425 Pearce Ave

Wake Forest, NC 27587

$495,000D

6 bd · 1.5 ba · 2,618 sqft · Built 2003 · MultiFamily · Pending · 63 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,862/mo
• Mortgage (P&I): −$2,596
• Tax + insurance: −$552
• HOA: −$0
• Vac / Maint / Mgmt: −$811
• Net cashflow: $-97/mo
• Annual: $-1,159/yr
• Cap rate: 6.06%
• Cash-on-cash: -0.84%
• DSCR: 0.96
• 1% rule: 0.78%
• Cash to close: $138,600

Investor read

• This is a 2 × 3-bed/2.0-bath units multifamily listed at $495k.
• At list price, monthly cash flow is $-97 ($-1k/yr) — negative. Per door: $-48/mo.
• To cash-flow at today's rent, offer at most $478k (3.4% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $386k (22.0% below list).
• It's been on market 63 days — a 6% lower offer ($465k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $386k (22.0% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $15k of value loss. Plan a longer hold.
• Location reads 84/100 on livability (#6 in NC, #818 nationally) — a professional / high-income tenant draw. Strengths: employment A+, housing A+, crime A-; Watch: amenities C-.
• Wake County Schools (suburban): math 52% / reading 60% proficiency, ranked #35 of 178 in NC (top 20%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Heritage Middle (math 65% / reading 75%, grade A, #19 of 475 statewide, top 4%, 997 students, 14% FRL); Wake Forest High School (math 61% / reading 71%, grade B, #154 of 535 statewide, top 29%, 2,101 students, 27% FRL).
• Zoned-school proficiency averages 68% at this address vs 56% district-wide (+12 pts) — the actual schools serving this property are materially stronger than the Wake County Schools average implies; a family-tenant draw the district grade alone would hide.
• Market conditions: Rents flat; 1084 active listings in the ZIP; high-income renter base; 15,249 units permitted in Wake County in 2024 (5,568 in 5+ unit buildings).
• Wake County population projected at +51% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 2y 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.
• Climate carrying-cost: major wind risk, 53% 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 6.1% vs local median 2.8% in Wake Forest — 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.
• This rent runs 35% of the median local income ($134k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

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 63 days. Have you received any prior offers? Is the seller open to a 22% 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?
• 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 A-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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?