117 Sherman Ave Ave

Waterloo, IA 50703

$40,000A-

3 bd · 1.0 ba · 1,128 sqft · Built 1896 · SingleFamily · Active · 137 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,015/mo
• Mortgage (P&I): −$210
• Tax + insurance: −$59
• HOA: −$0
• Vac / Maint / Mgmt: −$213
• Net cashflow: $533/mo
• Annual: $6,396/yr
• Cap rate: 22.28%
• Cash-on-cash: 57.10%
• DSCR: 3.54
• 1% rule: 2.54%
• Cash to close: $11,200

Investor read

• This is a 3-bed/1.0-bath single-family listed at $40k.
• At list price, monthly cash flow is $533 ($6k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $40k).
• It's been on market 137 days — a 12% lower offer ($35k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $35k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $277 of loan paydown is wiped out by about $1k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#74 in IA, #1,589 nationally) — a professional / high-income tenant draw. Strengths: commute A+, cost of living A+, housing A+; Watch: crime F, employment D-.
• Waterloo Community School District (urban): math 50% / reading 54% proficiency, ranked #276 of 289 in IA (top 96%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Cunningham School (math 32% / reading 32%, grade F, #601 of 616 statewide, top 98%, 376 students, 90% FRL); George Washington Carver Academy (math 36% / reading 43%, grade F, #240 of 246 statewide, top 98%, 442 students, 91% FRL); East High School (math 39% / reading 58%, grade D, #317 of 336 statewide, top 94%, 1,022 students, 73% FRL) — zoned schools average 85% FRL vs 58% district-wide (26 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Zoned-school proficiency averages 40% at this address vs 52% district-wide (-12 pts) — the specific schools serving this property underperform the Waterloo Community School District average; the district grade overstates school quality for this exact location.
• Watch-outs: built in 1896 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+6.7%/yr); 99 active listings in the ZIP; 23 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 52% of comp listings sitting > 30 days — soft ceiling on asking rent; 287 units permitted in Black Hawk County in 2024 (67 in 5+ unit buildings).
• Black Hawk County population projected at +10% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• At projected returns (-3.0% appreciation + 6.7% rent growth), your $11k cash investment doubles in ~2 years — after that, you're playing with house money.
• Cap rate 22.3% vs local median 4.2% in Waterloo — 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.

Questions for listing agent

• It's been on market 137 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1896 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• 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?
• 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 for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.