3907 Garden St

Mercedes, TX 78570

$55,000B

2 bd · 1.0 ba · 1,110 sqft · Built 1997 · SingleFamily · Pending · 56 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,149/mo
• Mortgage (P&I): −$288
• Tax + insurance: −$216
• HOA: −$0
• Vac / Maint / Mgmt: −$241
• Net cashflow: $403/mo
• Annual: $4,836/yr
• Cap rate: 15.09%
• Cash-on-cash: 31.40%
• DSCR: 2.40
• 1% rule: 2.09%
• Cash to close: $15,400

Investor read

• This is a 2-bed/1.0-bath single-family listed at $55k.
• At list price, monthly cash flow is $403 ($5k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $55k).
• It's been on market 56 days — a 3% lower offer ($53k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $53k (3.0% below list) — sets the bar for market timing.
• In year one you build about $3k of equity ($380 loan paydown + $2k appreciation (4.5% local appreciation)).
• Location reads 67/100 on livability (#547 in TX) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime F, amenities F, commute F.
• Mercedes ISD (suburban): math 12% / reading 21% proficiency, ranked #811 of 826 in TX (top 98%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 80% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: John F Kennedy El (math 17% / reading 17%, grade F, #3,836 of 4,322 statewide, top 91%, 462 students, 96% FRL); Sgt William G Harrell Middle (math 6% / reading 18%, grade F, #1,623 of 1,662 statewide, top 98%, 451 students, 95% FRL); Mercedes H S (math 8% / reading 12%, grade F, #1,591 of 1,632 statewide, top 98%, 974 students, 91% FRL).
• Watch-outs: property tax is 4.2% of price.
• Market conditions: 392 active listings in the ZIP; 12 comparable units currently listed for rent nearby; rentals lingering (median 45d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; 7,378 units permitted in Hidalgo County in 2024 (641 in 5+ unit buildings).
• Hidalgo County population projected at +28% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• At projected returns (4.5% appreciation + 3.0% rent growth), your $15k cash investment doubles in ~2 years — after that, you're playing with house money.
• Climate carrying-cost: severe wind risk, 99% chance of damaging wind over 30y; extreme-heat days projected 7→23/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 15.1% vs local median 3.4% in Mercedes — 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

• It's been on market 56 days. Have you received any prior offers? Is the seller open to a 3% 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?
• 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.