503 Correll Ave

Wharton, TX 77488

$40,000B-

2 bd · 1.0 ba · 900 sqft · Built 1970 · SingleFamily · Pending · 3 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,086/mo
• Mortgage (P&I): −$210
• Tax + insurance: −$509
• HOA: −$0
• Vac / Maint / Mgmt: −$228
• Net cashflow: $139/mo
• Annual: $1,668/yr
• Cap rate: 23.26%
• Cash-on-cash: 60.60%
• DSCR: 3.70
• 1% rule: 2.72%
• Cash to close: $11,200

Investor read

• This is a 2-bed/1.0-bath single-family listed at $40k.
• At list price, monthly cash flow is $139 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($1k rent vs $40k).
• Only 3 days on market — expect competitive offers; lowballing is unlikely to land.
• 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 65/100 on livability (#693 in TX) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+, health & safety B; Watch: crime C-, amenities F, commute F.
• Wharton ISD (town): math 28% / reading 31% proficiency, ranked #651 of 826 in TX (top 79%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 70% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Wharton J H (math 32% / reading 32%, grade F, #971 of 1,662 statewide, top 60%, 369 students, 77% FRL); Wharton H S (math 32% / reading 37%, grade F, #963 of 1,632 statewide, top 61%, 570 students, 74% FRL).
• Watch-outs: flood insurance adds $427/mo.
• Market conditions: 164 active listings in the ZIP; 191 units permitted in Wharton County in 2024 (45 in 5+ unit buildings).
• 3 sale attempts; this cycle's ask has dropped $10k (20%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (-3.0% appreciation + 3.0% rent growth), your $11k cash investment doubles in ~8 years — after that, you're playing with house money.
• Climate carrying-cost: in FEMA flood zone AE (mandatory federal flood insurance); severe wind risk, 99% chance of damaging wind over 30y; extreme-heat days projected 7→22/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 23.3% vs local median 3.2% in Wharton — 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

• Built in 1970 — 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 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?
• 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.