18306 Water Mill Dr

Houston, TX 77429

$266,000D

4 bd · 2.5 ba · 2,035 sqft · Built 1997 · SingleFamily · Pending · 76 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,377/mo
• Mortgage (P&I): −$1,395
• Tax + insurance: −$658
• HOA: −$64
• Vac / Maint / Mgmt: −$499
• Net cashflow: $-239/mo
• Annual: $-2,864/yr
• Cap rate: 5.22%
• Cash-on-cash: -3.85%
• DSCR: 0.83
• 1% rule: 0.89%
• Cash to close: $74,480

Investor read

• This is a 4-bed/2.5-bath single-family listed at $266k.
• At list price, monthly cash flow is $-239 ($-3k/yr) — negative.
• To cash-flow at today's rent, offer at most $224k (15.9% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $238k (10.6% below list).
• It's been on market 76 days — a 6% lower offer ($250k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $224k (15.9% below list) — sets the bar for cash-flow.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $8k of value loss. Plan a longer hold.
• 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: crime F.
• Cypress-Fairbanks ISD (suburban): math 45% / reading 52% proficiency, ranked #161 of 826 in TX (top 20%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Robison El (math 52% / reading 56%, grade C, #664 of 4,322 statewide, top 16%, 916 students, 41% FRL); Spillane Middle (math 74% / reading 71%, grade A, #49 of 1,662 statewide, top 3%, 1,546 students, 29% FRL); Cypress-Fairbanks J J A E P (12 students, 0% FRL) — zoned schools average 23% FRL vs 43% district-wide (20 pts lower); this property's tenant base skews higher-income than the district average.
• Zoned-school proficiency averages 63% at this address vs 48% district-wide (+15 pts) — the actual schools serving this property are materially stronger than the Cypress-Fairbanks ISD average implies; a family-tenant draw the district grade alone would hide.
• Market conditions: Rents soft (-1.2%/yr); 618 active listings in the ZIP; 8 comparable units currently listed for rent nearby; rentals at typical pace (median 24d on market — plan ~3-4 weeks tenant-placement turnaround); high-income renter base; 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.
• 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 5.2% vs local median 3.1% 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.

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 76 days. Have you received any prior offers? Is the seller open to a 16% 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?
• 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?
• 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?