8421 Hearth Dr #24

Houston, TX 77054

$72,000B-

3 bd · 2.0 ba · 1,274 sqft · Built 1979 · Condo · Pending · 13 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,596/mo
• Mortgage (P&I): −$378
• Tax + insurance: −$186
• HOA: −$569
• Vac / Maint / Mgmt: −$335
• Net cashflow: $128/mo
• Annual: $1,534/yr
• Cap rate: 9.53%
• Cash-on-cash: 11.57%
• DSCR: 1.51
• 1% rule: 2.22%
• Cash to close: $20,160

Investor read

• This is a 3-bed/2.0-bath condo listed at $72k. Condition is rated good.
• At list price, monthly cash flow is $128 ($2k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($2k rent vs $72k).
• Only 13 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $498 of loan paydown is wiped out by about $2k of value loss. Plan a longer hold.
• 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: crime F.
• Houston ISD (urban): math 27% / reading 35% proficiency, ranked #593 of 826 in TX (top 72%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 71% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Longfellow El (math 12% / reading 27%, grade F, #3,583 of 4,322 statewide, top 86%, 682 students, 75% FRL); Pershing Middle (math 36% / reading 49%, grade D-, #553 of 1,662 statewide, top 34%, 1,390 students, 60% FRL); Bellaire H S (math 45% / reading 62%, grade C-, #428 of 1,632 statewide, top 27%, 3,170 students, 48% FRL).
• Watch-outs: flood insurance adds $66/mo; HOA is 36% of rent.
• Market conditions: Rents soft (-2.8%/yr); 268 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals leasing fast (median 12d on market — plan ~1-2 weeks tenant-placement turnaround); 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.
• Climate carrying-cost: severe flood risk; severe wind risk, 99% chance of damaging wind over 30y; extreme-heat days projected 7→25/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 9.5% 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.
• This rent runs 31% of the median local income ($62k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• Built in 1979 — 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?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• 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.