506 W Oceanfront #2

Newport Beach, CA 92661

$975,000B-

5 bd · 3.0 ba · 2,294 sqft · Built 2000 · SingleFamily · Active · 631 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $10,479/mo
• Mortgage (P&I): −$5,113
• Tax + insurance: −$1,625
• HOA: −$0
• Vac / Maint / Mgmt: −$2,201
• Net cashflow: $1,540/mo
• Annual: $18,484/yr
• Cap rate: 8.19%
• Cash-on-cash: 6.77%
• DSCR: 1.30
• 1% rule: 1.07%
• Cash to close: $273,000

Investor read

• This is a 5-bed/3.0-bath single-family listed at $975k. Condition is rated good.
• At list price, monthly cash flow is $2k ($18k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($10k rent vs $975k).
• It's been on market 631 days — a 12% lower offer ($858k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $858k (12.0% below list) — sets the bar for market timing.
• In year one you build about $104k of equity ($7k loan paydown + $98k appreciation (10.0% local appreciation)).
• Location reads 76/100 on livability (#101 in CA, #3,645 nationally) — a middle-class / working-renter tenant base. Strengths: schools A+, amenities A+, employment A+; Watch: health & safety C-, cost of living F.
• Newport-Mesa Unified (urban): math 46% / reading 58% proficiency, ranked #106 of 517 in CA (top 20%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: Rents rising fast (+13.6%/yr); 52 active listings in the ZIP; 29 comparable units currently listed for rent nearby; rentals lingering (median 44d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 76% of comp listings sitting > 30 days — soft ceiling on asking rent; 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.
• At projected returns (10.0% appreciation + 8.0% rent growth), your $273k cash investment doubles in ~3 years — after that, you're playing with house money.
• By year 2, paydown + projected appreciation supports a ~$168k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: extreme-heat days projected 7→23/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.2% vs local median 0.6% in Newport Beach — 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 $10,479/mo this rent would consume 60% of the median local household income ($209k/yr) (locally 72% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• It's been on market 631 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• 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.
• 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?
• 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.