2406 Pearsall Pkwy

Waukegan, IL 60085

$459,000B

5 bd · 4.5 ba · 3,762 sqft · Built 1962 · MultiFamily · Active · 40 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $7,408/mo
• Mortgage (P&I): −$2,407
• Tax + insurance: −$998
• HOA: −$0
• Vac / Maint / Mgmt: −$1,556
• Net cashflow: $2,447/mo
• Annual: $29,361/yr
• Cap rate: 12.69%
• Cash-on-cash: 22.85%
• DSCR: 2.02
• 1% rule: 1.61%
• Cash to close: $128,520

Investor read

• This is a 2 × 4-bed/2.5-bath units multifamily listed at $459k.
• At list price, monthly cash flow is $2k ($29k/yr) — positive. Per door: $1k/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($7k rent vs $459k).
• It's been on market 40 days — a 3% lower offer ($445k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $445k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $14k of value loss. Plan a longer hold.
• Location reads 75/100 on livability (#216 in IL, #4,074 nationally) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A+, housing A+; Watch: employment C-, crime D, schools F.
• Waukegan CUSD 60 (suburban): math 7% / reading 10% proficiency, ranked #587 of 620 in IL (top 95%) — 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.
• Market conditions: Rents rising (+3.2%/yr); 89 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 948 units permitted in Lake County in 2024 (424 in 5+ unit buildings).
• Lake County population projected to shrink 8% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 3 sale attempts since 19y 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 $285k; list at $459k implies a 61% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.2% rent growth), your $129k cash investment doubles in ~6 years — after that, you're playing with house money.
• Cap rate 12.7% vs local median 4.6% in Waukegan — 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 $7,408/mo this rent would consume 133% of the median local household income ($67k/yr) (locally 2742% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 40 days. Have you received any prior offers? Is the seller open to a 3% 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?
• Built in 1962 — 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 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 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.