1053 Sheldon Ave SE, Grand Rapids, MI 49507 — 38.1% Cash-on-Cash

About this property

1053 Sheldon Ave SE is a 3-bedroom, 1-bathroom single-family property in Grand Rapids, MI 49507, listed at $124,900 after a $5,000 price reduction.

The listing is transparent about condition: this property needs a complete remodel. The bathroom currently has no floor, and the seller explicitly warns that walking the home may be dangerous. That's not a cosmetic touch-up situation — it's a gut-rehab candidate. Investors should budget accordingly before running return projections.

At 960 square feet on a 7,840-square-foot lot, the footprint is modest but functional. The layout is described as workable, which matters when planning a renovation scope. Non-owner-occupied status confirmed in public records, and no foreclosure or auction flags are present. The property has been on market 64 days — longer than every for-sale comp in the zip, which are moving in under a week — signaling that the condition discount is real and buyers are pricing in rehabilitation costs.

Tax-assessed value sits at $114,000 against a $124,900 ask, a gap worth noting when negotiating or stress-testing the purchase price against renovation budget overruns.

The investment case

The numbers here are outliers by any local standard: a 38.1% cash-on-cash return against a zip average of 8.2% and a city average of -4.4%.

List Price

$124,900

Monthly Payment (PITI+HOA)

$923

Principal & Interest

$690

Property Tax

$191

Insurance

$42

HOA

$0

PMI

$0

Est. Monthly Rent

$1,716

Estimated rent based on automated valuation of comparable listings.

Cash-on-Cash Return

38.1%

Cap Rate

16.1%

Monthly Cash Flow

$793

Gross Rent Multiplier

6.1

DSCR

2.4

At a $124,900 purchase price with 20% down, the all-in monthly payment — principal, interest, taxes, and insurance — comes to $923. Estimated monthly rent of $1,716 leaves $793 in monthly cash flow before maintenance and vacancy reserves. That's a debt service coverage ratio of 2.4, meaning the rent covers the mortgage payment more than twice over. Lenders typically require 1.25; this clears that bar by a wide margin.

The cap rate of 16.1% on a net operating income of $1,674 per month is the kind of figure that appears in distressed-market case studies, not standard the listing listings. The gross rent multiplier of 6.1 — meaning the property pays for itself in just over six years of gross rent — compares favorably against any reasonable benchmark for single-family residential.

What's driving these metrics is price, not rent. The property is priced well below comparable sales in the zip (the for-sale comp median is $275,000), and the rent estimate sits in the lower half of what comparable rentals in 49507 are achieving. That combination — suppressed price, market-rate rent — is the mechanical engine behind a 38.1% CoC in a city where the average deal produces negative cash flow.

Figures exclude depreciation tax benefits, which vary by individual tax situation.

The investment case is straightforward on paper: buy cheap, rent at market, collect the spread. The execution risk is the rehab.

Annual return outlook

The projected 49.2% total five-year ROI breaks into three components, with cash flow doing most of the work.

Cash flow contributes 38.1 percentage points of the 49.2% total return — the dominant driver by a wide margin. Mortgage paydown adds 6.9 points as principal reduces over the hold period. Appreciation contributes an estimated 4.2% annually, though that figure is a modeled estimate rather than a market-data-confirmed rate, so it warrants softer weighting in underwriting.

The structure of this return is unusual. Most residential investment returns lean on appreciation as the primary value creator, especially in markets where cash flow is thin. Here, the inverse is true: even if appreciation comes in below the estimate, the cash-flow component alone produces a return that clears the city's top-10 leaderboard threshold of 22.67%. This property ranks above that threshold, which means it's competing at the top of what Grand Rapids produces for cash-flow investors.

The honest caveat is that the five-year projection assumes stabilized occupancy at the estimated rent level — which requires completing the rehab first. Pre-renovation, this property generates zero income. The clock on that 38.1% CoC doesn't start until the property is rent-ready, and renovation timelines and costs directly compress the realized return.

How it compares to nearby for-sale listings

Five active listings in ZIP 49507 provide a price context that makes the $124,900 ask look like a significant outlier — in both directions.

The for-sale comp median in 49507 sits at $275,000. At $124,900, this property is priced 54.6% below that median. Even the lowest-priced comp — a 3-bed, 2-bath at 1,464 square feet listed at $175,000 — is 40% higher and in better condition by implication (it's not flagged as a gut rehab).

On a price-per-square-foot basis, this property asks roughly $130/sqft. The $175,000 comp at 1,464 sqft runs about $120/sqft, while the $249,900 comp at 984 sqft — nearly identical square footage — asks $254/sqft. The gap between this property and that near-identical-size comp is almost entirely explained by condition. A successful rehab that brings the property to market standard could close a meaningful portion of that gap.

Days on market tell the same story from a different angle. Every comp in the zip went under contract in four days or fewer. This property has been listed 64 days. The market isn't ignoring it — buyers are pricing in the rehabilitation risk and walking. That's the discount mechanism at work, and it's what makes the cash-flow math function.

Rental demand in this zip

Eleven comparable rentals in ZIP 49507 with three bedrooms provide a solid sample for evaluating the rent projection on this property.

11 comparable rentals in ZIP 49507 — median $1,895/mo, range $1,500–$3,100/mo

The estimated monthly rent of $1,716 sits below the rental comp median of $1,895 — a $179 gap, or about 9.4% below mid-market. That's a conservative starting point for underwriting, not an aggressive one. The comp range runs from $1,500 on the low end to $3,100 at the top, with the upper range likely reflecting larger or upgraded units.

Projecting $1,716 against a median of $1,895 means the cash-flow model doesn't require above-average rents to work. If a renovated property achieves median rents — a reasonable expectation for a fully remodeled unit — cash flow improves further. The current projection essentially stress-tests at below-median rent, which adds a margin of safety to the income side of the ledger.

The rental comp count of 11 is sufficient to have reasonable confidence in the range. A single outlier doesn't skew the median materially at that sample size. Demand for three-bedroom rentals in 49507 appears active enough to support the projection, though actual lease-up time post-renovation will depend on the quality of the finish and local vacancy conditions at the time of listing.

Who this property suits + risks to weigh

This property is built for an experienced rehabber with capital reserves and a reliable contractor network — not a first-time landlord or turnkey buyer.

Best fit

The investor profile here is someone who can absorb the full cost of a gut renovation without it derailing the deal economics. The returns are real, but they're contingent on executing a complete remodel — including a bathroom that currently has no floor — before a single dollar of rent arrives. Experienced fix-and-hold operators who can manage renovation scope and timeline will find the underlying metrics genuinely compelling. The 38.1% CoC and 16.1% cap rate are not manufactured by aggressive rent assumptions; they're produced by a suppressed purchase price against conservative rent projections.

A cash buyer or an investor with construction financing eliminates the carrying-cost drag during renovation. At $124,900, the capital commitment is low relative to most markets, which also limits downside if the project runs over budget.

Risks to weigh

Condition is the primary risk. "Full remodel" and "bathroom has no floor" are not minor disclosures. Renovation costs in this range can easily reach $40,000 to $80,000 or more depending on what's found once walls open — costs that directly compress the effective purchase price and return metrics. Investors should conduct a thorough inspection before closing and build a contingency into the budget.

The 64-day market time suggests other buyers have already run the numbers and passed. That's worth understanding, not dismissing. The tax-assessed value of $114,000 against a $124,900 ask leaves little room to negotiate purely on price; the leverage point is condition, not market pricing.

Appreciation is modeled at an estimated 4.2% annually, which adds to the long-term thesis but shouldn't anchor the underwriting given its estimated nature.