1114 S Sherbourne Dr

Los Angeles, CA 90035

$2,398,000B-

10 bd · 9.0 ba · 6,278 sqft · Built 1955 · MultiFamily · Active · 22 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $30,105/mo
• Mortgage (P&I): −$12,575
• Tax + insurance: −$3,539
• HOA: −$0
• Vac / Maint / Mgmt: −$6,322
• Net cashflow: $7,669/mo
• Annual: $92,023/yr
• Cap rate: 10.13%
• Cash-on-cash: 13.71%
• DSCR: 1.61
• 1% rule: 1.26%
• Cash to close: $671,440

Investor read

• This is a 7 × 10-bed/9.0-bath units multifamily listed at $2.40M.
• At list price, monthly cash flow is $8k ($92k/yr) — positive. Per door: $1k/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($30k rent vs $2.40M).
• It's been on market 22 days — a 2% lower offer ($2.36M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $2.36M (1.5% below list) — sets the bar for market timing.
• In year one you build about $82k of equity ($17k loan paydown + $65k appreciation (2.7% local appreciation)).
• Location reads 68/100 on livability (#273 in CA) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment B; Watch: health & safety C-, schools D+, crime F.
• Los Angeles Unified (urban): math 29% / reading 54% proficiency, ranked #223 of 517 in CA (top 43%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 67% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1955 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents soft (-1.6%/yr); 108 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.
• 6 sale attempts since 10y ago; this cycle's ask has dropped $282k (11%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $2.08M; 15% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• At projected returns (2.7% appreciation + 0.0% rent growth), your $671k cash investment doubles in ~4 years — after that, you're playing with house money.
• By year 3, paydown + projected appreciation supports a ~$204k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: extreme-heat days projected 7→21/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 10.1% vs local median 2.1% in Los Angeles — 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

• 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 1955 — 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?
• 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.