316/318 Highland Estates Dr

Round Rock, TX 78664

$425,000D

4 bd · 2.0 ba · 2,212 sqft · Built 1984 · MultiFamily · Active · 101 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,197/mo
• Mortgage (P&I): −$2,229
• Tax + insurance: −$788
• HOA: −$0
• Vac / Maint / Mgmt: −$671
• Net cashflow: $-491/mo
• Annual: $-5,888/yr
• Cap rate: 4.91%
• Cash-on-cash: -4.95%
• DSCR: 0.78
• 1% rule: 0.75%
• Cash to close: $119,000

Investor read

• This is a 2 × 2-bed/2.0-bath units multifamily listed at $425k.
• At list price, monthly cash flow is $-491 ($-6k/yr) — negative. Per door: $-245/mo.
• To cash-flow at today's rent, offer at most $338k (20.4% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $320k (24.8% below list).
• It's been on market 101 days — a 9% lower offer ($387k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $320k (24.8% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $13k of value loss. Plan a longer hold.
• Location reads 79/100 on livability (#56 in TX, #2,184 nationally) — a middle-class / working-renter tenant base. Strengths: employment A+, housing A+, health & safety A+; Watch: amenities D-, commute F.
• Round Rock ISD (urban): math 51% / reading 59% proficiency, ranked #86 of 826 in TX (top 10%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: Rents soft (-1.5%/yr); 300 active listings in the ZIP; 32 comparable units currently listed for rent nearby; rentals at typical pace (median 18d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 7,543 units permitted in Williamson County in 2024 (1,425 in 5+ unit buildings).
• Williamson County population projected at +69% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Climate carrying-cost: severe wind risk, 80% chance of damaging wind over 30y; extreme-heat days projected 7→22/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 4.9% vs local median 2.7% in Round Rock — 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 44% of the median local income ($87k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• It's been on market 101 days. Have you received any prior offers? Is the seller open to a 25% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are B-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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?