1520 Pelham Rd., M5-126E

Seal Beach, CA 90740

$249,000D

1 bd · 1.0 ba · 600 sqft · Built 1962 · Other · Active · 105 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,329/mo
• Mortgage (P&I): −$1,306
• Tax + insurance: −$481
• HOA: −$517
• Vac / Maint / Mgmt: −$489
• Net cashflow: $-465/mo
• Annual: $-5,575/yr
• Cap rate: 4.37%
• Cash-on-cash: -6.85%
• DSCR: 0.70
• 1% rule: 0.94%
• Cash to close: $69,720

Investor read

• This is a 1-bed/1.0-bath other listed at $249k.
• At list price, monthly cash flow is $-465 ($-6k/yr) — negative.
• To cash-flow at today's rent, offer at most $182k (27.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $233k (6.5% below list).
• It's been on market 105 days — a 9% lower offer ($227k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $182k (27.0% below list) — sets the bar for cash-flow.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $7k of value loss. Plan a longer hold.
• Location reads 58/100 on livability (#695 in CA) — a working-class tenant base; expect higher turnover. Strengths: employment A+, schools A, housing A-; Watch: health & safety D, crime F, amenities F.
• Los Alamitos Unified (suburban): math 57% / reading 82% proficiency, ranked #52 of 517 in CA (top 10%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease; only 10% free/reduced lunch — higher-income household profile.
• Watch-outs: flood insurance adds $66/mo; HOA is 22% of rent.
• Market conditions: Rents rising fast (+4.8%/yr); 110 active listings in the ZIP; 1 comparable units currently listed for rent nearby; solid renter incomes; 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.
• 6 sale attempts since 5y 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.
• Climate carrying-cost: severe flood risk; extreme-heat days projected 7→24/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 4.4% vs local median 3.3% in Seal 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.
• This rent runs 33% of the median local income ($85k/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?
• It's been on market 105 days. Have you received any prior offers? Is the seller open to a 27% concession, seller financing, or rate buy-down credit?
• 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?
• 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 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?