3716 Ethel Ave

Waco, TX 76707

$215,000C

2 bd · 1.0 ba · 1,536 sqft · Built 1951 · MultiFamily · Active · 2 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,364/mo
• Mortgage (P&I): −$1,127
• Tax + insurance: −$705
• HOA: −$0
• Vac / Maint / Mgmt: −$496
• Net cashflow: $35/mo
• Annual: $425/yr
• Cap rate: 8.87%
• Cash-on-cash: 9.21%
• DSCR: 1.41
• 1% rule: 1.10%
• Cash to close: $60,200

Investor read

• This is a 2 × 2.0-bed/1.0-bath units multifamily listed at $215k.
• At list price, monthly cash flow is $35 ($425/yr) — positive. Per door: $18/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $215k).
• Only 2 days on market — expect competitive offers; lowballing is unlikely to land.
• 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 74/100 on livability (#166 in TX, #4,378 nationally) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety A+; Watch: crime D, commute F, employment D-.
• Waco ISD (urban): math 20% / reading 24% proficiency, ranked #773 of 826 in TX (top 94%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 81% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Crestview El (math 17% / reading 17%, grade F, #3,836 of 4,322 statewide, top 91%, 451 students, 94% FRL).
• Watch-outs: flood insurance adds $427/mo; built in 1951 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+1.1%/yr); 144 active listings in the ZIP; 36 comparable units currently listed for rent nearby; rentals at typical pace (median 21d on market — plan ~3-4 weeks tenant-placement turnaround); lower-income renter base — watch delinquency; 1,014 units permitted in McLennan County in 2024 (200 in 5+ unit buildings).
• McLennan County population projected at +17% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 4 sale attempts since 6y 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 $62k; list at $215k implies a 247% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: in FEMA flood zone AE (mandatory federal flood insurance); major wind risk, 59% chance of damaging wind over 30y; extreme-heat days projected 7→24/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.9% vs local median 3.9% in Waco — 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 $2,364/mo this rent would consume 70% of the median local household income ($40k/yr) (locally 704% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1951 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• 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.