409 Lance Ln

Birmingham, AL 35206

$25,000D

3 bd · 2.0 ba · 1,404 sqft · Built 1966 · SingleFamily · Pending · 15 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,216/mo
• Mortgage (P&I): −$131
• Tax + insurance: −$42
• HOA: −$0
• Vac / Maint / Mgmt: −$255
• Net cashflow: $787/mo
• Annual: $9,450/yr
• Cap rate: 44.09%
• Cash-on-cash: 135.00%
• DSCR: 7.01
• 1% rule: 4.86%
• Cash to close: $7,000

Investor read

• This is a 3-bed/2.0-bath single-family listed at $25k.
• At list price, monthly cash flow is $787 ($9k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $25k).
• It's been on market 15 days — a 2% lower offer ($25k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $25k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $173 of loan paydown is wiped out by about $750 of value loss. Plan a longer hold.
• Location reads 67/100 on livability (#78 in AL) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A+, housing A+; Watch: amenities C-, crime F, employment F.
• Birmingham City (urban): math 4% / reading 20% proficiency, ranked #116 of 129 in AL (top 90%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 82% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Christian School (math 19% / reading 60%, grade F, #243 of 627 statewide, top 41%, 633 students, 62% FRL); Huffman High Schoolmagnet (math 2% / reading 2%, grade F, #291 of 305 statewide, top 100%, 1,147 students, 72% FRL) — zoned schools average 67% FRL vs 82% district-wide (16 pts lower); this property's tenant base skews higher-income than the district average.
• Market conditions: Rents rising (+1.8%/yr); 128 active listings in the ZIP; 29 comparable units currently listed for rent nearby; rentals lingering (median 44d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 55% of comp listings sitting > 30 days — soft ceiling on asking rent; lower-income renter base — watch delinquency; 2,114 units permitted in Jefferson County in 2024 (556 in 5+ unit buildings).
• Jefferson County population projected to shrink 4% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• 3 sale attempts since 14y ago; this cycle's ask has dropped $25k (50%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (-3.0% appreciation + 1.8% rent growth), your $7k cash investment doubles in ~1 year — after that, you're playing with house money.
• Climate carrying-cost: major wind risk, 27% chance of damaging wind over 30y; extreme-heat days projected 6→14/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 44.1% vs local median 6.2% in Birmingham — 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.
• This rent runs 34% of the median local income ($43k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• Built in 1966 — 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?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• 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.