137 S 3rd Ave

Covina, CA 91723

$1,250,000F

1 bd · 1.0 ba · 740 sqft · Built 1921 · MultiFamily · Pending · 103 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $8,404/mo
• Mortgage (P&I): −$6,555
• Tax + insurance: −$1,206
• HOA: −$0
• Vac / Maint / Mgmt: −$1,765
• Net cashflow: $-1,122/mo
• Annual: $-13,464/yr
• Cap rate: 5.22%
• Cash-on-cash: -3.85%
• DSCR: 0.83
• 1% rule: 0.67%
• Cash to close: $350,000

Investor read

• This is a 1×6bd/5.0ba + 3×1bd/1.0ba units multifamily listed at $1.25M.
• At list price, monthly cash flow is $-1k ($-13k/yr) — negative. Per door: $-281/mo.
• To cash-flow at today's rent, offer at most $1.05M (15.9% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $840k (32.8% below list).
• It's been on market 103 days — a 9% lower offer ($1.14M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $840k (32.8% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $9k of loan paydown is wiped out by about $38k of value loss. Plan a longer hold.
• Location reads 72/100 on livability (#181 in CA) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment A+; Watch: schools C-, crime C-, health & safety C-.
• Covina-Valley Unified (suburban): math 39% / reading 55% proficiency, ranked #462 of 1,400 in CA (top 33%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: built in 1921 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+7.2%/yr); 31 active listings in the ZIP; 30 comparable units currently listed for rent nearby; rentals at typical pace (median 22d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 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.
• 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.
• Current owner paid $395k; list at $1.25M implies a 216% 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 5.2% vs local median 2.4% in Covina — 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 $8,404/mo this rent would consume 107% of the median local household income ($94k/yr) (locally 792% 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?
• It's been on market 103 days. Have you received any prior offers? Is the seller open to a 33% concession, seller financing, or rate buy-down credit?
• 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 1921 — 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.
• 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?