702 Ellsworth Pl

Palo Alto, CA 94306

$2,880,000D-

3 bd · 2.5 ba · 1,906 sqft · Built 2026 · Other · Active · 15 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $7,264/mo
• Mortgage (P&I): −$15,103
• Tax + insurance: −$2,280
• HOA: −$0
• Vac / Maint / Mgmt: −$1,525
• Net cashflow: $-11,644/mo
• Annual: $-139,731/yr
• Cap rate: 1.44%
• Cash-on-cash: -17.33%
• DSCR: 0.23
• 1% rule: 0.25%
• Cash to close: $806,400

Investor read

• This is a 3-bed/2.5-bath other listed at $2.88M.
• At list price, monthly cash flow is $-12k ($-140k/yr) — negative.
• To cash-flow at today's rent, offer at most $823k (71.4% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $726k (74.8% below list).
• It's been on market 15 days — a 2% lower offer ($2.84M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $726k (74.8% below list) — sets the bar for 1% rule.
• Local home prices are declining (-2.2%/yr); year-one equity from $20k of loan paydown is wiped out by about $65k of value loss. Plan a longer hold.
• Location reads 84/100 on livability (#19 in CA, #821 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, employment A+; Watch: cost of living F.
• Palo Alto Unified (urban): math 79% / reading 80% proficiency, ranked #19 of 517 in CA (top 4%) — strong family-tenant draw, lease renewals of 3-5y typical; only 7% free/reduced lunch — higher-income household profile.
• Zoned schools: El Carmelo Elementary (math 72% / reading 72%, grade A-, #122 of 1,571 statewide, top 8%, 317 students, 18% FRL); Palo Alto High (math 87% / reading 87%, grade A, #21 of 1,170 statewide, top 2%, 1,992 students, 10% FRL).
• Market conditions: Rents rising fast (+6.4%/yr); 40 active listings in the ZIP; 15 comparable units currently listed for rent nearby; rentals leasing fast (median 13d on market — plan ~1-2 weeks tenant-placement turnaround); high-income renter base; 3,838 units permitted in Santa Clara County in 2024 (1,886 in 5+ unit buildings).
• Santa Clara County population projected at +24% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 3 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 $1.40M; list at $2.88M implies a 106% gain — meaningful room to come down on a strong offer.
• Cap rate 1.4% vs local median 0.4% in Palo Alto — 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.
• This rent runs 42% of the median local income ($210k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

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?
• 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.
• 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.