1125 E Palestine St

Mexia, TX 76667

$120,000C

3 bd · 1.0 ba · 2,114 sqft · Built 1920 · SingleFamily · Pending · 27 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,331/mo
• Mortgage (P&I): −$629
• Tax + insurance: −$314
• HOA: −$0
• Vac / Maint / Mgmt: −$280
• Net cashflow: $109/mo
• Annual: $1,304/yr
• Cap rate: 7.38%
• Cash-on-cash: 3.88%
• DSCR: 1.17
• 1% rule: 1.11%
• Cash to close: $33,600

Investor read

• This is a 3-bed/1.0-bath single-family listed at $120k.
• At list price, monthly cash flow is $109 ($1k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $120k).
• It's been on market 27 days — a 2% lower offer ($118k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $118k (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $830 of loan paydown is wiped out by about $4k of value loss. Plan a longer hold.
• Location reads 68/100 on livability (#458 in TX) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety B+; Watch: crime C-, schools F, amenities F.
• Mexia ISD (town): math 22% / reading 32% proficiency, ranked #696 of 826 in TX (top 84%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 69% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: property tax is 2.6% of price; built in 1920 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 129 active listings in the ZIP; 17 units permitted in Limestone County in 2024 (0 in 5+ unit buildings).
• Limestone County population projected to shrink 4% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• Climate carrying-cost: major wind risk, 69% chance of damaging wind over 30y; major wildfire risk; extreme-heat days projected 7→25/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 7.4% vs local median 3.6% in Mexia — 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

• Built in 1920 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Property tax is high relative to price — has the assessment been appealed recently, and will the sale trigger a re-assessment?
• 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?
• 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.