42-48 Lake St

East Orange, NJ 07017-1704

$599,000B

24 bd · 16.0 ba · 2,500 sqft · Built 1930 · MultiFamily · Under Contract · 20 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $7,847/mo
• Mortgage (P&I): −$3,141
• Tax + insurance: −$1,425
• HOA: −$0
• Vac / Maint / Mgmt: −$1,648
• Net cashflow: $1,633/mo
• Annual: $19,596/yr
• Cap rate: 10.42%
• Cash-on-cash: 14.74%
• DSCR: 1.66
• 1% rule: 1.31%
• Cash to close: $167,720

Investor read

• This is a 4 × 2-bed/1.3-bath units multifamily listed at $599k. Condition is rated good.
• At list price, monthly cash flow is $2k ($20k/yr) — positive. Per door: $408/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($8k rent vs $599k).
• It's been on market 20 days — a 2% lower offer ($590k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $590k (1.5% below list) — sets the bar for market timing.
• In year one you build about $22k of equity ($4k loan paydown + $18k appreciation (3.0% local appreciation)).
• 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: crime D-, amenities F, cost of living D-.
• East Orange School District (suburban): math 6% / reading 31% proficiency, ranked #444 of 472 in NJ (top 94%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 63% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Wahlstrom Early Childhood Academy (137 students, 49% FRL); John L. Costley Middle School (math 3% / reading 31%, grade F, #409 of 431 statewide, top 95%, 333 students, 59% FRL); East Orange Campus High School (math 4% / reading 35%, grade F, #357 of 399 statewide, top 90%, 1,748 students, 48% FRL).
• Watch-outs: flood insurance adds $427/mo; built in 1930 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 1 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 + 3.0% rent growth), your $168k cash investment doubles in ~4 years — after that, you're playing with house money.
• By year 2, paydown + projected appreciation supports a ~$36k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• 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→15/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 10.4% 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.

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?
• 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.
• 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.