The Somerville (3L16) Plan

Conroe, TX 77316

$349,940F

4 bd · 3.0 ba · 2,523 sqft · Built — · SingleFamily · Active · 4 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,785/mo
• Mortgage (P&I): −$2,084
• Tax + insurance: −$662
• HOA: −$0
• Vac / Maint / Mgmt: −$585
• Net cashflow: $-547/mo
• Annual: $-6,559/yr
• Cap rate: 4.64%
• Cash-on-cash: -5.89%
• DSCR: 0.74
• 1% rule: 0.70%
• Cash to close: $111,279

Investor read

• This is a 4-bed/3.0-bath single-family listed at $350k.
• At list price, monthly cash flow is $-547 ($-7k/yr) — negative.
• To cash-flow at today's rent, offer at most $318k (9.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $278k (20.4% below list).
• Only 4 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $278k (20.4% 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 $12k of value loss. Plan a longer hold.
• Location reads 74/100 on livability (#169 in TX, #4,447 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, amenities B; Watch: schools D+, commute F, health & safety F.
• Montgomery ISD (rural): math 63% / reading 57% proficiency, ranked #49 of 826 in TX (top 6%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: Rents flat; 2300 active listings in the ZIP; 4 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 75% 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.
• Cap rate 4.6% vs local median 3.1% in Conroe — 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?
• 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.
• 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.