1281 E Burnt Tree Dr

Mobile, AL 36695

$199,000D

3 bd · 2.0 ba · 1,239 sqft · Built 1987 · SingleFamily · Pending · 6 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,635/mo
• Mortgage (P&I): −$1,044
• Tax + insurance: −$141
• HOA: −$0
• Vac / Maint / Mgmt: −$343
• Net cashflow: $107/mo
• Annual: $1,284/yr
• Cap rate: 6.94%
• Cash-on-cash: 2.30%
• DSCR: 1.10
• 1% rule: 0.82%
• Cash to close: $55,720

Investor read

• This is a 3-bed/2.0-bath single-family listed at $199k.
• At list price, monthly cash flow is $107 ($1k/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 $164k (17.8% below list).
• Only 6 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $164k (17.8% below list) — sets the bar for 1% rule.
• 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 75/100 on livability (#20 in AL, #4,262 nationally) — a middle-class / working-renter tenant base. Strengths: commute A+, cost of living A+, housing A+; Watch: crime F, employment D-.
• Mobile County (urban): math 15% / reading 39% proficiency, ranked #81 of 129 in AL (top 63%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 67% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Elsie Collier Elementary School (math 35% / reading 61%, grade D, #135 of 627 statewide, top 22%, 743 students, 55% FRL); Bernice J Causey Middle School (math 17% / reading 51%, grade F, #98 of 257 statewide, top 38%, 1,418 students, 53% FRL); Baker High School (math 25% / reading 28%, grade F, #107 of 305 statewide, top 36%, 2,491 students, 42% FRL) — zoned schools average 50% FRL vs 67% district-wide (18 pts lower); this property's tenant base skews higher-income than the district average.
• Market conditions: Rents soft (-0.4%/yr); 557 active listings in the ZIP; 6 comparable units currently listed for rent nearby; rentals lingering (median 46d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 67% of comp listings sitting > 30 days — soft ceiling on asking rent; solid renter incomes; 1,678 units permitted in Mobile County in 2024 (264 in 5+ unit buildings).
• Mobile County population projected to shrink 8% by 2050 — rents likely to lag national; underwrite the cash flow, not the appreciation.
• Current owner paid $165k; 21% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: severe wind risk, 99% chance of damaging wind over 30y; moderate wildfire risk; extreme-heat days projected 7→21/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.9% vs local median 4.9% in Mobile — 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

• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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?
• 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.