654 Holcombe Ave

Mobile, AL 36606

$40,000B-

2 bd · 1.0 ba · 2,174 sqft · Built — · SingleFamily · Active · 185 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,505/mo
• Mortgage (P&I): −$210
• Tax + insurance: −$67
• HOA: −$0
• Vac / Maint / Mgmt: −$316
• Net cashflow: $913/mo
• Annual: $10,951/yr
• Cap rate: 33.67%
• Cash-on-cash: 97.78%
• DSCR: 5.35
• 1% rule: 3.76%
• Cash to close: $11,200

Investor read

• This is a 2-bed/1.0-bath single-family listed at $40k. Condition is rated poor.
• At list price, monthly cash flow is $913 ($11k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $40k).
• It's been on market 185 days — a 12% lower offer ($35k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $35k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $277 of loan paydown is wiped out by about $1k 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: schools D-, 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.
• Market conditions: Rents rising fast (+5.1%/yr); 174 active listings in the ZIP; 11 comparable units currently listed for rent nearby; rentals at typical pace (median 22d on market — plan ~3-4 weeks tenant-placement turnaround); 45% of comp listings sitting > 30 days — soft ceiling on asking rent; 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.
• At projected returns (-3.0% appreciation + 5.1% rent growth), your $11k cash investment doubles in ~2 years — after that, you're playing with house money.
• Cap rate 33.7% 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.
• This rent runs 35% of the median local income ($51k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• It's been on market 185 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• 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 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?
• 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.

Repairs flagged (vision-AI assessment)

• Major: Debris removal — The house is surrounded by debris, indicating a major cleanup is needed.
• Major: Exterior painting — The exterior suggests peeling paint and potential water damage, indicating a major repainting is needed.
• Major: Roof inspection — The overall condition suggests the roof may need inspection for potential damage.
• Major: Flooring replacement — The exterior suggests the flooring may need replacement.
• Major: Interior repairs — The exterior suggests the interior may need significant repairs.
• Major: HVAC/mechanical replacement — The exterior suggests the HVAC or mechanical systems may need replacement.