204 E 2nd Ave

Escondido, CA 92025

$5,300,000B-

551 bd · 841.0 ba · 2,896 sqft · Built 2025 · MultiFamily · Pending · 138 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $76,345/mo
• Mortgage (P&I): −$27,794
• Tax + insurance: −$5,014
• HOA: −$0
• Vac / Maint / Mgmt: −$16,032
• Net cashflow: $27,504/mo
• Annual: $330,053/yr
• Cap rate: 12.52%
• Cash-on-cash: 22.24%
• DSCR: 1.99
• 1% rule: 1.44%
• Cash to close: $1,484,000

Investor read

• This is a 29 × 19-bed/29.0-bath units multifamily listed at $5.30M.
• At list price, monthly cash flow is $28k ($330k/yr) — positive. Per door: $948/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($76k rent vs $5.30M).
• It's been on market 138 days — a 12% lower offer ($4.66M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $4.66M (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $37k of loan paydown is wiped out by about $159k of value loss. Plan a longer hold.
• Location reads 70/100 on livability (#238 in CA) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment B; Watch: health & safety C-, schools D+, crime D+.
• Escondido Union High (suburban): math 19% / reading 56% proficiency, ranked #247 of 517 in CA (top 48%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Market conditions: Rents rising (+1.1%/yr); 138 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.
• 5 sale attempts since 2y ago; this cycle's ask has dropped $500k (9%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $2.07M; list at $5.30M implies a 156% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 1.1% rent growth), your $1.48M cash investment doubles in ~7 years — after that, you're playing with house money.
• Climate carrying-cost: extreme-heat days projected 7→21/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 12.5% vs local median 2.4% in Escondido — 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 $76,345/mo this rent would consume 1130% of the median local household income ($81k/yr) (locally 3295% 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 138 days. Have you received any prior offers? Is the seller open to a 12% 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 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?
• 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.