1984 Pennsylvania St

Gary, IN 46407

$40,000D+

6 bd · 3.0 ba · 3,740 sqft · Built 1925 · MultiFamily · Active · 37 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,328/mo
• Mortgage (P&I): −$210
• Tax + insurance: −$58
• HOA: −$0
• Vac / Maint / Mgmt: −$699
• Net cashflow: $2,362/mo
• Annual: $28,338/yr
• Cap rate: 77.14%
• Cash-on-cash: 253.02%
• DSCR: 12.26
• 1% rule: 8.32%
• Cash to close: $11,200

Investor read

• This is a 6-bed/3.0-bath multifamily listed at $40k.
• At list price, monthly cash flow is $2k ($28k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $40k).
• It's been on market 37 days — a 3% lower offer ($39k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $39k (3.0% below list) — sets the bar for market timing.
• In year one you build about $669 of equity ($277 loan paydown + $392 appreciation (1.0% local appreciation)).
• Location reads 73/100 on livability (#105 in IN) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A+, housing A+; Watch: schools F, crime F, employment F.
• Gary Community School Corporation (urban): math 3% / reading 11% proficiency, ranked #299 of 301 in IN (top 99%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 80% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1925 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 121 active listings in the ZIP; lower-income renter base — watch delinquency; 1,642 units permitted in Lake County in 2024 (14 in 5+ unit buildings).
• Lake County population projected to shrink 7% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• At projected returns (1.0% appreciation + 3.0% rent growth), your $11k cash investment doubles in ~1 year — after that, you're playing with house money.
• Cap rate 77.1% vs local median 9.1% in Gary — 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 $3,328/mo this rent would consume 140% of the median local household income ($29k/yr) (locally 392% 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 37 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Built in 1925 — 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 F 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?
• 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?
• 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.