1502 39th St

Galveston, TX 77550

$1,175,000B

11 bd · None ba · 13,000 sqft · Built 1924 · MultiFamily · Active · 147 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $15,063/mo
• Mortgage (P&I): −$6,162
• Tax + insurance: −$1,958
• HOA: −$0
• Vac / Maint / Mgmt: −$3,163
• Net cashflow: $3,780/mo
• Annual: $45,355/yr
• Cap rate: 10.15%
• Cash-on-cash: 13.79%
• DSCR: 1.61
• 1% rule: 1.28%
• Cash to close: $329,000

Investor read

• This is a 11-bed/?-bath multifamily listed at $1.18M. Condition is rated good.
• At list price, monthly cash flow is $4k ($45k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($15k rent vs $1.18M).
• It's been on market 147 days — a 12% lower offer ($1.03M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $1.03M (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $8k of loan paydown is wiped out by about $35k of value loss. Plan a longer hold.
• Location reads 76/100 on livability (#108 in TX, #3,559 nationally) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A+, housing A+; Watch: amenities D+, employment D, crime F.
• Galveston ISD (town): math 33% / reading 39% proficiency, ranked #514 of 826 in TX (top 62%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 68% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1924 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents soft (-1.1%/yr); 622 active listings in the ZIP; 3,258 units permitted in Galveston County in 2024 (0 in 5+ unit buildings).
• Galveston County population projected at +43% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 6 sale attempts since 5y ago; this cycle's ask has dropped $75k (6%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Cap rate 10.2% vs local median 0.1% in Galveston — 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.
• At $15,063/mo this rent would consume 401% of the median local household income ($45k/yr) (locally 2193% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 147 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1924 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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.
• 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 apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.