5258 Preston Rd

Federalsburg, MD 21632

$225,000D+

4 bd · 1.0 ba · 1,350 sqft · Built 1960 · SingleFamily · Active · 26 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,775/mo
• Mortgage (P&I): −$1,180
• Tax + insurance: −$233
• HOA: −$0
• Vac / Maint / Mgmt: −$373
• Net cashflow: $-10/mo
• Annual: $-122/yr
• Cap rate: 6.24%
• Cash-on-cash: -0.19%
• DSCR: 0.99
• 1% rule: 0.79%
• Cash to close: $63,000

Investor read

• This is a 4-bed/1.0-bath single-family listed at $225k.
• At list price, monthly cash flow is $-10 ($-122/yr) — negative.
• To cash-flow at today's rent, offer at most $223k (0.8% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $178k (21.1% below list).
• It's been on market 26 days — a 2% lower offer ($222k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $178k (21.1% below list) — sets the bar for 1% rule.
• Local home prices are declining (-2.2%/yr); year-one equity from $2k of loan paydown is wiped out by about $5k of value loss. Plan a longer hold.
• Location reads 65/100 on livability (#266 in MD) — a middle-class / working-renter tenant base. Strengths: cost of living A+, crime A, health & safety A; Watch: housing C-, amenities F, commute F.
• Caroline County Public Schools (rural): math 13% / reading 29% proficiency, ranked #17 of 24 in MD (top 71%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Zoned schools: Federalsburg Elementary School (math 8% / reading 12%, grade F, #614 of 860 statewide, top 75%, 390 students, 80% FRL); Colonel Richardson Middle School (math 3% / reading 28%, grade F, #190 of 225 statewide, top 85%, 374 students, 72% FRL); Colonel Richardson High School (math 52% / reading 77%, grade B-, #55 of 222 statewide, top 26%, 549 students, 66% FRL) — zoned schools average 73% FRL vs 48% district-wide (24 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: 46 active listings in the ZIP; 59 units permitted in Caroline County in 2024 (0 in 5+ unit buildings).
• Caroline County population projected at -19% by 2050 — secular population decline; favor cash flow + early exit over multi-decade hold.
• 2 sale attempts since 4y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• Current owner paid $106k; list at $225k implies a 112% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: major wind risk, 59% 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 6.2% vs local median 4.8% in Federalsburg — 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?
• Built in 1960 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.