294 Governor St

Paterson, NJ 07501-1350

$799,000C-

8 bd · 4.0 ba · 3,344 sqft · Built 1940 · MultiFamily · Under Contract · 23 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $7,959/mo
• Mortgage (P&I): −$4,190
• Tax + insurance: −$1,332
• HOA: −$0
• Vac / Maint / Mgmt: −$1,671
• Net cashflow: $766/mo
• Annual: $9,191/yr
• Cap rate: 7.44%
• Cash-on-cash: 4.11%
• DSCR: 1.18
• 1% rule: 1.00%
• Cash to close: $223,720

Investor read

• This is a 4 × 2-bed/1.0-bath units multifamily listed at $799k. Condition is rated good.
• At list price, monthly cash flow is $766 ($9k/yr) — positive. Per door: $191/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $796k (0.4% below list).
• It's been on market 23 days — a 2% lower offer ($787k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $787k (1.5% below list) — sets the bar for market timing.
• In year one you build about $29k of equity ($6k loan paydown + $24k appreciation (3.0% local appreciation)).
• Location reads 69/100 on livability (#293 in NJ) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, health & safety A; Watch: schools D, employment D, crime F.
• Paterson Public School District (suburban): math 6% / reading 26% proficiency, ranked #458 of 472 in NJ (top 97%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 83% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1940 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 1 active listings in the ZIP; 860 units permitted in Passaic County in 2024 (614 in 5+ unit buildings).
• Passaic County population projected at +5% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• At projected returns (3.0% appreciation + 3.0% rent growth), your $224k cash investment doubles in ~5 years — after that, you're playing with house money.
• By year 2, paydown + projected appreciation supports a ~$48k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: major wind risk, 27% chance of damaging wind over 30y; extreme-heat days projected 7→15/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 7.4% vs local median 3.5% in Paterson — 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

• 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 1940 — 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?
• 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.