2131 Hermanson Dr

Waco, TX 76710

$162,500C

3 bd · 2.0 ba · 1,606 sqft · Built 1957 · SingleFamily · Pending · 97 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,869/mo
• Mortgage (P&I): −$852
• Tax + insurance: −$463
• HOA: −$0
• Vac / Maint / Mgmt: −$393
• Net cashflow: $162/mo
• Annual: $1,945/yr
• Cap rate: 7.49%
• Cash-on-cash: 4.28%
• DSCR: 1.19
• 1% rule: 1.15%
• Cash to close: $45,500

Investor read

• This is a 3-bed/2.0-bath single-family listed at $162k.
• At list price, monthly cash flow is $162 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $162k).
• It's been on market 97 days — a 9% lower offer ($148k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $148k (9.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $5k of value loss. Plan a longer hold.
• Location reads 74/100 on livability (#166 in TX, #4,378 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime D, commute F, employment D-.
• Waco ISD (urban): math 20% / reading 24% proficiency, ranked #773 of 826 in TX (top 94%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 81% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Mountainview El (math 12% / reading 27%, grade F, #3,583 of 4,322 statewide, top 86%, 402 students, 78% FRL) — zoned schools at 78% FRL track the district average.
• Watch-outs: property tax is 2.9% of price; built in 1957 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+2.4%/yr); 186 active listings in the ZIP; 13 comparable units currently listed for rent nearby; rentals at typical pace (median 21d on market — plan ~3-4 weeks tenant-placement turnaround); 46% of comp listings sitting > 30 days — soft ceiling on asking rent; 1,014 units permitted in McLennan County in 2024 (200 in 5+ unit buildings).
• McLennan County population projected at +17% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 3 sale attempts since 4y ago; this cycle's ask has dropped $20k (11%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Climate carrying-cost: major wind risk, 57% 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 7.5% vs local median 3.9% in Waco — 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.
• This rent runs 39% of the median local income ($58k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• It's been on market 97 days. Have you received any prior offers? Is the seller open to a 9% concession, seller financing, or rate buy-down credit?
• Built in 1957 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Property tax is high relative to price — has the assessment been appealed recently, and will the sale trigger a re-assessment?
• 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 D 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.