401 E Garfield St

Michigan City, IN 46360

$319,000B

4 bd · 4.0 ba · 2,184 sqft · Built 1906 · MultiFamily · Active · 15 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $5,470/mo
• Mortgage (P&I): −$1,673
• Tax + insurance: −$399
• HOA: −$0
• Vac / Maint / Mgmt: −$1,149
• Net cashflow: $2,250/mo
• Annual: $26,998/yr
• Cap rate: 14.76%
• Cash-on-cash: 30.23%
• DSCR: 2.34
• 1% rule: 1.71%
• Cash to close: $89,320

Investor read

• This is a 4 × 4-bed/4.0-bath units multifamily listed at $319k.
• At list price, monthly cash flow is $2k ($27k/yr) — positive. Per door: $562/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $319k).
• It's been on market 15 days — a 2% lower offer ($314k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $314k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $10k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#15 in IN, #1,317 nationally) — a professional / high-income tenant draw. Strengths: commute A+, cost of living A+, housing A+; Watch: employment D, schools D-, amenities D-.
• Michigan City Area Schools (urban): math 23% / reading 28% proficiency, ranked #262 of 301 in IN (top 87%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 68% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1906 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+9.7%/yr); 371 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals lingering (median 44d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; 216 units permitted in LaPorte County in 2024 (75 in 5+ unit buildings).
• LaPorte County population projected to shrink 7% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 4 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.
• At projected returns (-3.0% appreciation + 8.0% rent growth), your $89k cash investment doubles in ~4 years — after that, you're playing with house money.
• Cap rate 14.8% vs local median 2.7% in Michigan 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.
• At $5,470/mo this rent would consume 111% of the median local household income ($59k/yr) (locally 1152% 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 1906 — 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 D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.