259 Pearl St

Middletown, CT 06457

$395,000B+

9 bd · 3.0 ba · 3,906 sqft · Built 1917 · MultiFamily · Under Contract · 8 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $6,078/mo
• Mortgage (P&I): −$2,071
• Tax + insurance: −$738
• HOA: −$0
• Vac / Maint / Mgmt: −$1,276
• Net cashflow: $1,993/mo
• Annual: $23,910/yr
• Cap rate: 12.35%
• Cash-on-cash: 21.62%
• DSCR: 1.96
• 1% rule: 1.54%
• Cash to close: $110,600

Investor read

• This is a 3 × 3-bed/1.0-bath units multifamily listed at $395k.
• At list price, monthly cash flow is $2k ($24k/yr) — positive. Per door: $664/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($6k rent vs $395k).
• Only 8 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $12k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#17 in CT, #1,390 nationally) — a professional / high-income tenant draw. Strengths: crime A+, amenities A+, health & safety A+; Watch: commute F.
• Middletown School District (urban): math 24% / reading 44% proficiency, ranked #113 of 153 in CT (top 74%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Macdonough School (math 32% / reading 42%, grade F, #318 of 553 statewide, top 60%, 227 students, 66% FRL); Beman Middle School (math 19% / reading 44%, grade F, #134 of 175 statewide, top 77%, 968 students, 49% FRL); Middletown High School (math 25% / reading 52%, grade F, #111 of 194 statewide, top 57%, 1,214 students, 49% FRL) — zoned schools average 55% FRL vs 38% district-wide (16 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: built in 1917 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents flat; 147 active listings in the ZIP; solid renter incomes; 278 units permitted in Lower Connecticut River Valley Planning Region in 2024 (89 in 5+ unit buildings).
• 6 sale attempts since 20y 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.
• At projected returns (-3.0% appreciation + 0.2% rent growth), your $111k cash investment doubles in ~7 years — after that, you're playing with house money.
• Climate carrying-cost: major wind risk, 27% 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 12.3% vs local median 3.7% in Middletown — 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 $6,078/mo this rent would consume 92% of the median local household income ($79k/yr) (locally 2196% 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 1917 — 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.
• 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.
• How much new apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.