928 AVENIDA MAJORCA Unit B

Laguna Woods, CA 92637

$550,000D

2 bd · 2.0 ba · 1,009 sqft · Built 1967 · Condo · Active · 30 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,986/mo
• Mortgage (P&I): −$2,884
• Tax + insurance: −$917
• HOA: −$762
• Vac / Maint / Mgmt: −$627
• Net cashflow: $-2,204/mo
• Annual: $-26,451/yr
• Cap rate: 1.48%
• Cash-on-cash: -17.18%
• DSCR: 0.24
• 1% rule: 0.54%
• Cash to close: $154,000

Investor read

• This is a 2-bed/2.0-bath condo listed at $550k.
• At list price, monthly cash flow is $-2k ($-26k/yr) — negative.
• To cash-flow at today's rent, offer at most $231k (58.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $299k (45.7% below list).
• It's been on market 30 days — a 2% lower offer ($542k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $231k (58.0% below list) — sets the bar for cash-flow.
• In year one you build about $36k of equity ($4k loan paydown + $32k appreciation (5.9% local appreciation)).
• Location reads 72/100 on livability (#200 in CA) — a middle-class / working-renter tenant base. Strengths: crime A+, commute A+; Watch: schools C-, amenities D+, cost of living F.
• 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: HOA is 26% of rent.
• Market conditions: Rents rising fast (+6.8%/yr); 191 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals lingering (median 44d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 50% of comp listings sitting > 30 days — soft ceiling on asking rent; 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.
• 5 sale attempts since 25y ago 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.
• Current owner paid $195k; list at $550k implies a 182% gain — meaningful room to come down on a strong offer.
• By year 2, paydown + projected appreciation supports a ~$58k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Cap rate 1.5% vs local median 2.4% in Laguna Woods — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.
• At $2,986/mo this rent would consume 60% of the median local household income ($59k/yr) (locally 1572% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

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 1967 — 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.
• 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.
• 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.