Red Oak II Plan

New Fairview, TX 76078

$276,999D

3 bd · 2.0 ba · 1,440 sqft · Built — · SingleFamily · Active · 593 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,027/mo
• Mortgage (P&I): −$1,397
• Tax + insurance: −$444
• HOA: −$0
• Vac / Maint / Mgmt: −$426
• Net cashflow: $-239/mo
• Annual: $-2,870/yr
• Cap rate: 5.22%
• Cash-on-cash: -3.85%
• DSCR: 0.83
• 1% rule: 0.76%
• Cash to close: $74,585

Investor read

• This is a 3-bed/2.0-bath single-family listed at $277k.
• At list price, monthly cash flow is $-239 ($-3k/yr) — negative.
• To cash-flow at today's rent, offer at most $232k (16.3% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $203k (26.8% below list).
• It's been on market 593 days — a 12% lower offer ($244k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $203k (26.8% below list) — sets the bar for 1% rule.
• In year one you build about $28k of equity ($2k loan paydown + $27k appreciation (10.0% local appreciation)).
• Location reads 62/100 on livability (#901 in TX) — a middle-class / working-renter tenant base. Strengths: employment A+, cost of living A+, housing A+; Watch: schools F, amenities F, commute F.
• Northwest ISD (rural): math 48% / reading 52% proficiency, ranked #120 of 826 in TX (top 14%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: 262 active listings in the ZIP; 14 comparable units currently listed for rent nearby; rentals at typical pace (median 20d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 10,531 units permitted in Denton County in 2024 (2,713 in 5+ unit buildings).
• Denton County population projected at +66% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• By year 2, paydown + projected appreciation supports a ~$46k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: major wind risk; severe wildfire risk; extreme-heat days projected 7→22/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.2% vs local median 2.5% in New Fairview — 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 593 days. Have you received any prior offers? Is the seller open to a 27% concession, seller financing, or rate buy-down credit?
• 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 F-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.