616 Somerset St

New Brunswick, NJ 08901

$295,000C-

3 bd · 1.0 ba · 988 sqft · Built 1917 · SingleFamily · Active · 30 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,833/mo
• Mortgage (P&I): −$1,547
• Tax + insurance: −$397
• HOA: −$0
• Vac / Maint / Mgmt: −$595
• Net cashflow: $294/mo
• Annual: $3,534/yr
• Cap rate: 7.49%
• Cash-on-cash: 4.28%
• DSCR: 1.19
• 1% rule: 0.96%
• Cash to close: $82,600

Investor read

• This is a 3-bed/1.0-bath single-family listed at $295k.
• At list price, monthly cash flow is $294 ($4k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $283k (4.0% below list).
• It's been on market 30 days — a 2% lower offer ($291k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $283k (4.0% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $9k of value loss. Plan a longer hold.
• Location reads 75/100 on livability (#154 in NJ, #3,986 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, health & safety A+; Watch: employment C-, schools F, crime F.
• New Brunswick School District (urban): math 4% / reading 23% proficiency, ranked #463 of 472 in NJ (top 98%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 78% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1917 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+3.9%/yr); 49 active listings in the ZIP; 17 comparable units currently listed for rent nearby; rentals at typical pace (median 17d on market — plan ~3-4 weeks tenant-placement turnaround); 1,971 units permitted in Middlesex County in 2024 (1,193 in 5+ unit buildings).
• Middlesex County population projected at +15% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Current owner paid $28k; list at $295k implies a 954% gain — meaningful room to come down on a strong offer.
• 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 7.5% vs local median 3.8% in New Brunswick — 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 $2,833/mo this rent would consume 52% of the median local household income ($66k/yr) (locally 4329% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Built in 1917 — 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?
• 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.