2806 Avenue L

Galveston, TX 77550

$199,000B+

2 bd · 1.0 ba · 660 sqft · Built 1953 · MultiFamily · Active · 203 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $5,339/mo
• Mortgage (P&I): −$1,044
• Tax + insurance: −$1,220
• HOA: −$0
• Vac / Maint / Mgmt: −$1,121
• Net cashflow: $1,954/mo
• Annual: $23,445/yr
• Cap rate: 20.65%
• Cash-on-cash: 51.26%
• DSCR: 3.28
• 1% rule: 2.68%
• Cash to close: $55,720

Investor read

• This is a 2-bed/1.0-bath multifamily listed at $199k. Condition is rated poor.
• At list price, monthly cash flow is $2k ($23k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $199k).
• It's been on market 203 days — a 12% lower offer ($175k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $175k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $6k 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.
• Zoned schools: Oppe El (math 67% / reading 60%, grade B, #291 of 4,322 statewide, top 7%, 610 students, 63% FRL); Central Middle (math 18% / reading 21%, grade F, #1,445 of 1,662 statewide, top 88%, 879 students, 80% FRL); Ball H S (math 17% / reading 44%, grade F, #1,085 of 1,632 statewide, top 67%, 1,934 students, 73% FRL) — zoned schools at 72% FRL track the district average.
• Watch-outs: property tax is 4.3% of price; flood insurance adds $427/mo; built in 1953 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents soft (-1.1%/yr); 818 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals lingering (median 89d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 85% of comp listings sitting > 30 days — soft ceiling on asking rent; 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.
• 3 sale attempts since 2y ago; this cycle's ask is 69725% above the opening price — seller raised mid-cycle; expect resistance to lowballs.
• At projected returns (-3.0% appreciation + 0.0% rent growth), your $56k cash investment doubles in ~3 years — after that, you're playing with house money.
• Climate carrying-cost: in FEMA flood zone AE (mandatory federal flood insurance); severe wind risk, 99% chance of damaging wind over 30y; extreme-heat days projected 7→27/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 20.6% vs local median 0.4% 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 $5,339/mo this rent would consume 142% of the median local household income ($45k/yr) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 203 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• Built in 1953 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Property tax is high relative to price — has the assessment been appealed recently, and will the sale trigger a re-assessment?
• 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?

Repairs flagged (vision-AI assessment)

• Major: Kitchen cabinets — Severe wear and tear, likely unsafe and in need of replacement.
• Major: Bathroom fixtures — Signs of mold and mildew, likely in need of replacement.
• Major: Roof — Rusty and weathered, indicating potential water damage and structural issues.
• Major: Exterior siding — Peeling paint and damaged siding, in need of repair or replacement.
• Major: Flooring — Worn and damaged, in need of replacement.
• Major: Interior walls — Paint peeling and possibly water damage, in need of repair.