12405 Hickory Tree Way #613

Germantown, MD 20874

$205,000D

2 bd · 1.0 ba · 889 sqft · Built 1982 · Condo · Active · 114 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,077/mo
• Mortgage (P&I): −$1,075
• Tax + insurance: −$269
• HOA: −$425
• Vac / Maint / Mgmt: −$436
• Net cashflow: $-128/mo
• Annual: $-1,539/yr
• Cap rate: 5.54%
• Cash-on-cash: -2.68%
• DSCR: 0.88
• 1% rule: 1.01%
• Cash to close: $57,400

Investor read

• This is a 2-bed/1.0-bath condo listed at $205k.
• At list price, monthly cash flow is $-128 ($-2k/yr) — negative.
• To cash-flow at today's rent, offer at most $182k (11.1% below list).
• Meets the 1% rule at list price ($2k rent vs $205k).
• It's been on market 114 days — a 9% lower offer ($187k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $182k (11.1% below list) — sets the bar for cash-flow.
• 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 81/100 on livability (#36 in MD, #1,312 nationally) — a professional / high-income tenant draw. Strengths: commute A+, employment A+, housing A+; Watch: crime D, cost of living F.
• Montgomery County Public Schools (suburban): math 27% / reading 45% proficiency, ranked #3 of 24 in MD (top 12%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Dr. Sally K. Ride Elementary (math 16% / reading 21%, grade F, #393 of 860 statewide, top 46%, 502 students, 63% FRL); Roberto W. Clemente Middle (math 19% / reading 43%, grade F, #61 of 225 statewide, top 28%, 857 students, 59% FRL); Seneca Valley High (math 37% / reading 56%, grade D-, #118 of 222 statewide, top 54%, 2,239 students, 57% FRL) — zoned schools average 60% FRL vs 26% district-wide (33 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: HOA is 20% of rent.
• Market conditions: Rents rising (+1.3%/yr); 190 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals at typical pace (median 21d on market — plan ~3-4 weeks tenant-placement turnaround); high-income renter base; 3,880 units permitted in Montgomery County in 2024 (2,054 in 5+ unit buildings).
• Montgomery County population projected at +27% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 9 sale attempts since 19y ago; this cycle's ask is 10150% above the opening price — seller raised mid-cycle; expect resistance to lowballs.
• Current owner paid $140k; 46% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: extreme-heat days projected 7→16/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.5% vs local median 3.6% in Germantown — 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

• 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 114 days. Have you received any prior offers? Is the seller open to a 11% concession, seller financing, or rate buy-down credit?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• 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?
• 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?