39219 Water Rail Ct

Magnolia, TX 77354

$649,844D-

5 bd · 4.5 ba · 4,263 sqft · Built 2026 · SingleFamily · Active · 112 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,522/mo
• Mortgage (P&I): −$3,408
• Tax + insurance: −$1,150
• HOA: −$154
• Vac / Maint / Mgmt: −$530
• Net cashflow: $-2,719/mo
• Annual: $-32,630/yr
• Cap rate: 1.39%
• Cash-on-cash: -17.49%
• DSCR: 0.22
• 1% rule: 0.39%
• Cash to close: $181,956

Investor read

• This is a 5-bed/4.5-bath single-family listed at $650k.
• At list price, monthly cash flow is $-3k ($-33k/yr) — negative.
• To cash-flow at today's rent, offer at most $256k (60.5% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $252k (61.2% below list).
• It's been on market 112 days — a 9% lower offer ($591k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $252k (61.2% below list) — sets the bar for 1% rule.
• In year one you build about $69k of equity ($4k loan paydown + $65k appreciation (10.0% local appreciation)).
• Location reads 73/100 on livability (#222 in TX) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: schools D+, amenities F, commute F.
• Magnolia ISD (rural): math 42% / reading 45% proficiency, ranked #247 of 826 in TX (top 30%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: flood insurance adds $66/mo.
• Market conditions: Rents flat; 1604 active listings in the ZIP; high-income renter base; 13,259 units permitted in Montgomery County in 2024 (1,402 in 5+ unit buildings).
• Montgomery County population projected at +65% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• By year 2, paydown + projected appreciation supports a ~$112k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: severe flood risk; severe wind risk, 99% chance of damaging wind over 30y; extreme-heat days projected 7→21/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 1.4% vs local median 3.4% in Magnolia — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.

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 112 days. Have you received any prior offers? Is the seller open to a 61% concession, seller financing, or rate buy-down credit?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• 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?
• 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?