1059 Sherman St SE, Grand Rapids, MI 49506 — 23.3% Cash-on-Cash

About this property

1059 Sherman St SE is a 3-bedroom, 1-bath single-family property in Grand Rapids, MI 49506, currently tenant-occupied and listed as-is at $153,000.

The property sits on a 5,227-square-foot lot with 820 square feet of living space — compact, but functional for a rental. It has off-street parking and a basement, two features that meaningfully expand tenant appeal in a Midwest market where winter practicality matters. The seller is offering no repairs, which is a direct signal to underwrite renovation costs before closing.

The listing has been on the market 88 days — longer than any of the five for-sale comps in the zip, which range from 1 to 22 days. That extended DOM isn't necessarily a red flag given the as-is condition and tenant-occupied status, both of which narrow the buyer pool to investors. The tax-assessed value sits at $123,400 against a $153,000 ask, a gap worth noting when evaluating negotiating room. The property is non-owner-occupied with no pre-foreclosure or auction flag on record.

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

The investment case

Rent covering 1.5 times the total monthly payment is the defining financial characteristic here — a margin that's genuinely unusual when Grand Rapids' city average cash-on-cash sits at negative 4.4%.

List Price

$153,000

Monthly Payment (PITI+HOA)

$1,153

Principal & Interest

$825

Property Tax

$277

Insurance

$51

HOA

$0

PMI

$0

Est. Monthly Rent

$1,748

Estimated rent based on automated valuation of comparable listings.

Cash-on-Cash Return

23.3%

Cap Rate

13.3%

Monthly Cash Flow

$595

Gross Rent Multiplier

7.3

DSCR

2.1

The numbers: at a $153,000 purchase price with estimated monthly rent of $1,748, total monthly carrying costs run $1,153 — principal and interest at $825, property tax at $277, and insurance at $51. That leaves $595 in monthly cash flow before maintenance reserves. The cash-on-cash return is 23.3%, the cap rate is 13.3%, and the debt service coverage ratio is 2.1, meaning the property generates more than double what's needed to service the debt.

To put the 23.3% CoC in context: the city average for Grand Rapids is negative 4.4%. The weakest deal in the city's top-10 leaderboard posts a 22.67% CoC return — this property clears that bar. Grand Rapids doesn't produce many deals at this return level; this one qualifies among the strongest available locally.

The gross rent multiplier of 7.3 reflects a low entry price relative to annual rent — at the city's median listing price of $369,000, that ratio would look very different. Net operating income comes in at $1,697 per month. These metrics hold under the current 6.55% 30-year fixed rate, which is already baked into the payment breakdown above.

The investment case here is straightforward cash flow, not a value-add story that depends on rent growth or a future refinance.

Annual return outlook

The projected 5-year total ROI of 33.7% draws from three sources, with cash flow doing the heaviest lifting.

Breaking down the 33.7% total ROI: cash flow contributes 23.3%, mortgage paydown adds 6.2%, and appreciation accounts for an estimated 4.2% annually. Cash flow is the engine — it contributes more than two-thirds of the total return projection, which is the inverse of how most Grand Rapids deals are structured, where appreciation is often the primary thesis.

The 4.2% annual appreciation figure is an estimate, not a scraped market data point, so treat it as a reasonable directional assumption rather than a hard forecast. Even if appreciation comes in flat, the cash flow and paydown components alone produce a meaningful return on the down payment.

Mortgage paydown at 6.2% reflects the equity accumulation over five years at the current rate and price point — modest in absolute dollars but real, and it compounds alongside cash flow. The combination of all three components at these levels is what pushes the total ROI above what most single-family rentals in this market can produce.

How it compares to nearby for-sale listings

Five active 3-bedroom listings in ZIP 49506 provide a clear price context for this property — and the gap is substantial.

The for-sale comp median in this zip is $349,900, more than twice this property's $153,000 ask. The closest comp by price is a 3-bed/2-bath at $190,000 with 1,569 square feet — nearly double the living area at a 24% price premium. On a price-per-square-foot basis, this property's $186/sqft ask sits well below the comp range, which starts around $121/sqft for the $190K listing and runs higher from there.

The other four comps range from $324,900 to $455,000 — properties that are larger, carry two bathrooms, and have been on the market between 1 and 22 days. None of them are positioned as investor plays; they're priced for owner-occupant buyers. This property's 88-day DOM reflects a different buyer pool entirely, not a market signal about demand in the zip.

The price discount relative to comps is the structural reason the investment metrics work. A buyer paying $349,900 for a comparable 3-bedroom in this zip would face a fundamentally different cash flow equation at the same rental rate.

Rental demand in this zip

Seven comparable 3-bedroom rentals in ZIP 49506 show a median rent of $2,195 per month — 26% above this property's $1,748 estimated rent.

7 comparable rentals in ZIP 49506 — median $2,195/mo, range $2,000–$3,600/mo

The rental comp range runs from $2,000 to $3,600 per month across seven active listings in the same zip. This property's estimated rent of $1,748 sits below the floor of that comp range, which is a conservative posture. If the property can achieve even the minimum comp rent of $2,000 — a $252 monthly improvement — cash flow would increase to roughly $847 per month and the CoC return would improve accordingly.

The gap between this property's rent estimate and the comp median likely reflects the smaller square footage (820 sq ft versus larger comp properties) and the as-is condition. A landlord willing to invest in cosmetic improvements post-acquisition could reasonably close some of that gap. Even at the current $1,748 estimate, the cash flow math is positive and the DSCR of 2.1 provides a meaningful buffer against vacancy or short-term rent softness.

Seven comps is a solid sample size for a single zip code. The range's breadth — $2,000 to $3,600 — suggests rental demand in 49506 supports multiple price points, and a well-maintained 3-bedroom here has room to grow into the comp median over time.

Who this property suits + risks to weigh

This property fits a cash-flow-focused investor comfortable with an as-is acquisition and an inherited tenant — not a first-time buyer or a value-add flipper.

Best fit

The ideal buyer here is an investor who wants immediate cash flow without a renovation project. The tenant is already in place, the rent covers 1.5 times the monthly payment on day one, and the CoC return of 23.3% doesn't require any operational improvements to materialize. Investors who run lean portfolios and prefer stabilized assets over repositioning plays will find the math clean. The $153,000 entry price also keeps the down payment manageable, which matters for buyers deploying capital across multiple properties.

Risks to weigh

The as-is condition and no-repair seller stance mean any deferred maintenance becomes the buyer's problem immediately. The basement and the property's age warrant a thorough inspection — costs that should be underwritten before closing, not discovered after. The single bathroom limits tenant appeal at the upper end of the rental range; achieving comp-median rents of $2,195 would likely require at least cosmetic upgrades and possibly a bathroom addition over time.

The 88-day DOM deserves scrutiny. While the tenant-occupied, as-is status explains much of it, buyers should ask whether there have been any inspection-related deal failures. The tax-assessed value of $123,400 against a $153,000 ask also leaves room to negotiate, particularly if an inspection surfaces material issues. At a 1.78% effective property tax rate, carrying costs on this property are already meaningful — any upward reassessment post-sale would compress the cash flow margin.