20460 Pacific Coast #2

Malibu, CA 90265

$550,000B+

3 bd · 3.0 ba · 1,750 sqft · Built 1963 · SingleFamily · Active · 159 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $11,580/mo
• Mortgage (P&I): −$2,884
• Tax + insurance: −$917
• HOA: −$0
• Vac / Maint / Mgmt: −$2,432
• Net cashflow: $5,348/mo
• Annual: $64,171/yr
• Cap rate: 17.96%
• Cash-on-cash: 41.67%
• DSCR: 2.85
• 1% rule: 2.11%
• Cash to close: $154,000

Investor read

• This is a 3-bed/3.0-bath single-family listed at $550k. Condition is rated good.
• At list price, monthly cash flow is $5k ($64k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($12k rent vs $550k).
• It's been on market 159 days — a 12% lower offer ($484k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $484k (12.0% below list) — sets the bar for market timing.
• In year one you build about $7k of equity ($4k loan paydown + $3k appreciation (0.6% local appreciation)).
• Location reads 53/100 on livability (#979 in CA) — a working-class tenant base; expect higher turnover. Strengths: employment A+; Watch: housing C-, crime F, amenities F.
• Santa Monica-Malibu Unified (urban): math 61% / reading 74% proficiency, ranked #123 of 1,400 in CA (top 9%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Webster Elementary (214 students, 10% FRL).
• Market conditions: Rents falling (-3.4%/yr); 636 active listings in the ZIP; 6 comparable units currently listed for rent nearby; rentals lingering (median 46d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 67% of comp listings sitting > 30 days — soft ceiling on asking rent; high-income renter base; 19,697 units permitted in Los Angeles County in 2024 (9,426 in 5+ unit buildings).
• Los Angeles County population projected at +9% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 6 sale attempts since 3y 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.
• At projected returns (0.6% appreciation + 0.0% rent growth), your $154k cash investment doubles in ~3 years — after that, you're playing with house money.
• By year 5, paydown + projected appreciation supports a ~$35k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 18.0% vs local median 0.7% in Malibu — 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 $11,580/mo this rent would consume 71% of the median local household income ($197k/yr) (locally 420% 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 159 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1963 — 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 B-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.