Seller's pro forma says 6.1%, I get 4.6% on the same house

Your 3,400 tax line is doing a lot of work and I'd check it before Thursday. In a lot of jurisdictions a sale resets the assessment toward the price paid, and in others it doesn't move until a general reval. That varies by state and sometimes by county, so pull the parcel record and call the assessor's office directly rather than trusting the MLS field.

If that house is currently assessed at, say, 180,000 and your county reassesses on transfer at an effective rate near 1.4%, you're looking at something closer to 3,300 becoming 3,400 or becoming 4,700 depending entirely on local practice. At 4,700 your NOI drops to about 10,000 and the deal is worse than you think. Worth knowing which world you're in before you waive.

What's the lot? 1972 ranch on a quarter acre is one thing, on three quarters with road frontage in a suburb that's still building is another. I've been buying holding ground on that logic and it's slow money, but if the lot has any future split or accessory unit potential under current zoning you're not really underwriting a 4.6% rental, you're underwriting land with a tenant paying the carry.

That only helps if the numbers survive the wait, though, and yours don't. Negative 3,270 a year for a decade is 32,000 of patience money.

Your arithmetic is right and the conclusion follows from one assumption you haven't stated: what you believe rent does over the hold.

At 4.6% unlevered against 7.25% debt you have negative leverage. Every dollar you borrow lowers your return on equity. That is a defensible position only if you expect the spread to close, either through rent growth outrunning expenses or through a refinance at a lower rate. Neither is something you can underwrite as fact. Single-family rents rose about 1.3% year over year in early 2026, positive but well under the pace that would fix a 265 basis point gap in any reasonable timeframe.

The wider picture is consistent with what you're seeing. ATTOM's 2026 report found potential rental yields fell in roughly 55% of U.S. counties, with the national median home price at 360,000. Acquisition cost rose faster than rent could compensate. You aren't mispricing this house, you're looking at the market clearing level in a suburb that prices on owner-occupant demand rather than on yield.

Two specifics to nail down before Thursday. First, get the rate and the amortization from the lender in writing, because a DSCR quote in the low 7s and a locked rate are different things and your entire cash flow line moves with it. Second, confirm how your county treats assessment on transfer, since parcel is right that it can swing the tax line by a thousand or more, and that answer is state and county specific.

If the deal only works at 40% down, you've priced it as a bond. Decide whether you want a bond.

Managing side of this: 9% of collected on a single scattered house is a below-market quote and I'd want to read what it excludes. Most of us charge a leasing fee on top, commonly somewhere from half a month to a full month, plus a renewal fee, plus a markup or coordination fee on repairs over some threshold. If your 9% company charges a full month at lease-up and you turn every 24 months, your real management load is closer to 13% blended.

Also 8% of gross for maintenance and capex on a 1972 house with an original-ish sewer lateral and unknown ducts is light. I budget 10 to 12 on that vintage and I still get surprised. Add both corrections and cairn's 4.6% is closer to 4.0.

cairn, what would the price have to be for you to sign? I've been building my own first-purchase model for months and I keep failing to write down the number that makes me act, which means every deal looks like a maybe. If 247,000 all-in gives 4.6, then 6% NOI wants about 189,000 all-in, so 180 on the contract. Is that a real conversation with this seller or a fantasy?

I've gone through this a couple of times and I want to make sure I have the vocabulary right. Unlevered yield means the return before any mortgage, so NOI divided by everything you put in, and cairn's is 4.6%. Negative leverage means the loan costs more than the property earns, so borrowing makes it worse rather than better. Is that it? Because if so I don't understand why anyone buys at these prices at all.

I ran it and I get a slightly different picture, though not one that saves you.

Trellis is right about the maintenance line but I'd argue the other way on insurance. 2,100 on a 1,310 sq ft brick ranch reads high to me unless you're in a wind or hail zone or the roof is over 15. Shop it and you might find 1,500, which is 600 back to NOI. That takes you to 11,946, about 4.8%. Still negative leverage.

juniper, people buy at these prices because they're underwriting appreciation and a refinance, and they're calling that an investment. Sometimes it works. It's a rate bet with a tenant attached, and cairn is being honest enough to write the bet down instead of hiding it in a pro forma.

cairn, the question I'd put to you: if rates never come down and rent grows 2% a year, are you happy owning this in 2034? If the answer is no, the answer today is no.

Nine doors in and the thing that breaks me is never the pro forma, it's the year one capex I told myself was year four. Water heater you already found. On a 1972 house I'd assume the panel, the sewer lateral, and the HVAC are all inside a five year window. That's real money against a house that's already negative 3,270 annually.

I don't think 4.6% is unbuyable in principle. I think 4.6% financed at 7.25% is unbuyable, and I think you know that or you wouldn't have posted.

Where did 1,875 come from? If it's the listing agent's number, pull three actual signed comps from the last 90 days at similar size and school zone, not asking rents. Asking rents on the portals sit high because the ones that leased fast came off the market and the ones you're looking at didn't. I've seen 150 a month of daylight between asking and signed in ordinary suburbs. At 1,725 your NOI drops another 1,400 and there's nothing left to argue about.

I hold things for a long time so I'll ask the long question. Over ten years, what do you actually own here? Rent at 2% compounding is 2,285 by 2036 and your debt service is flat, so the cash flow crosses over somewhere around year six or seven and you've fed it maybe 15,000 by then. Meanwhile principal paydown is roughly 1,900 in year one and grows.

That's not nothing. It's also a bet that you have 15,000 of spare cash sitting patiently for six years while nine other doors ask you for money. Do you?

I passed on almost this exact house in a different metro last month. My filter is crude: contract price under 100 times market rent, and if I have to argue with the filter I don't buy. Yours is 127 times. That filter has kept me out of everything for eight months, which is either discipline or cowardice, and I honestly can't tell which yet.

quill, the number you're asking for is the filter. Write one down even if it's wrong. You can adjust a rule, you can't adjust a vibe.

Cheapest thing you'll ever do is let the inspection deadline pass on a deal you already don't believe.