306 Old Colchester Rd #197

Colchester, CT 06420

$135,000B

2 bd · 1.0 ba · 750 sqft · Built 1991 · Condo · Under Contract · 346 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,069/mo
• Mortgage (P&I): −$708
• Tax + insurance: −$225
• HOA: −$219
• Vac / Maint / Mgmt: −$435
• Net cashflow: $483/mo
• Annual: $5,794/yr
• Cap rate: 10.58%
• Cash-on-cash: 15.33%
• DSCR: 1.68
• 1% rule: 1.53%
• Cash to close: $37,800

Investor read

• This is a 2-bed/1.0-bath condo listed at $135k.
• At list price, monthly cash flow is $483 ($6k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $135k).
• It's been on market 346 days — a 12% lower offer ($119k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $119k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $933 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 77/100 on livability (#43 in CT, #3,018 nationally) — a middle-class / working-renter tenant base. Strengths: housing A+, health & safety A+, crime A; Watch: amenities F, commute F.
• Salem School District (rural): math 64% / reading 76% proficiency, ranked #17 of 153 in CT (top 11%) — strong family-tenant draw, lease renewals of 3-5y typical; only 9% free/reduced lunch — higher-income household profile.
• Zoned schools: Salem Elementary School (math 65% / reading 77%, grade A-, #73 of 553 statewide, top 13%, 397 students, 19% FRL).
• Market conditions: 29 active listings in the ZIP; 487 units permitted in Southeastern Connecticut Planning Region in 2024 (244 in 5+ unit buildings).
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $38k cash investment doubles in ~8 years — after that, you're playing with house money.
• Cap rate 10.6% vs local median 2.5% in Colchester — 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 346 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• 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.
• Schools are A-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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.