4725 Avenue R 1/2

Galveston, TX 77551

$350,000B-

15 bd · 3.0 ba · 1,932 sqft · Built 1955 · MultiFamily · Active · 349 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $5,375/mo
• Mortgage (P&I): −$1,835
• Tax + insurance: −$801
• HOA: −$0
• Vac / Maint / Mgmt: −$1,129
• Net cashflow: $1,610/mo
• Annual: $19,314/yr
• Cap rate: 12.04%
• Cash-on-cash: 20.52%
• DSCR: 1.91
• 1% rule: 1.54%
• Cash to close: $98,000

Investor read

• This is a 3 × 5-bed/?-bath units multifamily listed at $350k.
• At list price, monthly cash flow is $2k ($19k/yr) — positive. Per door: $537/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $350k).
• It's been on market 349 days — a 12% lower offer ($308k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $308k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $10k 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: flood insurance adds $66/mo; built in 1955 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+4.3%/yr); 380 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.
• 10 sale attempts since 22y ago; this cycle's ask has dropped $25k (7%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (-3.0% appreciation + 4.3% rent growth), your $98k cash investment doubles in ~6 years — after that, you're playing with house money.
• Climate carrying-cost: severe flood risk; severe wind risk, 99% chance of damaging wind over 30y; extreme-heat days projected 7→25/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 12.0% 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 $5,375/mo this rent would consume 111% of the median local household income ($58k/yr) (locally 1626% 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 349 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1955 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• 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?