2318 16th St

Santa Monica, CA 90405

$4,950,000B+

33 bd · 29.7 ba · 17,671 sqft · Built 1977 · MultiFamily · Pending · 21 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $64,789/mo
• Mortgage (P&I): −$25,958
• Tax + insurance: −$3,773
• HOA: −$0
• Vac / Maint / Mgmt: −$13,606
• Net cashflow: $21,452/mo
• Annual: $257,419/yr
• Cap rate: 11.49%
• Cash-on-cash: 18.57%
• DSCR: 1.83
• 1% rule: 1.31%
• Cash to close: $1,386,000

Investor read

• This is a 11 × 3-bed/2.7-bath units multifamily listed at $4.95M.
• At list price, monthly cash flow is $21k ($257k/yr) — positive. Per door: $2k/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($65k rent vs $4.95M).
• It's been on market 21 days — a 2% lower offer ($4.88M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $4.88M (1.5% below list) — sets the bar for market timing.
• In year one you build about $280k of equity ($34k loan paydown + $246k appreciation (5.0% local appreciation)).
• Location reads 72/100 on livability (#178 in CA) — a middle-class / working-renter tenant base. Strengths: schools A+, amenities A+, commute A+; Watch: health & safety C-, crime F, cost of living F.
• Santa Monica-Malibu Unified (urban): math 61% / reading 74% proficiency, ranked #123 of 1,400 in CA (top 9%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: Rents rising (+1.1%/yr); 100 active listings in the ZIP; high-income renter base; 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.
• At projected returns (5.0% appreciation + 1.1% rent growth), your $1.39M cash investment doubles in ~3 years — after that, you're playing with house money.
• By year 2, paydown + projected appreciation supports a ~$449k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 11.5% vs local median 1.2% in Santa Monica — 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 $64,789/mo this rent would consume 641% of the median local household income ($121k/yr) (locally 2402% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

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 1977 — 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 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?
• 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.