Princeton Plan

Magnolia, TX 77354

$504,990F

4 bd · 3.0 ba · 3,000 sqft · Built — · SingleFamily · Active · 113 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,176/mo
• Mortgage (P&I): −$3,236
• Tax + insurance: −$1,028
• HOA: −$0
• Vac / Maint / Mgmt: −$457
• Net cashflow: $-2,545/mo
• Annual: $-30,544/yr
• Cap rate: 1.34%
• Cash-on-cash: -17.68%
• DSCR: 0.21
• 1% rule: 0.35%
• Cash to close: $172,783

Investor read

• This is a 4-bed/3.0-bath single-family listed at $505k.
• At list price, monthly cash flow is $-3k ($-31k/yr) — negative.
• To cash-flow at today's rent, offer at most $249k (50.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $218k (56.9% below list).
• It's been on market 113 days — a 9% lower offer ($460k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $218k (56.9% below list) — sets the bar for 1% rule.
• In year one you build about $66k of equity ($4k loan paydown + $62k appreciation (10.0% local appreciation)).
• Location reads 73/100 on livability (#222 in TX) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: schools D+, amenities F, commute F.
• Magnolia ISD (rural): math 42% / reading 45% proficiency, ranked #247 of 826 in TX (top 30%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: Rents flat; 1621 active listings in the ZIP; 1 comparable units currently listed for rent nearby; high-income renter base; 13,259 units permitted in Montgomery County in 2024 (1,402 in 5+ unit buildings).
• Montgomery County population projected at +65% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• By year 2, paydown + projected appreciation supports a ~$106k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: severe wind risk, 99% chance of damaging wind over 30y; moderate wildfire risk; extreme-heat days projected 7→24/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 1.3% vs local median 3.4% in Magnolia — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.

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 113 days. Have you received any prior offers? Is the seller open to a 57% concession, seller financing, or rate buy-down credit?
• 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 D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.