538 Chapel St

New Haven, CT 06511

$1,190,000D-

5 bd · 4.0 ba · 4,194 sqft · Built 1844 · MultiFamily · Under Contract · 26 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $11,237/mo
• Mortgage (P&I): −$6,240
• Tax + insurance: −$2,206
• HOA: −$0
• Vac / Maint / Mgmt: −$2,360
• Net cashflow: $431/mo
• Annual: $5,169/yr
• Cap rate: 6.73%
• Cash-on-cash: 1.55%
• DSCR: 1.07
• 1% rule: 0.94%
• Cash to close: $333,200

Investor read

• This is a 4 × 6-bed/4.0-bath units multifamily listed at $1.19M.
• At list price, monthly cash flow is $431 ($5k/yr) — positive. Per door: $108/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $1.12M (5.6% below list).
• It's been on market 26 days — a 2% lower offer ($1.17M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $1.12M (5.6% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $8k of loan paydown is wiped out by about $36k of value loss. Plan a longer hold.
• Location reads 79/100 on livability (#31 in CT, #2,190 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, health & safety A+; Watch: employment D, crime F.
• New Haven School District (urban): math 12% / reading 25% proficiency, ranked #147 of 153 in CT (top 96%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 66% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: James Hillhouse High School (math 2% / reading 12%, grade F, #188 of 194 statewide, top 98%, 1,139 students, 79% FRL).
• Watch-outs: built in 1844 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+2.6%/yr); 137 active listings in the ZIP; 6 comparable units currently listed for rent nearby; rentals lingering (median 44d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 50% of comp listings sitting > 30 days — soft ceiling on asking rent; 1,059 units permitted in South Central Connecticut Planning Region in 2024 (779 in 5+ unit buildings).
• 2 sale attempts since 25y 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.
• Current owner paid $185k; list at $1.19M implies a 543% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: major wind risk, 56% chance of damaging wind over 30y; extreme-heat days projected 7→16/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.7% vs local median 4.8% in New Haven — 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 $11,237/mo this rent would consume 225% of the median local household income ($60k/yr) (locally 4999% 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 1844 — 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?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• 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.