904 - 906 Chestnut St

Hagerstown, MD 21740

$284,900D-

4 bd · 0.0 ba · 1,724 sqft · Built 1938 · MultiFamily · Active · 23 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,572/mo
• Mortgage (P&I): −$1,494
• Tax + insurance: −$475
• HOA: −$0
• Vac / Maint / Mgmt: −$540
• Net cashflow: $63/mo
• Annual: $756/yr
• Cap rate: 6.56%
• Cash-on-cash: 0.95%
• DSCR: 1.04
• 1% rule: 0.90%
• Cash to close: $79,772

Investor read

• This is a 2 × 2-bed/1-bath units multifamily listed at $285k.
• At list price, monthly cash flow is $63 ($756/yr) — positive. Per door: $32/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 $257k (9.7% below list).
• It's been on market 23 days — a 2% lower offer ($281k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $257k (9.7% below list) — sets the bar for 1% rule.
• 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 77/100 on livability (#83 in MD, #3,170 nationally) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A+, health & safety A+; Watch: schools C-, crime F, employment F.
• Washingtion County Public Schools (suburban): math 18% / reading 33% proficiency, ranked #13 of 24 in MD (top 54%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Watch-outs: built in 1938 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+4.0%/yr); 368 active listings in the ZIP; 24 comparable units currently listed for rent nearby; rentals at typical pace (median 22d on market — plan ~3-4 weeks tenant-placement turnaround); 232 units permitted in Washington County in 2024 (12 in 5+ unit buildings).
• 8 sale attempts since 27y 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 $191k; 49% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: extreme-heat days projected 7→17/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.6% vs local median 4.4% in Hagerstown — 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 $2,572/mo this rent would consume 49% of the median local household income ($63k/yr) (locally 2832% 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 1938 — 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.
• 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.
• 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.