1441 Homewood Rd. M5-96D

Seal Beach, CA 90740

$369,900D

2 bd · 1.0 ba · 1,125 sqft · Built 1962 · Townhouse · Active · 340 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,235/mo
• Mortgage (P&I): −$1,940
• Tax + insurance: −$683
• HOA: −$493
• Vac / Maint / Mgmt: −$679
• Net cashflow: $-560/mo
• Annual: $-6,722/yr
• Cap rate: 4.69%
• Cash-on-cash: -5.72%
• DSCR: 0.75
• 1% rule: 0.87%
• Cash to close: $103,572

Investor read

• This is a 2-bed/1.0-bath townhouse listed at $370k. Condition is rated fair.
• At list price, monthly cash flow is $-560 ($-7k/yr) — negative.
• To cash-flow at today's rent, offer at most $289k (21.9% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $323k (12.5% below list).
• It's been on market 340 days — a 12% lower offer ($326k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $289k (21.9% below list) — sets the bar for cash-flow.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $11k of value loss. Plan a longer hold.
• Location reads 58/100 on livability (#695 in CA) — a working-class tenant base; expect higher turnover. Strengths: employment A+, housing A-; Watch: health & safety D, crime F, amenities F.
• Los Alamitos Unified (suburban): math 57% / reading 82% proficiency, ranked #52 of 517 in CA (top 10%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease; only 10% free/reduced lunch — higher-income household profile.
• Zoned schools: Los Alamitos High (math 60% / reading 84%, grade B+, #92 of 1,170 statewide, top 8%, 3,055 students, 15% FRL).
• Watch-outs: flood insurance adds $66/mo.
• Market conditions: Rents rising fast (+4.8%/yr); 126 active listings in the ZIP; 7 comparable units currently listed for rent nearby; rentals lingering (median 104d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 86% of comp listings sitting > 30 days — soft ceiling on asking rent; solid renter incomes; 6,974 units permitted in Orange County in 2024 (3,839 in 5+ unit buildings).
• Orange County population projected at +14% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 3 sale attempts since 5y ago; this cycle's ask has dropped $55k (13%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Climate carrying-cost: severe flood risk; extreme-heat days projected 7→23/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 4.7% vs local median 3.2% in Seal Beach — 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 $3,235/mo this rent would consume 45% of the median local household income ($85k/yr) — 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 340 days. Have you received any prior offers? Is the seller open to a 22% concession, seller financing, or rate buy-down credit?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• Built in 1962 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• 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.

Repairs flagged (vision-AI assessment)

• Minor: Kitchen cabinets — Slight wear
• Minor: Bathroom cabinets — Slight wear
• Minor: Bathroom countertop — Slight wear