420 E Denton St

Howe, TX 75459

$33,000B

1 bd · None ba · 900 sqft · Built 1962 · SingleFamily · Pending · 8 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,145/mo
• Mortgage (P&I): −$173
• Tax + insurance: −$145
• HOA: −$0
• Vac / Maint / Mgmt: −$240
• Net cashflow: $586/mo
• Annual: $7,036/yr
• Cap rate: 27.61%
• Cash-on-cash: 76.14%
• DSCR: 4.39
• 1% rule: 3.47%
• Cash to close: $9,240

Investor read

• This is a 1-bed/?-bath single-family listed at $33k.
• At list price, monthly cash flow is $586 ($7k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $33k).
• Only 8 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $228 of loan paydown is wiped out by about $990 of value loss. Plan a longer hold.
• Location reads 70/100 on livability (#368 in TX) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F, health & safety F.
• Howe ISD (rural): math 47% / reading 51% proficiency, ranked #180 of 826 in TX (top 22%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Summit Hill El (358 students, 69% FRL); Howe Middle (math 40% / reading 45%, grade D-, #553 of 1,662 statewide, top 34%, 292 students, 49% FRL); Howe H S (math 52% / reading 62%, grade C, #333 of 1,632 statewide, top 22%, 352 students, 41% FRL).
• Watch-outs: property tax is 4.8% of price.
• Market conditions: 143 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 2,272 units permitted in Grayson County in 2024 (750 in 5+ unit buildings).
• Grayson County population projected at +12% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 2 sale attempts since 16y 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.
• Current owner paid $16k; list at $33k implies a 100% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $9k cash investment doubles in ~2 years — after that, you're playing with house money.
• Climate carrying-cost: moderate wind risk, 26% chance of damaging wind over 30y; major wildfire risk; extreme-heat days projected 6→17/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 27.6% vs local median 4.5% in Howe — 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

• Built in 1962 — 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?
• 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?
• 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.