26 Farrell St

Houston, TX 77022

$948,000C-

10 bd · 10.0 ba · 6,826 sqft · Built 1964 · MultiFamily · Active · 196 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $10,815/mo
• Mortgage (P&I): −$4,971
• Tax + insurance: −$1,580
• HOA: −$0
• Vac / Maint / Mgmt: −$2,271
• Net cashflow: $1,992/mo
• Annual: $23,909/yr
• Cap rate: 8.82%
• Cash-on-cash: 9.01%
• DSCR: 1.40
• 1% rule: 1.14%
• Cash to close: $265,440

Investor read

• This is a 10 × 1-bed/1-bath units multifamily listed at $948k. Condition is rated good.
• At list price, monthly cash flow is $2k ($24k/yr) — positive. Per door: $199/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($11k rent vs $948k).
• It's been on market 196 days — a 12% lower offer ($834k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $834k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $7k of loan paydown is wiped out by about $28k of value loss. Plan a longer hold.
• Location reads 74/100 on livability (#184 in TX, #4,771 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, cost of living A+, housing A+; Watch: schools D, crime F.
• Houston ISD (urban): math 27% / reading 35% proficiency, ranked #593 of 826 in TX (top 72%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 71% free/reduced lunch — lower-income household profile, screen leases tightly.
• Market conditions: Rents rising fast (+4.5%/yr); 285 active listings in the ZIP; 29,883 units permitted in Harris County in 2024 (8,621 in 5+ unit buildings).
• Harris County population projected at +47% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 6y ago; this cycle's ask has dropped $202k (18%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (-3.0% appreciation + 4.5% rent growth), your $265k cash investment doubles in ~10 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→24/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.8% vs local median 3.1% in Houston — 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 $10,815/mo this rent would consume 246% of the median local household income ($53k/yr) (locally 1354% 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 196 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 1964 — 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?