40 Merrick St Unit A

Worcester, MA 01609

$409,000B-

3 bd · 1.5 ba · 1,536 sqft · Built 2007 · MultiFamily · Active · 27 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,629/mo
• Mortgage (P&I): −$2,145
• Tax + insurance: −$513
• HOA: −$0
• Vac / Maint / Mgmt: −$972
• Net cashflow: $999/mo
• Annual: $11,992/yr
• Cap rate: 9.22%
• Cash-on-cash: 10.47%
• DSCR: 1.47
• 1% rule: 1.13%
• Cash to close: $114,520

Investor read

• This is a 3-bed/1.5-bath multifamily listed at $409k.
• At list price, monthly cash flow is $999 ($12k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $409k).
• It's been on market 27 days — a 2% lower offer ($403k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $403k (1.5% 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 $12k of value loss. Plan a longer hold.
• Location reads 87/100 on livability (#9 in MA, #312 nationally) — a professional / high-income tenant draw. Strengths: crime A+, amenities A+, commute A+; Watch: cost of living D.
• Worcester (urban): math 17% / reading 30% proficiency, ranked #280 of 302 in MA (top 93%) — 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.
• Zoned schools: Elm Park Community (math 4% / reading 24%, grade F, #881 of 938 statewide, top 94%, 415 students, 0% FRL); Forest Grove Middle (math 19% / reading 31%, grade F, #234 of 305 statewide, top 77%, 897 students, 0% FRL); Doherty Memorial High (math 37% / reading 47%, grade F, #214 of 343 statewide, top 65%, 1,344 students, 0% FRL) — zoned schools average 0% FRL vs 66% district-wide (66 pts lower); this property's tenant base skews higher-income than the district average.
• Market conditions: Rents rising (+3.4%/yr); 50 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals at typical pace (median 26d on market — plan ~3-4 weeks tenant-placement turnaround); 45% of comp listings sitting > 30 days — soft ceiling on asking rent; 2,293 units permitted in Worcester County in 2024 (1,205 in 5+ unit buildings).
• Current owner paid $170k; list at $409k implies a 141% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.4% rent growth), your $115k cash investment doubles in ~10 years — after that, you're playing with house money.
• Climate carrying-cost: major wind risk, 27% chance of damaging wind over 30y — expect insurance premiums to compound above CPI over the hold.
• Cap rate 9.2% vs local median 3.8% in Worcester — 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 $4,629/mo this rent would consume 81% of the median local household income ($68k/yr) (locally 1183% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• 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.