508 Gathings Ave

Covington, TX 76636

$175,000D

2 bd · 1.0 ba · 924 sqft · Built 1979 · SingleFamily · Active · 238 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,350/mo
• Mortgage (P&I): −$918
• Tax + insurance: −$269
• HOA: −$0
• Vac / Maint / Mgmt: −$284
• Net cashflow: $-121/mo
• Annual: $-1,448/yr
• Cap rate: 5.47%
• Cash-on-cash: -2.95%
• DSCR: 0.87
• 1% rule: 0.77%
• Cash to close: $49,000

Investor read

• This is a 2-bed/1.0-bath single-family listed at $175k.
• At list price, monthly cash flow is $-121 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $154k (12.2% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $135k (22.9% below list).
• It's been on market 238 days — a 12% lower offer ($154k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $135k (22.9% below list) — sets the bar for 1% rule.
• In year one you build about $6k of equity ($1k loan paydown + $4k appreciation (2.5% local appreciation)).
• Location reads 61/100 on livability (#991 in TX) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing B+; Watch: health & safety D+, schools D, crime F.
• Covington ISD (rural): math 45% / reading 35% proficiency, ranked #698 of 1,141 in TX (top 61%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: 47 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 65 units permitted in Hill County in 2024 (0 in 5+ unit buildings).
• Hill County population projected at -12% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 3 sale attempts since 7y ago; this cycle's ask has dropped $10k (5%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• By year 7, paydown + projected appreciation supports a ~$35k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: major wind risk, 27% chance of damaging wind over 30y; major wildfire risk; extreme-heat days projected 7→22/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.

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 238 days. Have you received any prior offers? Is the seller open to a 23% concession, seller financing, or rate buy-down credit?
• Built in 1979 — 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.
• 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?
• 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?