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Due Diligence · Due-diligence report
15 Aug 2026 · asking $699,500 · listed 7 days
26 findings: 2 deal-breaker, 9 high, 13 medium, 2 informational. Each one carries its evidence, its sources, and what would resolve it.
At $699,500 on realistic rents of $5,200 a month, net operating income covers debt service 0.81 times. That is below the 1.00 most lenders require outright — you would not qualify for the loan at this price on these rents. Annual cash flow is −$7,082.
The listing markets this as a 2-unit property. The assessor records 1 — the building description reads "2SF3UG", which decodes as two-story, single family, 3-car unattached garage. If the additional unit is not legal, the income case collapses: you would be underwriting one unit's rent against the whole purchase price, and a lender will not fund a unit that does not legally exist. Assessor descriptions do go stale, so this is strongly suggestive rather than conclusive — but the burden of proof sits with the seller, and the answer changes the value by hundreds of thousands of dollars.
The listing describes the basement in terms that read as an additional living space — the phrase "kitchenette" appears — in a building the assessor records as 1 unit and the listing already claims 2. That combination is the classic profile of an unpermitted unit stack. It matters beyond the paperwork: nobody has inspected the egress, the fire separation, the electrical or the plumbing in a space being marketed as habitable.
The listing claims a renovation (major remodel year 2026), and the seller bought at $500,000 on 2026-07-28. A genuine gut renovation of 3,020 sq ft costs $181,200–$271,800, which would put their basis at $681,200–$771,800. The asking price of $699,500 is only 2.7% over the cheapest version of that — break-even to a loss. Nobody renovates to sell at break-even, so the work was not done after this purchase. The spread is priced as a resale margin on a distressed buy, not as cost recovery.
It sold for $500,000 on 2026-07-28 and was relisted at $699,500 on 2026-08-08. That is a $199,500 markup — up 39.9% — in 11 days. Little or no work is possible in that time, so the spread is the seller's margin and you would be paying all of it.
The property went pending on 2025-09-26 and did not close until 2026-07-28 — 10 months — at $500,000 against a $649,999 list, a 23.1% cut. An escrow that long ending in a discount that large is the signature of a short sale awaiting lender approval, or a court-supervised sale. It matters because it tells you the last transaction price was set by a lender's loss mitigation, not by an open-market bid.
Honestly underwritten, the property yields 4.24% against debt costing 7.50% — a spread of −3.26%. That is negative leverage: borrowing more does not raise the return, it lowers it, and the cash-on-cash figure only stays positive while the loan is interest-only. This is a structural fact about the price, not a financing problem to shop around.
The permit feed is confirmed current to 2026-07-31, is known to report certificates of occupancy, and shows none has ever been issued for this parcel. The listing markets 2 units. Zoning that permits multiple units is not the same thing as the building legally being one — permitted use and legal existing use are different, and only a certificate of occupancy establishes the latter. Realistically this means the seller must obtain one, which requires retroactively permitting and inspecting whatever was built.
The seller projects $6,000–$7,000 a month. Comparable units support $4,900–$5,600. At the midpoints that is an overstatement of 23.8% — a range of roughly 7% to 43% depending on which ends you compare. Every cap rate, DSCR and cash-flow figure built on the seller's number is overstated by the same margin. Underwrite on the market range.
The listing carries a major remodel year of 2026. The permit feed — confirmed current to 2026-07-31 — records only: 2023-04-18 Demolition $2,900. No construction permit exists for the claimed work. Unpermitted work is a substantive risk rather than a paperwork detail: no inspector has signed off the electrical, the plumbing, the egress or the fire separation, and retroactive permitting can require opening finished work and can fail.
The building is vacant and there is no rent roll, no leases and no operating statement. The $6,000–$7,000 a month in the listing is a projection, not income. The photographs are virtually staged — the rooms are empty and digitally furnished — so nobody has seen this building as it actually stands. A DSCR lender may decline to fund on projected rents alone, and a vacant building generates no cash while you lease it up.
This parcel is assessed at $277,100 against a neighbouring median of $147,600 — 1.88 times. Comparables: 66 Sunset Ave at $136,700 ($5,107), 78 Sunset Ave at $158,500 ($5,922). Either the assessment is wrong, in which case there is an appeal worth filing, or the neighbours are under-assessed and this parcel carries a tax load its block does not. Either way it is a real expense difference against the comparables you would sell into.
The property appears under 2 MLS numbers (4045728, 109354674) and 2 agents (Coldwell Banker, Corcoran). Dual listings carry different data on each side — square footage, unit counts and rent projections routinely disagree — and it is not always clear which agent can actually bind the seller. Reconcile the two before relying on any field from either.
The building dates from 1915, squarely inside the pre-1978 lead-paint regime. NJ law covers pre-1978 one- and two-family rentals. Inspection at turnover or every three years, certificate valid two years, penalties to $1,000 per week after a 30-day cure. Deleading where it is required runs into five figures per unit in the strictest states, and refusing to rent to families with children is illegal discrimination — so this is a cost to budget, not one to avoid.
The listing states 10,998 sq ft against the assessor's 3,020 — a difference of 264%. Do not let anyone model off the larger figure: price per square foot, rent per square foot and any renovation budget all change materially with it. The assessor's measurement is the one to underwrite on.
The bedroom segment this property's income depends on is softening, not tightening: 3BR at $2,200, −6% year on year (Zumper — Lower Vailsburg). Falling rents in the relevant segment mean the projected income is a ceiling rather than a floor, and they compound with any rent-growth cap the municipality imposes.
The immediate block does not read as rental stock: 68-70 Sunset Ave is tax-exempt church, 82 Sunset Ave is city-owned vacant parcel, 66 Sunset Ave is single family, 78 Sunset Ave is single family. That matters for resale rather than for the rent roll — you would be selling a multi-family into a street of owner-occupiers, exempt parcels and vacant lots, and owner-occupiers do not price a building off its income. It also means the comparable sales an appraiser reaches for will be single-family.
The listing carries placeholder numbers where real data should be: MLS sub-field = 999; MLS sub-field = 9999. These are the values an agent enters when the field is unknown, and they propagate straight into any model built off the listing. Treat every unverified figure in this listing — square footage, rents, taxes, unit count — as unreliable until it is confirmed against a primary record.
The building dates from 1915. Pre-1940 construction routinely carries original or near-original electrical and plumbing, an uninsulated envelope that makes heating expensive, and structural detail that a standard inspection may not reach. Insurance quotes on old frame construction run well above the figures used in generic underwriting — treat any assumed premium as provisional until a real quote arrives. Repairs and capital reserves on a building this age belong at the top of their range, not the middle.
This property is subject to rent control in Newark, NJ. Newark Municipal Code §19:2-3 — the lesser of CPI or 4%, with 4% a hard statutory ceiling. There is no general vacancy decontrol: the cap applies irrespective of a change of tenant or a change of ownership, so buying the building does not reset the rents. Exemptions exist but must be perfected by application: Substantial rehabilitation, §19:2-18.2 — a dwelling vacant 18+ months where rehabilitation exceeded 50% of fair market value, plus a new certificate of occupancy, buying a five-year exemption; needs Rent Control Board approval and documented spend. Any dwelling of four units or less in at least one unit of which the owner resides — not available to a non-owner-occupier. Reported by the vendored reference material rather than by the source report, and unconfirmed against the ordinance text: a new-construction exemption of up to 30 years from completion, and a substantial-rehabilitation exemption that must be applied for within two years of the first permit. Verify both directly before relying on either. §19:2-2 defines a 'multiple dwelling' as any building containing one or more rented apartments and §19:2-2.1 subjects all of them to control; there is no 3-unit threshold. §19:2-3.2 caps increases irrespective of change of ownership or vacancy. Secondary sources conflict — confirm with the Division of Rent Control, 973-733-3675.
The 2024-01-01 sale at $700,000 sits 63.7% above the average of the sales either side of it ($427,500). An outlier that size is usually either a non-arm's-length transfer or a print the market did not repeat — treat the lower, repeated prices as the real level until a title search says otherwise.
The parcel is assessed at $277,100, 40% of the $699,500 asking price, carrying a $11,081 bill. A revaluation has been ordered with no implementation date set. A revaluation moves every assessment toward market **and** resets the rate proportionally, so it is not automatically a tax rise — but a parcel assessed this far below its price gains more than the average parcel does, and the bill moves with it. Applying the published effective rate to the purchase price gives roughly $12,906 a year, about $1,825 more than the $11,081 you would be underwriting. Read every cap rate on this property as pre-reset and stress-test it.
The parcel traded 3 times in the 4 years up to its most recent sale: 2023-06-20 $355,000 → 2024-01-01 $700,000 → 2026-07-28 $500,000. Repeated churn means no owner has been able to hold it, and it makes the highest print the least reliable one. Read the lower, repeated prices as the market and treat the peak as the outlier until the deeds say otherwise.
None of the listing sources say whether the 2 units are separately metered. It is frequently undisclosed, and it is never volunteered when the answer is no. There are 2 heating systems, which suggests separate HVAC — but separate HVAC is not the same as separate meters. Shared meters mean the landlord carries water, sewer and possibly gas and electric for every unit, and cannot bill it back without a sub-metering installation.
The listing reports 7 days on market, but it was relisted on 2026-08-08. Sources differ on whether a relisting resets the clock, and marketing of this property goes back to 2023-11-04 — 1015 days ago. Read the days-on-market figure as a range, not a fact, and do not treat a low number as evidence of fresh demand.
Newark, NJ requires rental registration. Fees run $50 per unit. Regime repealed and replaced 20 May 2026: annual registration of all units including single-family, $50/unit inspection fee, $100/unit penalty for unreported tenant changes, inspection every three years or on change of occupancy, certificate of habitability required on every turnover. Registration is a precondition to raising rent at all. Budget the fees and the inspection turnaround into the operating expense line, and note that registration is commonly a precondition to raising rent or to bringing an eviction.
The parcel has 9 recorded events, 4 of them completed sales, against 1 construction permit on the same timeline. Read the two together: a price move with no permit under it is value that was created somewhere other than in the building.
| Date | Event | Price |
|---|---|---|
| 30 Sep 2004 | Sold | $225,000 |
| 1 Jan 2011 | Rented Rented as a modest 1-family at $1,175/mo. Report gives the year only. | $1,175/mo |
| 18 Apr 2023 | Demolition permit Demolition of an accessory structure. | $2,900 |
| 20 Jun 2023 | Sold The 2023 flipper buys. | $355,000 |
| 4 Nov 2023 | Listed | $649,000 |
| 1 Jan 2024 | Sold Report dates this 'Dec 2023 / Jan 2024'. Arm's-length status unverified — a $355k → $700k → $500k pattern warrants a title search. | $700,000 |
| 1 Feb 2025 | Listed Listed as multi-family. Report dates this 'Feb / Mar 2025'. | $649,999 |
| 26 Sep 2025 | Pending | — |
| 28 Jul 2026 | Sold A 23.1% cut after a 10-month escrow, with a high-volume distressed-sale agent — the signature of a short sale awaiting lender approval. | $500,000 |
| 8 Aug 2026 | Relisted | $699,500 |
Sold for $500,000 on 28 Jul 2026 and relisted at $699,500 on 8 Aug 2026 — a $199,500 markup (+39.9%) in 11 days.
The property went pending on 26 Sep 2025 and did not close until 28 Jul 2026 — 10 months later, at 23.1% below the $649,999 it was listed at. A third party was approving that sale.
The largest move in the history is $355,000 on 20 Jun 2023 to $700,000 on 1 Jan 2024, 6.4 months apart — $345,000, +97.2%. Whatever work explains that gain was paid for, and banked, by whoever owned it then.
The listing records a major remodel year of 2026, but the permit feed — confirmed to cover this parcel through 31 Jul 2026 — carries no permit of any kind in that year or the one before it.
Improvement value went from $142,600 to $256,200 (+80%) while land value held perfectly still at $20,900. That signature — improvement jumps, land does not, in a year with no citywide revaluation — is an added assessment for completed work, so the work was finished before that tax year.
The listing markets 2 units; the assessor records 1 unit under the building code "2SF3UG". Nothing available online settles which is legal, and the answer changes the value by a large multiple of the negotiation. No certificate of occupancy has ever been issued for this parcel, in a feed established to report certificates as well as permits and current to 31 Jul 2026. There is therefore no document establishing legal use of any kind. Do not model off the listing's square footage of 10,998 — the assessor records 3,020 sq ft.
There is no rent roll, no lease and no operating statement, and the building is vacant with virtually staged photographs. Every income figure in the listing is a projection. The seller projects $6,500/mo against an observable market of $5,250/mo — an overstatement of 24%. 3BR rents are 6% down year on year at a $2,200 median as of 14 Aug 2026. The segments this income case depends on are softening, not tightening.
| Unit | Beds / baths | Listing claims | Realistic range |
|---|---|---|---|
| Unit 1 (with basement) | 6 / 2 | — | $2,800 – $3,200 |
| Unit 2 | 3 / 1 | — | $2,100 – $2,400 |
Observable market $4,900–$5,600/mo against the seller's $6,000–$7,000. Seton Hall's off-campus portal shows live Upper Vailsburg listings at $2,150–$3,000.
At $699,500 on realistic rents of $5,200/mo, the property yields a 4.24% cap rate, covers debt service 0.81 times and throws off −$7,082 a year — −2.6% on the $269,389 it takes to close. The 1.15 coverage floor is only satisfied up to $490,960, 29.8% below the asking price. Cash flow turns negative above $564,604. 2 of the expense lines are estimates rather than quotes — the insurance premium and water, trash, licensing and the other running costs — and each appears on the unverified list below.
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| Scenario | Cap rate | DSCR | Cash flow / yr | Capital needed | Cash-on-cash |
|---|---|---|---|---|---|
| Ask $699,500 · seller's $6,500/mo | 5.96%−1.54% spread | 1.14below floor1.52 gross | +$4,974 | $269,389 | +1.8% |
| Ask $699,500 · realistic $5,200/mothe load-bearing row | 4.24%−3.26% spread | 0.81below floor1.21 gross | −$7,082 | $269,389 | −2.6% |
| Ask $699,500 · conservative $4,900/mo | 3.84%−3.66% spread | 0.73below floor1.14 gross | −$9,864 | $269,389 | −3.7% |
| At $500,000 · realistic $5,200/mo | 5.93%−1.57% spread | 1.13below floor1.52 gross | +$3,392 | $195,698 | +1.7% |
| At $500,000 · conservative $4,900/mo | 5.37%−2.13% spread | 1.02below floor1.44 gross | +$610 | $195,698 | +0.3% |
| If only one legal unit · $3,000/mo at ask | 1.32%−6.18% spread | 0.25below floor0.70 gross | −$27,484 | $269,389 | −10.2% |
| If only one legal unit · $3,000/mo at $500,000 | 1.85%−5.65% spread | 0.35below floor0.88 gross | −$17,010 | $195,698 | −8.7% |
Each DSCR is given twice: NOI ÷ debt service above — the honest measure — and gross rent ÷ PITIA below it. The two can differ by a third on one property, so ask each lender which it applies; it decides whether the loan funds at all.
Highest price clearing DSCR 1.15 on realistic rents: $490,960
Highest price at which cash flow is still non-negative: $564,604
Municipal rules bind this property in 4 respects. Each entry carries its own citation; verify the contested ones by phone before underwriting off them.
The property sits in Vailsburg, Newark West Ward, Walk Score 66. Nearest rail is South Orange on the Morris & Essex line, not anything in Newark. Physically cut off from the rest of Newark by the Garden State Parkway trench. The immediate block is not a multifamily block — 68-70 Sunset Ave is tax-exempt church, 82 Sunset Ave is city-owned vacant parcel, 66 Sunset Ave is single family and 78 Sunset Ave is single family. That matters for resale: you would be selling a multi-family into a single-family street.
The current bill is $11,081 on an assessment of $277,100 — an effective rate of 1.58% against the asking price. Divided by the 2026 equalization ratio of 40.69%, the assessment implies a market value of $681,003. That figure moves substantially between ratio years, so it is context rather than a negotiating number. This parcel is assessed at 1.9× the average of its 2 immediate neighbours — above the 1.5× at which an appeal is worth pricing. An appeal argues comparability, so gather the neighbours' record cards before filing. A municipal revaluation is ordered with no implementation date set. It reprices every assessment to market and resets the rate proportionally, so it is not automatically a doubling: applying the published effective rate to the asking price gives roughly $12,906, about $1,825 more than the $11,081 this report underwrites. Stress-test it.
Bill ÷ asking price
Bill ÷ top of the recommended range
2026 table
Assessment ÷ the ratio. Moves a lot between ratio years.
| Address | Assessed | Annual tax | This parcel is |
|---|---|---|---|
| 66 Sunset Ave | $136,700 | $5,107 | 2.0× |
| 78 Sunset Ave | $158,500 | $5,922 | 1.7× |
| Tax year | Land | Improvement | Total | What changed |
|---|---|---|---|---|
| 2024 | $20,900 | $142,600 | $163,500 | — |
| 2025 | $20,900 | $256,200 | $277,100 | Improvement value +80% while land held still — the signature of an added assessment for completed work, not a revaluation. |
Applying the published effective rate to the asking price gives roughly $12,906, $1,825 more than the bill this report underwrites. A revaluation resets the rate as well as the base, so it is closer to neutral than it looks.
Newark revaluation ordered with no implementation date set. Assessments roughly double when it lands; at a $699,500 valuation the bill goes toward $13,400.
An assessment appeal is worth pricing
This parcel is assessed at 1.9× the average of its 2 immediate neighbours — above the 1.5× at which an appeal is worth pricing. An appeal argues comparability, so gather the neighbours' record cards before filing.
10 items could not be established from public sources, listed in rough order of how much they matter. Each one is a checkbox: tick it when you hold the document, not when somebody tells you the answer.
The assessor and the listing disagree about how many dwelling units this building legally has. Permitted use and legal existing use are different things, and the answer changes the value by more than the whole negotiation is worth.
How to verify: Ask the municipality's construction-code office for the certificate of occupancy and the full zoning and permit history for Block 4060 Lot 40. Not the agent's assurance — the document. Where no certificate exists, obtaining one becomes the seller's obligation, at their cost, before closing.
Unpermitted work means no inspector signed off the electrical, the plumbing, the egress or the fire separation. Retroactive permitting can run from a few thousand dollars to tens of thousands, and it can fail.
How to verify: File a records request with the city clerk for every permit, inspection and certificate on the parcel, and have the renovation opened up where the permit record is silent.
The ordinance text and the secondary landlord-data sources disagree, and the answer caps rent growth for the whole hold period. It is decisive enough to be worth a phone call.
How to verify: Call the municipality's rent control office and get the answer in writing: whether the property is controlled, what the current allowable increase is, and whether any exemption applies. The ordinance text is at https://ecode360.com/36623772.
A landlord-paid utility is uncapped, weather-dependent operating expense that no vacancy allowance covers. Two heating systems suggests separate HVAC, which is not the same thing as separate meters.
How to verify: Ask the utility for the meter count at the address, and walk the basement with the inspector to confirm the panel and the shut-offs are split per unit.
Taxes move debt-service coverage more than any other single line in a high-tax jurisdiction. A stale or derived figure quietly changes the verdict.
How to verify: Confirm the current year's bill with the municipal tax collector, and ask whether an added assessment or a revaluation is pending on the parcel.
A price history that moves sharply in both directions over a few years is either a real market or a sequence of transfers that were never open-market trades. The comparables argument depends on which.
How to verify: Order a title search covering the recent transfers, and read the deeds and realty transfer fee affidavits at the county register.
Where the photographs are virtually staged or the building is vacant, nobody has seen the property as it actually stands. Every condition assumption in this report is inference.
How to verify: Book a full interior inspection before removing any contingency, and have the inspector look specifically at the items the permit record does not cover.
A long escrow closing well below the list price is the signature of a short sale awaiting lender approval. If that is what it was, the last trade is a floor on value rather than a comparable.
How to verify: The deed and the realty transfer fee affidavit at the county register will show it.
Assessor data lags recorded deeds by months, so the party you would be negotiating with may not be the party on the public record.
How to verify: Search grantee records at the county register for the most recent transfer.
No public source quotes a premium, so this report estimates one. An older building in a dense urban market can price well above the estimate, and the difference lands directly in the coverage ratio.
How to verify: Get a written quote from a carrier that will actually write the risk, for the building's real age, construction and unit count.
Offer between $490,000 and $520,000, not $699,500 — 26% below the ask at the top of the range. Make the offer conditional on 3 things, in writing. If the seller refuses any of them, walk. At the asking price you would be paying $349,750 per marketed unit.
Listing says 2 units; the assessor records 1
The listing markets this as a 2-unit property. The assessor records 1 — the building description reads "2SF3UG", which decodes as two-story, single family, 3-car unattached garage. If the additional unit is not legal, the income case collapses: you would be underwriting one unit's rent against the whole purchase price, and a lender will not fund a unit that does not legally exist. Assessor descriptions do go stale, so this is strongly suggestive rather than conclusive — but the burden of proof sits with the seller, and the answer changes the value by hundreds of thousands of dollars. Make it the seller's obligation, at their cost, before closing: The certificate of occupancy establishing the legal unit count — the document, not the agent's word.
No certificate of occupancy has ever been issued
The permit feed is confirmed current to 2026-07-31, is known to report certificates of occupancy, and shows none has ever been issued for this parcel. The listing markets 2 units. Zoning that permits multiple units is not the same thing as the building legally being one — permitted use and legal existing use are different, and only a certificate of occupancy establishes the latter. Realistically this means the seller must obtain one, which requires retroactively permitting and inspecting whatever was built. Condition the offer on it: Whether any certificate of occupancy exists, via a public-records request naming the parcel.
Listing claims a 2026 remodel; the permit record shows none
The listing carries a major remodel year of 2026. The permit feed — confirmed current to 2026-07-31 — records only: 2023-04-18 Demolition $2,900. No construction permit exists for the claimed work. Unpermitted work is a substantive risk rather than a paperwork detail: no inspector has signed off the electrical, the plumbing, the egress or the fire separation, and retroactive permitting can require opening finished work and can fail. Condition the offer on it: A public-records request for every permit, inspection and certificate issued on the parcel.
Market research and financial modelling, not investment advice. Every figure here needs verifying against primary documents before you commit — particularly the certificate of occupancy, the rent control status and the current tax bill.