331 Walnut St

Newport Beach, CA 92663

$2,950,000D

3 bd · 4.5 ba · 2,546 sqft · Built 1962 · SingleFamily · Active · 16 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $9,114/mo
• Mortgage (P&I): −$15,470
• Tax + insurance: −$2,869
• HOA: −$55
• Vac / Maint / Mgmt: −$1,914
• Net cashflow: $-11,194/mo
• Annual: $-134,326/yr
• Cap rate: 1.77%
• Cash-on-cash: -16.17%
• DSCR: 0.28
• 1% rule: 0.31%
• Cash to close: $826,000

Investor read

• This is a 3-bed/4.5-bath single-family listed at $2.95M.
• At list price, monthly cash flow is $-11k ($-134k/yr) — negative.
• To cash-flow at today's rent, offer at most $973k (67.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $911k (69.1% below list).
• It's been on market 16 days — a 2% lower offer ($2.91M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $911k (69.1% below list) — sets the bar for 1% rule.
• In year one you build about $315k of equity ($20k loan paydown + $295k 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: amenities A+, employment A+, commute 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.
• Zoned schools: Newport Elementary (math 67%, 313 students, 26% FRL); Horace Ensign Intermediate (math 49%, 915 students, 48% FRL); Newport Harbor High (math 44% / reading 66%, grade C, #249 of 1,170 statewide, top 22%, 2,268 students, 44% FRL) — zoned schools at 39% FRL track the district average.
• Watch-outs: flood insurance adds $66/mo.
• Market conditions: Rents rising (+2.6%/yr); 121 active listings in the ZIP; 25 comparable units currently listed for rent nearby; rentals at typical pace (median 17d on market — plan ~3-4 weeks tenant-placement turnaround); 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.
• 14 sale attempts since 22y 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 $1.26M; list at $2.95M implies a 133% gain — meaningful room to come down on a strong offer.
• By year 2, paydown + projected appreciation supports a ~$507k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: severe flood risk; extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 1.8% 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.

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 1962 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• 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?
• 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.