500 S 2nd St

Watertown, WI 53094

$359,900B-

None bd · None ba · — sqft · Built 1940 · MultiFamily · Pending · 5 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,831/mo
• Mortgage (P&I): −$1,887
• Tax + insurance: −$600
• HOA: −$0
• Vac / Maint / Mgmt: −$1,015
• Net cashflow: $1,329/mo
• Annual: $15,952/yr
• Cap rate: 10.73%
• Cash-on-cash: 15.83%
• DSCR: 1.70
• 1% rule: 1.34%
• Cash to close: $100,772

Investor read

• This is a 4 × 2-bed/?-bath units multifamily listed at $360k. Condition is rated poor.
• At list price, monthly cash flow is $1k ($16k/yr) — positive. Per door: $332/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $360k).
• Only 5 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $11k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#224 in WI) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: amenities C-, employment D+, commute F.
• Watertown Unified School District (town): math 36% / reading 34% proficiency, ranked #221 of 342 in WI (top 65%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1940 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 96 active listings in the ZIP; 11 comparable units currently listed for rent nearby; rentals at typical pace (median 18d on market — plan ~3-4 weeks tenant-placement turnaround); 145 units permitted in Jefferson County in 2024 (0 in 5+ unit buildings).
• Jefferson County population projected to shrink 6% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 8 sale attempts since 4y ago 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.
• Current owner paid $295k; 22% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $101k cash investment doubles in ~8 years — after that, you're playing with house money.
• Cap rate 10.7% vs local median 2.2% in Watertown — 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 $4,831/mo this rent would consume 79% of the median local household income ($73k/yr) (locally 394% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

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?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• 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.
• 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.

Repairs flagged (vision-AI assessment)

• Major: exterior siding — Severe weathering and peeling
• Major: exterior paint — Significant peeling and discoloration
• Major: landscaping — Overgrown and unkempt