1018 21st St

Santa Monica, CA 90403

$2,595,000C-

11 bd · 6.0 ba · 5,734 sqft · Built 1956 · MultiFamily · Active · 23 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $23,581/mo
• Mortgage (P&I): −$13,608
• Tax + insurance: −$3,781
• HOA: −$0
• Vac / Maint / Mgmt: −$4,952
• Net cashflow: $1,239/mo
• Annual: $14,870/yr
• Cap rate: 6.87%
• Cash-on-cash: 2.05%
• DSCR: 1.09
• 1% rule: 0.91%
• Cash to close: $726,600

Investor read

• This is a 1×3bd/2ba + 2×2bd/2ba + 2×2bd/1.5ba units multifamily listed at $2.60M.
• At list price, monthly cash flow is $1k ($15k/yr) — positive. Per door: $248/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $2.36M (9.1% below list).
• It's been on market 23 days — a 2% lower offer ($2.56M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $2.36M (9.1% below list) — sets the bar for 1% rule.
• In year one you build about $15k of equity ($18k loan paydown + $-3k appreciation (-0.1% local appreciation)).
• Location reads 72/100 on livability (#178 in CA) — a middle-class / working-renter tenant base. Strengths: schools A+, amenities A+, commute A+; Watch: health & safety C-, crime F, cost of living F.
• Santa Monica-Malibu Unified (urban): math 61% / reading 74% proficiency, ranked #123 of 1,400 in CA (top 9%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1956 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents soft (-0.1%/yr); 93 active listings in the ZIP; high-income renter base; 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.
• By year 8, paydown + projected appreciation supports a ~$174k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.9% vs local median 1.2% in Santa Monica — 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 $23,581/mo this rent would consume 232% of the median local household income ($122k/yr) (locally 2265% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• 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 1956 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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?
• Crime grade is F 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.
• 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.