1240 W Michigan Ave

Southern Pines, NC 28387

$234,900D+

3 bd · 1.0 ba · 910 sqft · Built 1979 · SingleFamily · Active · 63 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,204/mo
• Mortgage (P&I): −$1,232
• Tax + insurance: −$149
• HOA: −$0
• Vac / Maint / Mgmt: −$463
• Net cashflow: $360/mo
• Annual: $4,321/yr
• Cap rate: 8.13%
• Cash-on-cash: 6.57%
• DSCR: 1.29
• 1% rule: 0.94%
• Cash to close: $65,772

Investor read

• This is a 3-bed/1.0-bath single-family listed at $235k.
• At list price, monthly cash flow is $360 ($4k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $220k (6.2% below list).
• It's been on market 63 days — a 6% lower offer ($221k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $220k (6.2% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $7k of value loss. Plan a longer hold.
• Location reads 65/100 on livability (#327 in NC) — a middle-class / working-renter tenant base. Strengths: housing A; Watch: health & safety C-, crime D+, amenities F.
• Moore County Schools (rural): math 48% / reading 54% proficiency, ranked #58 of 178 in NC (top 33%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Southern Pines Elementary (math 41% / reading 48%, grade F, #574 of 1,410 statewide, top 43%, 612 students, 53% FRL); Crain'S Creek Middle (math 37% / reading 47%, grade D-, #199 of 475 statewide, top 43%, 592 students, 51% FRL); Pinecrest High (math 66% / reading 72%, grade B, #131 of 535 statewide, top 25%, 2,221 students, 34% FRL).
• Market conditions: Rents soft (-0.8%/yr); 210 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals at typical pace (median 23d on market — plan ~3-4 weeks tenant-placement turnaround); 941 units permitted in Moore County in 2024 (0 in 5+ unit buildings).
• Moore County population projected at +29% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Climate carrying-cost: major wind risk, 64% chance of damaging wind over 30y; extreme-heat days projected 7→16/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.1% vs local median 2.1% in Southern Pines — 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.
• This rent runs 35% of the median local income ($75k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• It's been on market 63 days. Have you received any prior offers? Is the seller open to a 6% 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.
• Crime grade is D 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?
• 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.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.