4427 Palm Ave #2

Foothill Farms, CA 95842

$179,000D

2 bd · 1.0 ba · 840 sqft · Built 1970 · Condo · Pending · 27 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $1,739/mo
• Mortgage (P&I): −$939
• Tax + insurance: −$114
• HOA: −$350
• Vac / Maint / Mgmt: −$365
• Net cashflow: $-30/mo
• Annual: $-356/yr
• Cap rate: 6.09%
• Cash-on-cash: -0.71%
• DSCR: 0.97
• 1% rule: 0.97%
• Cash to close: $50,120

Investor read

• This is a 2-bed/1.0-bath condo listed at $179k.
• At list price, monthly cash flow is $-30 ($-356/yr) — negative.
• To cash-flow at today's rent, offer at most $174k (2.9% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $174k (2.9% below list).
• It's been on market 27 days — a 2% lower offer ($176k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $174k (2.9% below list) — sets the bar for cash-flow.
• 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 64/100 on livability (#433 in CA) — a middle-class / working-renter tenant base. Strengths: housing A+, schools A; Watch: employment D+, crime F, amenities F.
• Twin Rivers Unified (suburban): math 29% / reading 37% proficiency, ranked #970 of 1,400 in CA (top 69%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 76% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: HOA is 20% of rent.
• Market conditions: Rents rising fast (+6.5%/yr); 130 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals leasing fast (median 2d on market — plan ~1-2 weeks tenant-placement turnaround); 6,825 units permitted in Sacramento County in 2024 (1,752 in 5+ unit buildings).
• Sacramento County population projected at +17% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Current owner paid $150k; 19% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: extreme-heat days projected 7→16/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.1% vs local median 3.9% in Foothill Farms — 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 ($68k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• Built in 1970 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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 A-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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?