5518 Farley Dr

Houston, TX 77032

$227,499C

4 bd · 2.0 ba · 2,018 sqft · Built 1983 · MultiFamily · Active · 332 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,516/mo
• Mortgage (P&I): −$1,193
• Tax + insurance: −$471
• HOA: −$0
• Vac / Maint / Mgmt: −$528
• Net cashflow: $323/mo
• Annual: $3,879/yr
• Cap rate: 8.00%
• Cash-on-cash: 6.09%
• DSCR: 1.27
• 1% rule: 1.11%
• Cash to close: $63,700

Investor read

• This is a 2 × 2-bed/1.0-bath units multifamily listed at $227k.
• At list price, monthly cash flow is $323 ($4k/yr) — positive. Per door: $162/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($3k rent vs $227k).
• It's been on market 332 days — a 12% lower offer ($200k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $200k (12.0% below list) — sets the bar for market timing.
• In year one you build about $681 of equity ($2k loan paydown + $-892 appreciation (-0.4% local appreciation)).
• Location reads 74/100 on livability (#184 in TX, #4,771 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, cost of living A+, housing A+; Watch: schools D, crime F.
• Aldine ISD (suburban): math 16% / reading 21% proficiency, ranked #790 of 826 in TX (top 96%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 79% free/reduced lunch — lower-income household profile, screen leases tightly.
• Market conditions: Rents soft (-1.5%/yr); 41 active listings in the ZIP; lower-income renter base — watch delinquency; 29,883 units permitted in Harris County in 2024 (8,621 in 5+ unit buildings).
• Harris County population projected at +47% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 7y 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.
• Climate carrying-cost: severe wind risk, 99% 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 8.0% vs local median 3.2% in Houston — 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 $2,516/mo this rent would consume 69% of the median local household income ($44k/yr) (locally 944% 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 332 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• 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?
• 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.