414 E Lincoln Ave

Escondido, CA 92026

$695,000D

2 bd · 2.0 ba · 1,564 sqft · Built 1935 · MultiFamily · Pending · 26 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $5,320/mo
• Mortgage (P&I): −$3,645
• Tax + insurance: −$415
• HOA: −$0
• Vac / Maint / Mgmt: −$1,117
• Net cashflow: $143/mo
• Annual: $1,712/yr
• Cap rate: 6.54%
• Cash-on-cash: 0.88%
• DSCR: 1.04
• 1% rule: 0.77%
• Cash to close: $194,600

Investor read

• This is a 2 × 3-bed/3.0-bath units multifamily listed at $695k.
• At list price, monthly cash flow is $143 ($2k/yr) — positive. Per door: $71/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $532k (23.5% below list).
• It's been on market 26 days — a 2% lower offer ($685k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $532k (23.5% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $5k of loan paydown is wiped out by about $21k of value loss. Plan a longer hold.
• Location reads 70/100 on livability (#238 in CA) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment B; Watch: health & safety C-, schools D+, crime D+.
• Escondido Union High (suburban): math 19% / reading 56% proficiency, ranked #247 of 517 in CA (top 48%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1935 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+1.0%/yr); 227 active listings in the ZIP; 22 comparable units currently listed for rent nearby; rentals leasing fast (median 0d on market — plan ~1-2 weeks tenant-placement turnaround); solid renter incomes; 11,759 units permitted in San Diego County in 2024 (7,244 in 5+ unit buildings).
• San Diego County population projected at +20% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Current owner paid $75k; list at $695k implies a 827% gain — meaningful room to come down on a strong offer.
• 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 6.5% vs local median 2.4% in Escondido — 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 $5,320/mo this rent would consume 61% of the median local household income ($105k/yr) (locally 2319% 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 1935 — 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 D 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?
• 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.