2336 5th St

Muskegon Heights, MI 49444

$139,000B

12 bd · 1.0 ba · 1,916 sqft · Built 1930 · MultiFamily · Pending · 9 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,137/mo
• Mortgage (P&I): −$729
• Tax + insurance: −$300
• HOA: −$0
• Vac / Maint / Mgmt: −$869
• Net cashflow: $2,239/mo
• Annual: $26,873/yr
• Cap rate: 25.63%
• Cash-on-cash: 69.05%
• DSCR: 4.07
• 1% rule: 2.98%
• Cash to close: $38,920

Investor read

• This is a 3 × 4-bed/3.0-bath units multifamily listed at $139k.
• At list price, monthly cash flow is $2k ($27k/yr) — positive. Per door: $746/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $139k).
• Only 9 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $961 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 61/100 on livability (#574 in MI) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A; Watch: schools D+, crime F, amenities F.
• Watch-outs: built in 1930 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 240 active listings in the ZIP; 438 units permitted in Muskegon County in 2024 (115 in 5+ unit buildings).
• Muskegon County population projected to shrink 8% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 10 sale attempts since 15y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $39k cash investment doubles in ~2 years — after that, you're playing with house money.
• Cap rate 25.6% vs local median 8.4% in Muskegon Heights — 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 $4,137/mo this rent would consume 94% of the median local household income ($53k/yr) (locally 930% 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?
• Built in 1930 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• Crime grade is F 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.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.