2002 Montgomery St SW

Decatur, AL 35601

$55,000B-

3 bd · 1.5 ba · 1,624 sqft · Built 1974 · SingleFamily · Pending · 5 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,395/mo
• Mortgage (P&I): −$288
• Tax + insurance: −$47
• HOA: −$0
• Vac / Maint / Mgmt: −$293
• Net cashflow: $767/mo
• Annual: $9,200/yr
• Cap rate: 23.02%
• Cash-on-cash: 59.74%
• DSCR: 3.66
• 1% rule: 2.54%
• Cash to close: $15,400

Investor read

• This is a 3-bed/1.5-bath single-family listed at $55k.
• At list price, monthly cash flow is $767 ($9k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $55k).
• Only 5 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $380 of loan paydown is wiped out by about $2k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#28 in AL) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: employment D+, crime F, amenities F.
• Decatur City (urban): math 22% / reading 40% proficiency, ranked #66 of 129 in AL (top 51%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Woodmeade Elementary School (math 17% / reading 37%, grade F, #392 of 627 statewide, top 65%, 354 students, 76% FRL); Austin Middle School (math 18% / reading 39%, grade F, #138 of 257 statewide, top 54%, 714 students, 77% FRL); Austin High School (math 20% / reading 24%, grade F, #142 of 305 statewide, top 51%, 1,025 students, 66% FRL) — zoned schools average 73% FRL vs 57% district-wide (16 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: Rents rising fast (+4.7%/yr); 225 active listings in the ZIP; 9 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 67% of comp listings sitting > 30 days — soft ceiling on asking rent; 231 units permitted in Morgan County in 2024 (0 in 5+ unit buildings).
• Morgan County population projected at -11% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• At projected returns (-3.0% appreciation + 4.7% rent growth), your $15k cash investment doubles in ~2 years — after that, you're playing with house money.
• Climate carrying-cost: moderate wind risk, 23% chance of damaging wind over 30y; extreme-heat days projected 7→18/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 23.0% vs local median 4.0% in Decatur — 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 33% of the median local income ($51k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• Built in 1974 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• 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.
• 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.