503-507 Pearl St

Denton, TX 76201

$395,000C

9 bd · 3.0 ba · 2,392 sqft · Built 1949 · MultiFamily · Active · 129 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,505/mo
• Mortgage (P&I): −$2,071
• Tax + insurance: −$658
• HOA: −$0
• Vac / Maint / Mgmt: −$946
• Net cashflow: $829/mo
• Annual: $9,950/yr
• Cap rate: 8.81%
• Cash-on-cash: 9.00%
• DSCR: 1.40
• 1% rule: 1.14%
• Cash to close: $110,600

Investor read

• This is a 3 × 3-bed/1-bath units multifamily listed at $395k.
• At list price, monthly cash flow is $829 ($10k/yr) — positive. Per door: $276/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $395k).
• It's been on market 129 days — a 12% lower offer ($348k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $348k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $12k of value loss. Plan a longer hold.
• Location reads 88/100 on livability (#2 in TX, #210 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, housing A+.
• Denton ISD (urban): math 36% / reading 43% proficiency, ranked #383 of 826 in TX (top 46%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1949 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents flat; 71 active listings in the ZIP; lower-income renter base — watch delinquency; 10,531 units permitted in Denton County in 2024 (2,713 in 5+ unit buildings).
• Denton County population projected at +66% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Climate carrying-cost: extreme-heat days projected 7→22/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.8% vs local median 3.4% in Denton — 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 $4,505/mo this rent would consume 135% of the median local household income ($40k/yr) (locally 3598% 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 129 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 1949 — 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 B-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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.