904 7th St

Brownwood, TX 76801

$38,500D

2 bd · 1.0 ba · 2,032 sqft · Built 1953 · SingleFamily · Pending · 39 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,800/mo
• Mortgage (P&I): −$202
• Tax + insurance: −$149
• HOA: −$0
• Vac / Maint / Mgmt: −$378
• Net cashflow: $1,072/mo
• Annual: $12,859/yr
• Cap rate: 39.69%
• Cash-on-cash: 119.28%
• DSCR: 6.31
• 1% rule: 4.68%
• Cash to close: $10,780

Investor read

• This is a 2-bed/1.0-bath single-family listed at $38k.
• At list price, monthly cash flow is $1k ($13k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $38k).
• It's been on market 39 days — a 3% lower offer ($37k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $37k (3.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $266 of loan paydown is wiped out by about $1k of value loss. Plan a longer hold.
• Location reads 64/100 on livability (#781 in TX) — a middle-class / working-renter tenant base. Strengths: cost of living A+, housing A+; Watch: crime D+, health & safety D+, amenities F.
• Brownwood ISD (town): math 45% / reading 41% proficiency, ranked #344 of 826 in TX (top 42%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Northwest El (math 37% / reading 32%, grade F, #1,995 of 4,322 statewide, top 50%, 460 students, 87% FRL); Brownwood Middle (math 39% / reading 41%, grade F, #646 of 1,662 statewide, top 40%, 485 students, 64% FRL); Brownwood H S (math 55% / reading 49%, grade D+, #447 of 1,632 statewide, top 29%, 971 students, 54% FRL).
• Watch-outs: property tax is 4.1% of price; built in 1953 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 380 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 142 units permitted in Brown County in 2024 (0 in 5+ unit buildings).
• 2 sale attempts; this cycle's ask has dropped $12k (23%) 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 ~1 year — after that, you're playing with house money.
• Climate carrying-cost: major wind risk, 27% chance of damaging wind over 30y; major wildfire risk; extreme-heat days projected 7→23/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 39.7% vs local median 3.8% in Brownwood — 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

• It's been on market 39 days. Have you received any prior offers? Is the seller open to a 3% concession, seller financing, or rate buy-down credit?
• Built in 1953 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Property tax is high relative to price — has the assessment been appealed recently, and will the sale trigger a re-assessment?
• 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.