7645 Pacific Ave

Lemon Grove, CA 91945

$9,200,000B-

2268 bd · 1764.0 ba · 7,152 sqft · Built 1969 · MultiFamily · Active · 1 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $130,554/mo
• Mortgage (P&I): −$48,246
• Tax + insurance: −$9,827
• HOA: −$0
• Vac / Maint / Mgmt: −$27,416
• Net cashflow: $45,065/mo
• Annual: $540,779/yr
• Cap rate: 12.17%
• Cash-on-cash: 20.99%
• DSCR: 1.93
• 1% rule: 1.42%
• Cash to close: $2,576,000

Investor read

• This is a 42 × 54-bed/42.0-bath units multifamily listed at $9.20M.
• At list price, monthly cash flow is $45k ($541k/yr) — positive. Per door: $1k/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($131k rent vs $9.20M).
• Only 1 days on market — expect competitive offers; lowballing is unlikely to land.
• Local home prices are declining (-3.0%/yr); year-one equity from $64k of loan paydown is wiped out by about $276k of value loss. Plan a longer hold.
• Location reads 64/100 on livability (#411 in CA) — a middle-class / working-renter tenant base. Strengths: commute A+; Watch: crime C-, amenities D, schools D-.
• Lemon Grove (suburban): math 25% / reading 25% proficiency, ranked #389 of 517 in CA (top 75%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 65% free/reduced lunch — lower-income household profile, screen leases tightly.
• Market conditions: Rents rising (+1.7%/yr); 44 active listings in the ZIP; solid renter incomes; 11,759 units permitted in San Diego County in 2024 (7,244 in 5+ unit buildings).
• San Diego County population projected at +20% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 6 sale attempts since 3y 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.
• At projected returns (-3.0% appreciation + 1.7% rent growth), your $2.58M cash investment doubles in ~7 years — after that, you're playing with house money.
• Climate carrying-cost: extreme-heat days projected 7→19/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 12.2% vs local median 2.8% in Lemon Grove — 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 $130,554/mo this rent would consume 1780% of the median local household income ($88k/yr) (locally 1363% 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 1969 — 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 D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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 apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.