2 Magnolia Dr Unit 1A

Water Mill, NY 11976

$2,595,000A-

4 bd · 4.5 ba · 2,591 sqft · Built 2023 · Townhouse · Pending · 91 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $52,093/mo
• Mortgage (P&I): −$12,514
• Tax + insurance: −$3,977
• HOA: −$0
• Vac / Maint / Mgmt: −$10,939
• Net cashflow: $24,662/mo
• Annual: $295,943/yr
• Cap rate: 18.69%
• Cash-on-cash: 44.29%
• DSCR: 2.97
• 1% rule: 2.18%
• Cash to close: $668,167

Investor read

• This is a 4-bed/4.5-bath townhouse listed at $2.60M.
• At list price, monthly cash flow is $25k ($296k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($52k rent vs $2.60M).
• It's been on market 91 days — a 9% lower offer ($2.36M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $2.36M (9.0% below list) — sets the bar for market timing.
• In year one you build about $222k of equity ($16k loan paydown + $206k appreciation (8.6% local appreciation)).
• Location reads 71/100 on livability (#410 in NY) — a middle-class / working-renter tenant base. Strengths: crime A+, employment A+, commute A-; Watch: amenities F, cost of living F, housing F.
• Southampton Union Free School District (suburban): math 53% / reading 51% proficiency, ranked #293 of 590 in NY (top 50%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Southampton High School (math 98%, 595 students, 48% FRL) — zoned schools average 48% FRL vs 30% district-wide (17 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: Rents rising fast (+30.1%/yr); 52 active listings in the ZIP; 1 comparable units currently listed for rent nearby; high-income renter base; 1,366 units permitted in Suffolk County in 2024 (216 in 5+ unit buildings).
• Suffolk County population projected to shrink 5% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• At projected returns (8.6% appreciation + 8.0% rent growth), your $668k cash investment doubles in ~2 years — after that, you're playing with house money.
• By year 2, paydown + projected appreciation supports a ~$357k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Cap rate 18.7% vs local median 10.6% in Water Mill — 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.
• At $52,093/mo this rent would consume 347% of the median local household income ($180k/yr) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 91 days. Have you received any prior offers? Is the seller open to a 9% 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.
• 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.