38 Split Rock Rd

The Woodlands, TX 77381

$475,000D

4 bd · 2.5 ba · 2,316 sqft · Built 1983 · SingleFamily · Pending · 13 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,470/mo
• Mortgage (P&I): −$2,491
• Tax + insurance: −$737
• HOA: −$0
• Vac / Maint / Mgmt: −$729
• Net cashflow: $-487/mo
• Annual: $-5,840/yr
• Cap rate: 5.06%
• Cash-on-cash: -4.39%
• DSCR: 0.80
• 1% rule: 0.73%
• Cash to close: $133,000

Investor read

• This is a 4-bed/2.5-bath single-family listed at $475k.
• At list price, monthly cash flow is $-487 ($-6k/yr) — negative.
• To cash-flow at today's rent, offer at most $389k (18.1% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $347k (27.0% below list).
• Only 13 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $347k (27.0% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $14k of value loss. Plan a longer hold.
• Location reads 91/100 on livability (#1 in TX, #47 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, employment A+; Watch: cost of living D-.
• Conroe ISD (other): math 57% / reading 57% proficiency, ranked #69 of 826 in TX (top 8%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Ride El (math 77% / reading 77%, grade A, #55 of 4,322 statewide, top 1%, 569 students, 32% FRL); Knox J H (math 65% / reading 67%, grade A-, #92 of 1,662 statewide, top 6%, 1,448 students, 31% FRL); Conroe H S (math 32% / reading 51%, grade F, #767 of 1,632 statewide, top 47%, 4,915 students, 61% FRL).
• Market conditions: Rents rising (+2.1%/yr); 261 active listings in the ZIP; 3 comparable units currently listed for rent nearby; rentals at typical pace (median 23d on market — plan ~3-4 weeks tenant-placement turnaround); high-income renter base; 13,259 units permitted in Montgomery County in 2024 (1,402 in 5+ unit buildings).
• Montgomery County population projected at +65% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 5y 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 $145k; list at $475k implies a 227% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: severe wind risk, 99% chance of damaging wind over 30y; extreme-heat days projected 7→23/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.1% vs local median 2.3% in The Woodlands — 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?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are A-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?
• 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.