7234 Palo Alto Ave

Yucca Valley, CA 92284

$725,000C+

10 bd · 5.0 ba · 4,190 sqft · Built 1983 · MultiFamily · Active · 104 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $9,382/mo
• Mortgage (P&I): −$3,802
• Tax + insurance: −$1,006
• HOA: −$0
• Vac / Maint / Mgmt: −$1,970
• Net cashflow: $2,604/mo
• Annual: $31,247/yr
• Cap rate: 10.60%
• Cash-on-cash: 15.39%
• DSCR: 1.68
• 1% rule: 1.29%
• Cash to close: $203,000

Investor read

• This is a 5 × 2-bed/1.0-bath units multifamily listed at $725k.
• At list price, monthly cash flow is $3k ($31k/yr) — positive. Per door: $521/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($9k rent vs $725k).
• It's been on market 104 days — a 9% lower offer ($660k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $660k (9.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $5k of loan paydown is wiped out by about $22k of value loss. Plan a longer hold.
• Location reads 60/100 on livability (#566 in CA) — a middle-class / working-renter tenant base. Strengths: commute A+, housing A+; Watch: cost of living D+, schools F, crime D-.
• Morongo Unified (town): math 15% / reading 38% proficiency, ranked #395 of 517 in CA (top 76%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover.
• Market conditions: Rents rising fast (+4.1%/yr); 563 active listings in the ZIP; 5,458 units permitted in San Bernardino County in 2024 (1,500 in 5+ unit buildings).
• San Bernardino County population projected at +15% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 3 sale attempts since 8y 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 $385k; list at $725k implies a 88% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 4.1% rent growth), your $203k cash investment doubles in ~8 years — after that, you're playing with house money.
• Climate carrying-cost: moderate wildfire risk; extreme-heat days projected 8→24/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 10.6% vs local median 3.6% in Yucca Valley — 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 $9,382/mo this rent would consume 193% of the median local household income ($58k/yr) (locally 1132% 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 104 days. Have you received any prior offers? Is the seller open to a 9% 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?
• 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 F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• Crime grade is D in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• 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.