406 Ellwood Beach Dr

Goleta, CA 93117

$3,600,000D

15 bd · 12.0 ba · 6,819 sqft · Built — · MultiFamily · Pending · 73 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $28,663/mo
• Mortgage (P&I): −$18,879
• Tax + insurance: −$5,249
• HOA: −$0
• Vac / Maint / Mgmt: −$6,019
• Net cashflow: $-1,485/mo
• Annual: $-17,814/yr
• Cap rate: 5.80%
• Cash-on-cash: -1.77%
• DSCR: 0.92
• 1% rule: 0.80%
• Cash to close: $1,008,000

Investor read

• This is a 5 × 3-bed/2.4-bath units multifamily listed at $3.60M.
• At list price, monthly cash flow is $-1k ($-18k/yr) — negative. Per door: $-297/mo.
• To cash-flow at today's rent, offer at most $3.34M (7.3% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $2.87M (20.4% below list).
• It's been on market 73 days — a 6% lower offer ($3.38M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $2.87M (20.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $25k of loan paydown is wiped out by about $108k of value loss. Plan a longer hold.
• Location reads 81/100 on livability (#40 in CA, #1,510 nationally) — a professional / high-income tenant draw. Strengths: amenities A+, commute A+, employment A+; Watch: cost of living F.
• Goleta Union Elementary (suburban): math 59% / reading 65% proficiency, ranked #195 of 1,400 in CA (top 14%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: Rents rising fast (+6.5%/yr); 70 active listings in the ZIP; solid renter incomes; 719 units permitted in Santa Barbara County in 2024 (217 in 5+ unit buildings).
• Santa Barbara County population projected at +20% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 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.
• Climate carrying-cost: moderate wildfire risk; extreme-heat days projected 7→19/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.8% vs local median 2.9% in Goleta — 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 $28,663/mo this rent would consume 382% of the median local household income ($90k/yr) (locally 4402% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

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 73 days. Have you received any prior offers? Is the seller open to a 20% 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.
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• 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.