2407 Stephenson St

Durham, NC 27704

$160,000D+

2 bd · 1.0 ba · 696 sqft · Built 1950 · SingleFamily · Active · 58 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,369/mo
• Mortgage (P&I): −$839
• Tax + insurance: −$221
• HOA: −$0
• Vac / Maint / Mgmt: −$288
• Net cashflow: $22/mo
• Annual: $260/yr
• Cap rate: 6.46%
• Cash-on-cash: 0.58%
• DSCR: 1.03
• 1% rule: 0.86%
• Cash to close: $44,800

Investor read

• This is a 2-bed/1.0-bath single-family listed at $160k.
• At list price, monthly cash flow is $22 ($260/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $137k (14.4% below list).
• It's been on market 58 days — a 3% lower offer ($155k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $137k (14.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $1k of loan paydown is wiped out by about $5k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#15 in NC, #1,411 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, housing A+; Watch: crime F.
• Durham Public Schools (urban): math 29% / reading 39% proficiency, ranked #132 of 178 in NC (top 74%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Holt Elementary (math 10% / reading 26%, grade F, #1,280 of 1,410 statewide, top 91%, 636 students, 83% FRL); George L Carrington Middle (math 23% / reading 37%, grade F, #335 of 475 statewide, top 72%, 755 students, 73% FRL); Riverside High (math 49% / reading 42%, grade D-, #347 of 535 statewide, top 65%, 1,812 students, 51% FRL).
• Watch-outs: built in 1950 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+2.6%/yr); 400 active listings in the ZIP; 10 comparable units currently listed for rent nearby; rentals at typical pace (median 25d on market — plan ~3-4 weeks tenant-placement turnaround); 2,905 units permitted in Durham County in 2024 (955 in 5+ unit buildings).
• Durham County population projected at +44% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Climate carrying-cost: major wind risk, 27% chance of damaging wind over 30y; extreme-heat days projected 7→16/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.5% vs local median 3.0% in Durham — 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 58 days. Have you received any prior offers? Is the seller open to a 14% concession, seller financing, or rate buy-down credit?
• Built in 1950 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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?
• 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.
• 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.