18 N Sovereign Ave

Atlantic City, NJ 08401-3641

$625,000F

None bd · None ba · 2,272 sqft · Built 1940 · MultiFamily · Active · 105 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $5,350/mo
• Mortgage (P&I): −$3,278
• Tax + insurance: −$1,391
• HOA: −$0
• Vac / Maint / Mgmt: −$1,124
• Net cashflow: $-442/mo
• Annual: $-5,306/yr
• Cap rate: 6.26%
• Cash-on-cash: -0.11%
• DSCR: 1.00
• 1% rule: 0.86%
• Cash to close: $175,000

Investor read

• This is a multifamily listed at $625k.
• At list price, monthly cash flow is $-442 ($-5k/yr) — negative.
• To cash-flow at today's rent, offer at most $547k (12.5% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $535k (14.4% below list).
• It's been on market 105 days — a 9% lower offer ($569k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $535k (14.4% below list) — sets the bar for 1% rule.
• In year one you build about $23k of equity ($4k loan paydown + $19k appreciation (3.0% local appreciation)).
• Location reads 55/100 on livability (#525 in NJ) — a working-class tenant base; expect higher turnover. Strengths: health & safety A; Watch: commute D, crime F, amenities F.
• Atlantic City School District (urban): math 9% / reading 26% proficiency, ranked #454 of 472 in NJ (top 96%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 85% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Sovereign Avenue School (math 16% / reading 34%, grade F, #862 of 1,303 statewide, top 67%, 698 students, 91% FRL); Atlantic City High School (math 12% / reading 32%, grade F, #346 of 399 statewide, top 88%, 1,764 students, 80% FRL) — zoned schools at 86% FRL track the district average.
• Watch-outs: flood insurance adds $427/mo; built in 1940 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 1 active listings in the ZIP; 7 comparable units currently listed for rent nearby; rentals at typical pace (median 24d on market — plan ~3-4 weeks tenant-placement turnaround); 672 units permitted in Atlantic County in 2024 (258 in 5+ unit buildings).
• Atlantic County population projected at -12% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 4 sale attempts since 26y 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 $160k; list at $625k implies a 291% gain — meaningful room to come down on a strong offer.
• By year 2, paydown + projected appreciation supports a ~$38k 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); severe wind risk, 80% 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 6.3% vs local median 3.7% in Atlantic City — 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

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• It's been on market 105 days. Have you received any prior offers? Is the seller open to a 14% concession, seller financing, or rate buy-down credit?
• Built in 1940 — 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?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are F-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?