The Pearson Plan

Pinehurst, TX 77354

$274,990D-

3 bd · 2.0 ba · 1,701 sqft · Built — · SingleFamily · Active · 195 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,940/mo
• Mortgage (P&I): −$1,484
• Tax + insurance: −$472
• HOA: −$0
• Vac / Maint / Mgmt: −$407
• Net cashflow: $-423/mo
• Annual: $-5,073/yr
• Cap rate: 4.50%
• Cash-on-cash: -6.40%
• DSCR: 0.72
• 1% rule: 0.69%
• Cash to close: $79,237

Investor read

• This is a 3-bed/2.0-bath single-family listed at $275k.
• At list price, monthly cash flow is $-423 ($-5k/yr) — negative.
• To cash-flow at today's rent, offer at most $222k (19.3% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $194k (29.4% below list).
• It's been on market 195 days — a 12% lower offer ($242k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $194k (29.4% below list) — sets the bar for 1% rule.
• In year one you build about $30k of equity ($2k loan paydown + $28k appreciation (10.0% local appreciation)).
• Location reads 55/100 on livability (#1,350 in TX) — a working-class tenant base; expect higher turnover. Strengths: cost of living A+, housing B+; Watch: employment C-, schools F, crime D-.
• Magnolia ISD (rural): math 42% / reading 45% proficiency, ranked #247 of 826 in TX (top 30%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: Rents flat; 1621 active listings in the ZIP; 9 comparable units currently listed for rent nearby; rentals at typical pace (median 25d 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.
• By year 2, paydown + projected appreciation supports a ~$49k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: severe wind risk, 99% chance of damaging wind over 30y; moderate wildfire risk; extreme-heat days projected 6→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 4.5% vs local median 2.0% in Pinehurst — 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?
• It's been on market 195 days. Have you received any prior offers? Is the seller open to a 29% concession, seller financing, or rate buy-down credit?
• 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 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?
• 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?
• 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.