40227 S Hill Pass

Magnolia, TX 77354

$415,000D-

4 bd · 3.0 ba · 3,385 sqft · Built 2019 · SingleFamily · Active · 45 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,192/mo
• Mortgage (P&I): −$2,176
• Tax + insurance: −$1,138
• HOA: −$0
• Vac / Maint / Mgmt: −$460
• Net cashflow: $-1,582/mo
• Annual: $-18,987/yr
• Cap rate: 1.72%
• Cash-on-cash: -16.34%
• DSCR: 0.27
• 1% rule: 0.53%
• Cash to close: $116,200

Investor read

• This is a 4-bed/3.0-bath single-family listed at $415k.
• At list price, monthly cash flow is $-2k ($-19k/yr) — negative.
• To cash-flow at today's rent, offer at most $232k (44.2% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $219k (47.2% below list).
• It's been on market 45 days — a 3% lower offer ($403k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $219k (47.2% below list) — sets the bar for 1% rule.
• In year one you build about $44k of equity ($3k loan paydown + $42k 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: 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.
• Zoned schools: Magnolia Parkway El (math 38% / reading 46%, grade F, #1,335 of 4,322 statewide, top 33%, 776 students, 45% FRL); Bear Branch J H (math 44% / reading 46%, grade D, #479 of 1,662 statewide, top 29%, 1,076 students, 37% FRL); Magnolia H S (math 47% / reading 62%, grade C-, #379 of 1,632 statewide, top 26%, 2,248 students, 31% FRL) — zoned schools at 37% FRL track the district average.
• Watch-outs: property tax is 2.8% of price.
• Market conditions: Rents flat; 1622 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 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.
• 2 sale attempts since 3y 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.
• By year 2, paydown + projected appreciation supports a ~$71k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: severe wind risk, 99% chance of damaging wind over 30y; moderate wildfire risk; extreme-heat days projected 7→25/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 1.7% vs local median 3.4% in Magnolia — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.

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 45 days. Have you received any prior offers? Is the seller open to a 47% concession, seller financing, or rate buy-down credit?
• 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?
• 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.