42622 Rustico Rd

Magnolia, TX 77354

$399,990D

4 bd · 3.5 ba · 2,479 sqft · Built 2025 · Land · Pending · 63 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,288/mo
• Mortgage (P&I): −$2,098
• Tax + insurance: −$283
• HOA: −$75
• Vac / Maint / Mgmt: −$480
• Net cashflow: $-648/mo
• Annual: $-7,775/yr
• Cap rate: 4.35%
• Cash-on-cash: -6.94%
• DSCR: 0.69
• 1% rule: 0.57%
• Cash to close: $111,997

Investor read

• This is a 4-bed/3.5-bath land listed at $400k.
• At list price, monthly cash flow is $-648 ($-8k/yr) — negative.
• To cash-flow at today's rent, offer at most $286k (28.6% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $229k (42.8% below list).
• It's been on market 63 days — a 6% lower offer ($376k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $229k (42.8% below list) — sets the bar for 1% rule.
• In year one you build about $43k of equity ($3k loan paydown + $40k appreciation (10.0% local appreciation)).
• Location reads 73/100 on livability (#222 in TX) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: schools D+, amenities F, commute F.
• Magnolia ISD (rural): math 42% / reading 45% proficiency, ranked #247 of 826 in TX (top 30%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: Rents flat; 1621 active listings in the ZIP; high-income renter base; 13,259 units permitted in Montgomery County in 2024 (1,402 in 5+ unit buildings).
• Montgomery County population projected at +65% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 5 sale attempts 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.
• By year 2, paydown + projected appreciation supports a ~$69k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Cap rate 4.3% vs local median 3.4% in Magnolia — meaningfully above typical; check what's discounted (condition, days-on-market, listing class) to confirm the premium yield is real.

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 63 days. Have you received any prior offers? Is the seller open to a 43% 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?
• 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.