40339 Bay Warbler Way

Magnolia, TX 77354

$227,900C

3 bd · 2.0 ba · 1,474 sqft · Built 2022 · SingleFamily · Active · 31 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,121/mo
• Mortgage (P&I): −$1,195
• Tax + insurance: −$505
• HOA: −$154
• Vac / Maint / Mgmt: −$445
• Net cashflow: $-178/mo
• Annual: $-2,139/yr
• Cap rate: 5.35%
• Cash-on-cash: -3.35%
• DSCR: 0.85
• 1% rule: 0.93%
• Cash to close: $63,812

Investor read

• This is a 3-bed/2.0-bath single-family listed at $228k. Condition is rated good.
• At list price, monthly cash flow is $-178 ($-2k/yr) — negative.
• To cash-flow at today's rent, offer at most $196k (13.8% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $212k (6.9% below list).
• It's been on market 31 days — a 3% lower offer ($221k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $196k (13.8% below list) — sets the bar for cash-flow.
• In year one you build about $24k of equity ($2k loan paydown + $23k 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: 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.
• Zoned schools: Magnolia Parkway El (math 38% / reading 46%, grade F, #1,335 of 4,322 statewide, top 33%, 776 students, 45% FRL); Bear Branch J H (math 44% / reading 46%, grade D, #479 of 1,662 statewide, top 29%, 1,076 students, 37% FRL); Magnolia H S (math 47% / reading 62%, grade C-, #379 of 1,632 statewide, top 26%, 2,248 students, 31% FRL) — zoned schools at 37% FRL track the district average.
• Market conditions: Rents flat; 2167 active listings in the ZIP; 11 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 73% of comp listings sitting > 30 days — soft ceiling on asking rent; 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.
• 8 sale attempts since 4y ago; this cycle's ask has dropped $22k (9%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• By year 2, paydown + projected appreciation supports a ~$39k 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; extreme-heat days projected 7→23/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.4% vs local median 3.6% in Magnolia — 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

• 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 31 days. Have you received any prior offers? Is the seller open to a 14% concession, seller financing, or rate buy-down credit?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• 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?
• 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.