2395 Delaware #72

Santa Cruz, CA 95060

$225,000C+

3 bd · 2.0 ba · 1,440 sqft · Built 1971 · Manufactured · Active · 422 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $5,327/mo
• Mortgage (P&I): −$1,180
• Tax + insurance: −$375
• HOA: −$0
• Vac / Maint / Mgmt: −$1,119
• Net cashflow: $2,654/mo
• Annual: $31,843/yr
• Cap rate: 20.45%
• Cash-on-cash: 50.54%
• DSCR: 3.25
• 1% rule: 2.37%
• Cash to close: $63,000

Investor read

• This is a 3-bed/2.0-bath manufactured listed at $225k.
• At list price, monthly cash flow is $3k ($32k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($5k rent vs $225k).
• It's been on market 422 days — a 12% lower offer ($198k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $198k (12.0% below list) — sets the bar for market timing.
• 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 75/100 on livability (#119 in CA, #4,226 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment A+; Watch: crime F, cost of living F.
• Market conditions: Rents rising (+2.7%/yr); 98 active listings in the ZIP; 1 comparable units currently listed for rent nearby; solid renter incomes; 224 units permitted in Santa Cruz County in 2024 (25 in 5+ unit buildings).
• Santa Cruz County population projected at +18% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 3 sale attempts since 7y ago; this cycle's ask has dropped $170k (43%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $42k; list at $225k implies a 436% gain — meaningful room to come down on a strong offer.
• At projected returns (-3.0% appreciation + 2.7% rent growth), your $63k cash investment doubles in ~3 years — after that, you're playing with house money.
• Cap rate 20.4% vs local median 1.8% in Santa Cruz — 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 $5,327/mo this rent would consume 59% of the median local household income ($109k/yr) (locally 2932% 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 422 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1971 — 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 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?
• Crime grade is F 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.
• 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.