527 Valley St #2

East Orange, NJ 07050

$499,999C+

8 bd · 2.0 ba · — sqft · Built 1950 · MultiFamily · Active · 17 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $6,248/mo
• Mortgage (P&I): −$2,622
• Tax + insurance: −$956
• HOA: −$0
• Vac / Maint / Mgmt: −$1,312
• Net cashflow: $1,358/mo
• Annual: $16,299/yr
• Cap rate: 9.85%
• Cash-on-cash: 12.69%
• DSCR: 1.56
• 1% rule: 1.25%
• Cash to close: $140,000

Investor read

• This is a 2 × 4-bed/1.0-bath units multifamily listed at $500k. Condition is rated fair.
• At list price, monthly cash flow is $1k ($16k/yr) — positive. Per door: $679/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($6k rent vs $500k).
• It's been on market 17 days — a 2% lower offer ($492k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $492k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $15k of value loss. Plan a longer hold.
• Location reads 73/100 on livability (#189 in NJ) — a middle-class / working-renter tenant base. Strengths: commute A+, health & safety A, housing A-; Watch: schools C-, crime D-, amenities F.
• Orange Board Of Education School District (suburban): math 10% / reading 32% proficiency, ranked #432 of 472 in NJ (top 92%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 72% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: flood insurance adds $122/mo; built in 1950 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+4.6%/yr); 41 active listings in the ZIP; 3,364 units permitted in Essex County in 2024 (2,551 in 5+ unit buildings).
• Essex County population projected at +3% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• At projected returns (-3.0% appreciation + 4.6% rent growth), your $140k cash investment doubles in ~9 years — after that, you're playing with house money.
• Climate carrying-cost: in FEMA flood zone AO (mandatory federal flood insurance); major wind risk, 27% chance of damaging wind over 30y; extreme-heat days projected 7→15/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 9.8% vs local median 3.0% in East Orange — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• At $6,248/mo this rent would consume 143% of the median local household income ($53k/yr) (locally 2703% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• Built in 1950 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Crime grade is D in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.

Repairs flagged (vision-AI assessment)

• Major: Exterior siding — Signs of peeling paint and weathering indicate significant damage.
• Major: Landscaping — Minimal landscaping and snow accumulation suggest a lack of maintenance.
• Minor: Interior walls/paint — Some touch-ups may be needed to improve appearance.
• Minor: Bathrooms — Updates to fixtures and finishes could enhance value.
• Minor: HVAC/mechanicals — Inspection may be needed to ensure efficiency and functionality.
• Minor: Exterior lighting — Adding exterior lighting could improve safety and curb appeal.