0 Hot Springs Canyon Rd #26

Rancho Mission Viejo, CA 92675

$420,000C-

3 bd · 1.5 ba · 1,100 sqft · Built 1926 · SingleFamily · Active · 235 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,584/mo
• Mortgage (P&I): −$2,203
• Tax + insurance: −$700
• HOA: −$0
• Vac / Maint / Mgmt: −$963
• Net cashflow: $718/mo
• Annual: $8,622/yr
• Cap rate: 8.35%
• Cash-on-cash: 7.33%
• DSCR: 1.33
• 1% rule: 1.09%
• Cash to close: $117,600

Investor read

• This is a 3-bed/1.5-bath single-family listed at $420k. Condition is rated fair.
• At list price, monthly cash flow is $718 ($9k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $420k).
• It's been on market 235 days — a 12% lower offer ($370k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $370k (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $13k of value loss. Plan a longer hold.
• Location reads: area grade C — affects rentability + tenant quality, not the cash-flow math above.
• Saddleback Valley Unified (suburban): math 51% / reading 73% proficiency, ranked #67 of 517 in CA (top 13%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1926 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+8.2%/yr); 108 active listings in the ZIP; high-income renter base; 6,974 units permitted in Orange County in 2024 (3,839 in 5+ unit buildings).
• Orange County population projected at +14% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 2 sale attempts with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• At projected returns (-3.0% appreciation + 8.0% rent growth), your $118k cash investment doubles in ~9 years — after that, you're playing with house money.
• Climate carrying-cost: moderate flood risk; severe wildfire risk; extreme-heat days projected 10→29/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.3% vs local median 1.8% in Rancho Mission Viejo — 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 42% of the median local income ($129k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• It's been on market 235 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• Built in 1926 — 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.
• 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.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.

Repairs flagged (vision-AI assessment)

• Major: Exposed plumbing — Visible leaks and damage
• Major: Worn cabinetry — Visible wear and tear
• Major: Exposed electrical wiring — Visible damage