407 Herndon Ave

Tyler, TX 75702

$180,000B

4 bd · 4.0 ba · 2,688 sqft · Built 1936 · MultiFamily · Active · 168 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,014/mo
• Mortgage (P&I): −$944
• Tax + insurance: −$400
• HOA: −$0
• Vac / Maint / Mgmt: −$843
• Net cashflow: $1,827/mo
• Annual: $21,928/yr
• Cap rate: 18.48%
• Cash-on-cash: 43.51%
• DSCR: 2.94
• 1% rule: 2.23%
• Cash to close: $50,400

Investor read

• This is a 4-bed/4.0-bath multifamily listed at $180k.
• At list price, monthly cash flow is $2k ($22k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($4k rent vs $180k).
• It's been on market 168 days — a 12% lower offer ($158k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $158k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $5k of value loss. Plan a longer hold.
• Location reads 75/100 on livability (#147 in TX, #4,181 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: employment C-, schools D+, crime D+.
• Tyler ISD (urban): math 39% / reading 38% proficiency, ranked #449 of 826 in TX (top 54%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 66% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1936 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+2.3%/yr); 155 active listings in the ZIP; 9 comparable units currently listed for rent nearby; rentals lingering (median 44d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 56% of comp listings sitting > 30 days — soft ceiling on asking rent; 595 units permitted in Smith County in 2024 (45 in 5+ unit buildings).
• Smith County population projected at +24% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• At projected returns (-3.0% appreciation + 2.3% rent growth), your $50k cash investment doubles in ~3 years — after that, you're playing with house money.
• Climate carrying-cost: major wind risk, 59% 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 18.5% vs local median 3.6% in Tyler — 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.
• At $4,014/mo this rent would consume 93% of the median local household income ($52k/yr) (locally 803% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 168 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1936 — 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.
• 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 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?
• 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.