500 Bay Ave #403 South

Ocean City, NJ 08226

$574,900D

1 bd · 1.0 ba · 989 sqft · Built 1977 · Condo · Active · 37 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,960/mo
• Mortgage (P&I): −$3,015
• Tax + insurance: −$958
• HOA: −$516
• Vac / Maint / Mgmt: −$1,042
• Net cashflow: $-571/mo
• Annual: $-6,849/yr
• Cap rate: 5.10%
• Cash-on-cash: -4.25%
• DSCR: 0.81
• 1% rule: 0.86%
• Cash to close: $160,972

Investor read

• This is a 1-bed/1.0-bath condo listed at $575k. Condition is rated excellent.
• At list price, monthly cash flow is $-571 ($-7k/yr) — negative.
• To cash-flow at today's rent, offer at most $492k (14.4% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $496k (13.7% below list).
• It's been on market 37 days — a 3% lower offer ($558k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $492k (14.4% below list) — sets the bar for cash-flow.
• Local home prices are declining (-3.0%/yr); year-one equity from $4k of loan paydown is wiped out by about $17k of value loss. Plan a longer hold.
• Location reads 80/100 on livability (#72 in NJ, #1,762 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, employment A+, health & safety A+; Watch: housing D+, cost of living F.
• Ocean City School District (urban): math 31% / reading 53% proficiency, ranked #212 of 472 in NJ (top 45%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Ocean City Primary School (math 54% / reading 42%, grade D, #299 of 1,303 statewide, top 23%, 280 students, 31% FRL); Ocean City Intermediate School (math 26% / reading 49%, grade F, #217 of 431 statewide, top 51%, 370 students, 27% FRL); Ocean City High School (math 33% / reading 63%, grade D, #117 of 399 statewide, top 30%, 1,215 students, 13% FRL) — zoned schools at 24% FRL track the district average.
• Market conditions: 514 active listings in the ZIP; 2 comparable units currently listed for rent nearby; solid renter incomes; 877 units permitted in Cape May County in 2024 (35 in 5+ unit buildings).
• Cape May County population projected at -24% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 2 sale attempts 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.
• Cap rate 5.1% vs local median 3.4% in Ocean 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 $4,960/mo this rent would consume 58% of the median local household income ($102k/yr) — very limited rent-growth headroom before tenants either downsize or default.

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 37 days. Have you received any prior offers? Is the seller open to a 14% concession, seller financing, or rate buy-down credit?
• Built in 1977 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• 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?