118 Grove St

Middletown, CT 06457

$300,000B

3 bd · 2.0 ba · 1,926 sqft · Built 1900 · MultiFamily · Under Contract · 38 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,778/mo
• Mortgage (P&I): −$1,573
• Tax + insurance: −$1,011
• HOA: −$0
• Vac / Maint / Mgmt: −$793
• Net cashflow: $400/mo
• Annual: $4,804/yr
• Cap rate: 9.74%
• Cash-on-cash: 12.30%
• DSCR: 1.55
• 1% rule: 1.26%
• Cash to close: $84,000

Investor read

• This is a 2 × 3-bed/2.0-bath units multifamily listed at $300k.
• At list price, monthly cash flow is $400 ($5k/yr) — positive. Per door: $200/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $300k).
• It's been on market 38 days — a 3% lower offer ($291k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $291k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $9k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#17 in CT, #1,390 nationally) — a professional / high-income tenant draw. Strengths: crime A+, amenities A+, health & safety A+; Watch: commute F.
• Middletown School District (urban): math 24% / reading 44% proficiency, ranked #113 of 153 in CT (top 74%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Macdonough School (math 32% / reading 42%, grade F, #318 of 553 statewide, top 60%, 227 students, 66% FRL); Middletown High School (math 25% / reading 52%, grade F, #111 of 194 statewide, top 57%, 1,214 students, 49% FRL) — zoned schools average 58% FRL vs 38% district-wide (19 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: flood insurance adds $460/mo; built in 1900 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents flat; 143 active listings in the ZIP; 9 comparable units currently listed for rent nearby; rentals leasing fast (median 2d on market — plan ~1-2 weeks tenant-placement turnaround); solid renter incomes; 278 units permitted in Lower Connecticut River Valley Planning Region in 2024 (89 in 5+ unit buildings).
• 8 sale attempts since 22y ago; this cycle's ask has dropped $60k (17%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $202k; 48% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: in FEMA flood zone AE (mandatory federal flood insurance); major wind risk, 27% chance of damaging wind over 30y; extreme-heat days projected 7→17/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 9.7% vs local median 3.7% in Middletown — 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 $3,778/mo this rent would consume 57% of the median local household income ($79k/yr) (locally 2196% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 38 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• 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 1900 — 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.
• 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.