5607 Avenue M 1/2

Santa Fe, TX 77510

$399,500D

4 bd · 2.0 ba · 1,989 sqft · Built 1980 · SingleFamily · Active · 32 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $31,930/mo
• Mortgage (P&I): −$2,095
• Tax + insurance: −$883
• HOA: −$0
• Vac / Maint / Mgmt: −$6,705
• Net cashflow: $22,246/mo
• Annual: $266,954/yr
• Cap rate: 73.12%
• Cash-on-cash: 238.65%
• DSCR: 11.62
• 1% rule: 7.99%
• Cash to close: $111,860

Investor read

• This is a 4-bed/2.0-bath single-family listed at $400k.
• At list price, monthly cash flow is $22k ($267k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($32k rent vs $400k).
• It's been on market 32 days — a 3% lower offer ($388k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $388k (3.0% 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 67/100 on livability (#550 in TX) — a middle-class / working-renter tenant base. Strengths: crime A+, cost of living A+, housing A+; Watch: amenities F, commute F, health & safety F.
• Santa Fe ISD (suburban): math 38% / reading 39% proficiency, ranked #385 of 826 in TX (top 47%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: 236 active listings in the ZIP; 2 comparable units currently listed for rent nearby; 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.
• 5 sale attempts since 14y ago; this cycle's ask has dropped $50k (11%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $112k cash investment doubles in ~1 year — 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→26/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 73.1% vs local median 4.5% in Santa Fe — 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.

Questions for listing agent

• It's been on market 32 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• 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.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.