631 I St

Los Banos, CA 93635

$1,395,000C+

None bd · None ba · 5,230 sqft · Built 1939 · MultiFamily · Active · 183 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $16,818/mo
• Mortgage (P&I): −$7,316
• Tax + insurance: −$2,325
• HOA: −$0
• Vac / Maint / Mgmt: −$3,532
• Net cashflow: $3,646/mo
• Annual: $43,748/yr
• Cap rate: 9.43%
• Cash-on-cash: 11.20%
• DSCR: 1.50
• 1% rule: 1.21%
• Cash to close: $390,600

Investor read

• This is a multifamily listed at $1.40M. Condition is rated good.
• At list price, monthly cash flow is $4k ($44k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($17k rent vs $1.40M).
• It's been on market 183 days — a 12% lower offer ($1.23M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $1.23M (12.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $10k of loan paydown is wiped out by about $42k of value loss. Plan a longer hold.
• Location reads 68/100 on livability (#270 in CA) — a middle-class / working-renter tenant base. Strengths: housing A+, health & safety A+, amenities B; Watch: schools D, commute F, cost of living F.
• Los Banos Unified (town): math 3% / reading 16% proficiency, ranked #503 of 517 in CA (top 97%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 62% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1939 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+6.5%/yr); 211 active listings in the ZIP; 459 units permitted in Merced County in 2024 (0 in 5+ unit buildings).
• Merced County population projected at +12% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 3 sale attempts 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 + 6.5% rent growth), your $391k cash investment doubles in ~8 years — after that, you're playing with house money.
• Cap rate 9.4% vs local median 3.4% in Los Banos — 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 $16,818/mo this rent would consume 301% of the median local household income ($67k/yr) (locally 1595% 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 183 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1939 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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?
• 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.