2416 Russell St

Houston, TX 77026

$225,000C-

3 bd · 2.0 ba · 1,630 sqft · Built 1940 · SingleFamily · Active · 92 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,958/mo
• Mortgage (P&I): −$1,180
• Tax + insurance: −$366
• HOA: −$0
• Vac / Maint / Mgmt: −$411
• Net cashflow: $1/mo
• Annual: $15/yr
• Cap rate: 6.30%
• Cash-on-cash: 0.02%
• DSCR: 1.00
• 1% rule: 0.87%
• Cash to close: $63,000

Investor read

• This is a 3-bed/2.0-bath single-family listed at $225k.
• At list price, monthly cash flow is $1 ($15/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $196k (13.0% below list).
• It's been on market 92 days — a 9% lower offer ($205k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $196k (13.0% below list) — sets the bar for 1% rule.
• In year one you build about $10k of equity ($2k loan paydown + $9k appreciation (3.9% local appreciation)).
• Location reads 74/100 on livability (#184 in TX, #4,771 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, cost of living A+, housing A+; Watch: schools D, crime F.
• Houston ISD (urban): math 27% / reading 35% proficiency, ranked #593 of 826 in TX (top 72%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 71% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1940 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+3.1%/yr); 448 active listings in the ZIP; 25 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 64% of comp listings sitting > 30 days — soft ceiling on asking rent; lower-income renter base — watch delinquency; 29,883 units permitted in Harris County in 2024 (8,621 in 5+ unit buildings).
• Harris County population projected at +47% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 4y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• At projected returns (3.9% appreciation + 3.1% rent growth), your $63k cash investment doubles in ~6 years — after that, you're playing with house money.
• By year 4, paydown + projected appreciation supports a ~$35k 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 6.3% vs local median 3.2% in Houston — 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 $1,958/mo this rent would consume 60% of the median local household income ($39k/yr) (locally 1531% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 92 days. Have you received any prior offers? Is the seller open to a 13% concession, seller financing, or rate buy-down credit?
• Built in 1940 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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?
• Crime grade is F in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• 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.