12940 Prairie Ave

Hawthorne, CA 90250

$1,099,000C

20 bd · 20.0 ba · 3,280 sqft · Built 1962 · MultiFamily · Active · 236 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $12,107/mo
• Mortgage (P&I): −$5,763
• Tax + insurance: −$1,832
• HOA: −$0
• Vac / Maint / Mgmt: −$2,542
• Net cashflow: $1,970/mo
• Annual: $23,635/yr
• Cap rate: 8.44%
• Cash-on-cash: 7.68%
• DSCR: 1.34
• 1% rule: 1.10%
• Cash to close: $307,720

Investor read

• This is a 4 × 5-bed/5.0-bath units multifamily listed at $1.10M.
• At list price, monthly cash flow is $2k ($24k/yr) — positive. Per door: $492/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($12k rent vs $1.10M).
• It's been on market 236 days — a 12% lower offer ($967k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $967k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $8k of loan paydown is wiped out by about $33k of value loss. Plan a longer hold.
• Location reads 60/100 on livability (#597 in CA) — a middle-class / working-renter tenant base. Strengths: commute A+, housing B; Watch: crime F, cost of living F, health & safety F.
• Hawthorne (suburban): math 38% / reading 47% proficiency, ranked #673 of 1,400 in CA (top 48%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 78% free/reduced lunch — lower-income household profile, screen leases tightly.
• Market conditions: Rents rising (+1.9%/yr); 96 active listings in the ZIP; solid renter incomes; 19,697 units permitted in Los Angeles County in 2024 (9,426 in 5+ unit buildings).
• Los Angeles County population projected at +9% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 17 sale attempts since 30y ago; this cycle's ask is 60956% above the opening price — seller raised mid-cycle; expect resistance to lowballs.
• Cap rate 8.4% vs local median 2.0% in Hawthorne — 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.
• At $12,107/mo this rent would consume 185% of the median local household income ($78k/yr) (locally 6620% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 236 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1962 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• 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.