Executive Summary
Analyzed 15 four-plex listings from the Houston MLS against a buyer buybox of $2,000+/unit/month target rent and 20% down payment at current investment property rates.
Top 5 by Cash-on-Cash Return (ranked):
- #1 — 1539 Westheimer Corner (Montrose) — 5.41% CoC, +$881/mo cash flow. Premium Montrose location commands $2,300/unit. 107 DOM = negotiation room. $196K total cash in.
- #2 — 1313 Peden St (Stratford/Montrose) — 4.25% CoC, +$810/mo cash flow. Top Montrose address, $2,600/unit feasible. 378 DOM = massive negotiation leverage. Could get even better at $900K.
- #3 — 5763 Easthampton Dr (Pine Village) — 2.47% CoC, +$402/mo cash flow. Biggest units (2,018 SF/ea), lowest $/SF ($105). Suburban family rental play. $195K total cash in.
- #4 — 324 W Alabama St (Westmoreland) — 2.29% CoC, +$385/mo cash flow. Near Montrose, $2,150/unit rents. 174 DOM = room to negotiate below $875K.
- #5 — 1409 Wentworth St (Near Med Center) — 0.91% CoC, +$156/mo cash flow. Near TMC/Museum District. Strong tenant demand from medical professionals. Only 24 DOM.
Bottom line: 7 of 15 properties show positive monthly cash flow at estimated rents. The Montrose corridor (#4 Westheimer, #5 W Alabama, #13 Peden) offers the best combination of rent ceiling and appreciation. Easthampton (#3) offers the best pure value play with the largest units and lowest $/SF. Several high-DOM properties (Peden at 378, Paris at 212, W Alabama at 174) present strong negotiation opportunities that could significantly improve returns.
Analysis Assumptions
- Down Payment: 20% of purchase price
- Closing Costs: ~3% of purchase price (buyer side)
- Mortgage Rate: 7.25% fixed, 30-year (investment property, 4-unit conventional)
- Monthly P&I Factor: $6.8218 per $1,000 of loan amount
- Operating Expenses: 40% of gross rent (property tax, insurance, maintenance, 5% vacancy, 8% property management)
- Rent Estimates: Based on Houston market comps by neighborhood, unit size, and condition. Verify with local comps and existing rent rolls.
- Cap Rate: Annual NOI / Purchase Price
- Cash-on-Cash: Annual Cash Flow / Total Cash Invested (down + closing)
Top Picks — Detailed Analysis
Top Pick #1 — Best Cash-on-Cash Return
Monthly Mortgage (P&I)
$4,639
Operating Expenses (40%)
$3,680/mo
Why #1: Montrose is Houston's premier rental neighborhood. Walkability, restaurants, nightlife, and proximity to downtown drive premium rents. $2,300/unit is achievable for 1,007 SF units in this location — could push to $2,500 with updated finishes. 107 DOM suggests negotiation room — offer $800K-$825K and this becomes even stronger. At $800K: CoC rises to ~7%. The cap rate of 7.79% is the second highest on the entire list.
Top Pick #2 — Highest Rent Potential + Negotiation Upside
Monthly Mortgage (P&I)
$5,430
Operating Expenses (40%)
$4,160/mo
Why #2: 378 days on market — over a year. This is the biggest negotiation opportunity on the list. Peden/Stratford is prime Montrose with the highest rent ceiling. Units are smaller (672 SF) but 1BR/studio units in Montrose command $2,400-$2,800 from young professionals. The real play: offer $875K-$900K. At $900K negotiated price, CoC jumps to approximately 6.5% with +$1,090/mo cash flow. Highest cap rate on the list at 7.53%.
Top Pick #3 — Best Value per Square Foot
Monthly Mortgage (P&I)
$4,638
Operating Expenses (40%)
$3,360/mo
Why #3: Largest units on the entire list at 2,018 SF each — these are essentially small houses. Lowest price per SF ($105) by a wide margin. Townhome-style layout = better tenant retention, lower turnover costs. Pine Village is suburban but family renters will pay for space. $2,100/unit is conservative for 2,018 SF — could push to $2,200-$2,300 with good finishes. Second-lowest total cash needed at $195K. Strong 7.12% cap rate.
Top Pick #4 — Near-Montrose with Negotiation Room
Monthly Mortgage (P&I)
$4,775
Operating Expenses (40%)
$3,440/mo
Why #4: Westmoreland is adjacent to Montrose proper — same tenant pool, slightly lower acquisition cost. 174 DOM = motivated seller. Offer $800K-$825K for significantly better returns. At $825K: CoC rises to ~3.5%. W Alabama corridor benefits from Montrose foot traffic and walkability. $2,150/unit is conservative; $2,200-$2,300 possible with quality finishes.
Top Pick #5 — Location Upside Near Medical Center
Monthly Mortgage (P&I)
$4,884
Operating Expenses (40%)
$3,360/mo
Why #5: Proximity to Texas Medical Center, Museum District, and UH means strong, consistent demand from medical professionals, residents, and students. Only 24 DOM = desirable property moving fast. $2,100/unit is conservative — medical professionals often pay $2,200-$2,400 for convenience near TMC. Lower vacancy risk. Slight positive cash flow with real upside from rent growth. The location story here is the strongest on the list for long-term appreciation.
Complete Analysis — All 15 Properties (Ranked by Cash Flow)
| Rank |
Address |
MLS# |
Price |
SF/Unit |
$/SF |
DOM |
Rent/Unit |
Gross/Mo |
Mortgage |
OpEx |
Cash Flow |
CoC% |
Cap% |
Cash In |
| 1 |
1539 Westheimer |
5452319 |
$850K |
1,007 |
$211 |
107 |
$2,300 |
$9,200 |
$4,639 |
$3,680 |
+$881 |
5.41% |
7.79% |
$196K |
| 2 |
1313 Peden St |
30551721 |
$995K |
672 |
$370 |
378 |
$2,600 |
$10,400 |
$5,430 |
$4,160 |
+$810 |
4.25% |
7.53% |
$229K |
| 3 |
5763 Easthampton |
92066932 |
$850K |
2,018 |
$105 |
54 |
$2,100 |
$8,400 |
$4,638 |
$3,360 |
+$402 |
2.47% |
7.12% |
$195K |
| 4 |
324 W Alabama |
61198010 |
$875K |
1,026 |
$213 |
174 |
$2,150 |
$8,600 |
$4,775 |
$3,440 |
+$385 |
2.29% |
7.08% |
$201K |
| 5 |
1409 Wentworth |
97166472 |
$895K |
1,061 |
$211 |
24 |
$2,100 |
$8,400 |
$4,884 |
$3,360 |
+$156 |
0.91% |
6.76% |
$206K |
| 6 |
3106 Lee St |
43421823 |
$880K |
960 |
$229 |
118 |
$2,050 |
$8,200 |
$4,800 |
$3,280 |
+$120 |
0.71% |
6.71% |
$202K |
| 7 |
1920 Binz St |
17724839 |
$950K |
921 |
$258 |
15 |
$2,200 |
$8,800 |
$5,185 |
$3,520 |
+$95 |
0.52% |
6.67% |
$219K |
| 8 |
6930 Paris St |
24146865 |
$800K |
1,495 |
$134 |
212 |
$1,800 |
$7,200 |
$4,366 |
$2,880 |
-$46 |
-0.30% |
6.48% |
$184K |
| 9 |
3813 Jeanetta |
31961468 |
$950K |
2,000 |
$119 |
124 |
$2,100 |
$8,400 |
$5,185 |
$3,360 |
-$145 |
-0.79% |
6.37% |
$219K |
| 10 |
1206 Schweikhardt |
4280546 |
$950K |
818 |
$290 |
8 |
$1,900 |
$7,600 |
$5,184 |
$3,040 |
-$624 |
-3.43% |
5.76% |
$218K |
| 11 |
4445 Rusk St |
57527934 |
$975K |
938 |
$260 |
158 |
$1,950 |
$7,800 |
$5,321 |
$3,120 |
-$641 |
-3.43% |
5.76% |
$224K |
| 12 |
6101 Shotwell |
89253313 |
$845K |
1,491 |
$142 |
18 |
$1,650 |
$6,600 |
$4,612 |
$2,640 |
-$652 |
-4.02% |
5.62% |
$194K |
| 13 |
4002 Bennington |
43311426 |
$1,200K |
2,175 |
$138 |
24 |
$2,400 |
$9,600 |
$6,549 |
$3,840 |
-$789 |
-3.43% |
5.76% |
$276K |
| 14 |
12033 Ticonderoga
FLAG: 240 SF/unit? |
50249067 |
$899K |
240 |
$936 |
58 |
$1,200 |
$4,800 |
$4,906 |
$1,920 |
-$2,026 |
-11.76% |
3.84% |
$207K |
| 15 |
305 N Live Oak |
35384205 |
$1,200K |
1,573 |
$191 |
8 |
$1,700 |
$6,800 |
$6,549 |
$2,720 |
-$2,469 |
-10.73% |
4.08% |
$276K |
GREEN = positive cash flow | YELLOW = near break-even (within -$200/mo) | RED = negative cash flow over $200/mo
Negotiation Opportunities (High DOM = Motivated Sellers)
- 1313 Peden (378 DOM) — Listed over a year. Offer $875K-$900K. At $900K: CoC jumps to ~6.5%, CF +$1,090/mo. Strongest negotiation play on the list.
- 6930 Paris (212 DOM) — 7+ months sitting. Offer $720K-$750K. At $750K: cash flow flips to +$230/mo positive.
- 324 W Alabama (174 DOM) — Near Montrose. Offer $800K-$825K. At $825K: CoC rises to ~3.5%.
- 4445 Rusk (158 DOM) — Eastwood gentrification area. Offer $850K-$875K. Numbers start working at $850K.
- 3813 Jeanetta (124 DOM) — Spring Branch appreciation play. Offer $880K-$920K. At $900K: cash flow goes positive.
- 1539 Westheimer (107 DOM) — Already the #1 pick. At $800K: CoC reaches ~7%. Very worth pursuing an aggressive offer.
Properties to Approach with Caution
- 12033 Ticonderoga (#14 ranked) — 960 SF total = 240 SF per unit. This is almost certainly a data error in the MLS (likely lot size or an acreage number). At $936/SF the numbers are impossible. Verify the actual building square footage before proceeding.
- 305 N Live Oak (#15 ranked) — $1.2M in Settegast. Rent ceiling in this neighborhood tops out around $1,700/unit. That produces -$2,469/mo negative cash flow. The price-to-rent ratio does not work unless this is a brand new build that can command $2,400+/unit, which is unlikely in Settegast.
- 6101 Shotwell (#12 ranked) — Trinity Gardens neighborhood limits rent ceiling to ~$1,650/unit. At $845K listing price, produces -$652/mo. Would need to negotiate to the low $700K range to break even.
- 4002 Bennington (#13 ranked) — 8,700 SF of likely newer construction is appealing, but at $1.2M the debt service overwhelms the rent potential. If rents hit $2,600/unit it approaches break-even. Best as an appreciation play, not a cash flow play at current rates.
Recommended Strategy for Buyer
- Immediate action: Schedule showings on #1 (Westheimer), #2 (Peden), and #3 (Easthampton). These are the three strongest cash-flow properties.
- Best negotiation targets: Peden (378 DOM) and Westheimer (107 DOM) have the most room to negotiate. Aggressive offers could yield 6-7% CoC returns.
- If budget is under $200K cash: Focus on Easthampton ($195K), Westheimer ($196K), or Paris St ($184K). All under $200K total cash needed.
- If buyer wants premium location: Westheimer and Peden are both in Montrose, Houston's most desirable rental market with lowest vacancy rates.
- If buyer wants max space/value: Easthampton (2,018 SF/unit at $105/SF) or Jeanetta (2,000 SF/unit at $119/SF) offer the most physical asset per dollar.
- Rate sensitivity: If rates drop to 6.5% in 12-18 months, every property on this list improves by ~$200-$300/mo in cash flow. The top 7 properties all become solidly positive.
Disclaimer
This analysis is for informational purposes only and does not constitute financial or investment advice. Rent estimates are based on neighborhood market research and comparable properties but are not guaranteed. Actual operating expenses, vacancy rates, maintenance costs, insurance premiums, and property taxes will vary by property. Property condition, age, renovation needs, and existing tenant situations are not factored into this analysis and could materially impact returns. Buyer should verify all information independently, conduct property inspections, review actual rent rolls (if existing tenants), obtain actual insurance and tax quotes, and consult with a financial advisor and/or CPA before making investment decisions.
Prepared by: The Property Joes Group | Keller Williams Memorial | [email protected]