20391 Cypress

Newport Beach, CA 92660

$7,600,000F

5 bd · 6.0 ba · 7,042 sqft · Built 2000 · SingleFamily · Active · 77 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $6,975/mo
• Mortgage (P&I): −$39,855
• Tax + insurance: −$7,404
• HOA: −$0
• Vac / Maint / Mgmt: −$1,465
• Net cashflow: $-41,749/mo
• Annual: $-500,986/yr
• Cap rate: -0.30%
• Cash-on-cash: -23.54%
• DSCR: -0.05
• 1% rule: 0.09%
• Cash to close: $2,128,000

Investor read

• This is a 5-bed/6.0-bath single-family listed at $7.60M.
• At list price, monthly cash flow is $-42k ($-501k/yr) — negative.
• To cash-flow at today's rent, offer at most $797k (89.5% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $697k (90.8% below list).
• It's been on market 77 days — a 6% lower offer ($7.14M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $697k (90.8% below list) — sets the bar for 1% rule.
• In year one you build about $813k of equity ($53k loan paydown + $760k appreciation (10.0% local appreciation)).
• Location reads 76/100 on livability (#101 in CA, #3,645 nationally) — a middle-class / working-renter tenant base. Strengths: schools A+, amenities A+, employment A+; Watch: health & safety C-, cost of living F.
• Newport-Mesa Unified (urban): math 46% / reading 58% proficiency, ranked #106 of 517 in CA (top 20%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: Rents rising fast (+4.1%/yr); 154 active listings in the ZIP; high-income renter base; 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.
• 21 sale attempts since 24y ago; this cycle's ask has dropped $900k (11%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $4.50M; list at $7.60M implies a 69% gain — meaningful room to come down on a strong offer.
• By year 2, paydown + projected appreciation supports a ~$1.31M cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: extreme-heat days projected 7→22/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate -0.3% vs local median 0.6% in Newport Beach — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.
• At $6,975/mo this rent would consume 52% of the median local household income ($160k/yr) (locally 2633% 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 77 days. Have you received any prior offers? Is the seller open to a 91% concession, seller financing, or rate buy-down credit?
• 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?
• 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.
• 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.