1288 Derrick Dr

Stockton, CA 95206

$360,000D

3 bd · 2.0 ba · 1,134 sqft · Built 1989 · SingleFamily · Pending · 3 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $2,597/mo
• Mortgage (P&I): −$1,888
• Tax + insurance: −$278
• HOA: −$0
• Vac / Maint / Mgmt: −$545
• Net cashflow: $-114/mo
• Annual: $-1,371/yr
• Cap rate: 5.91%
• Cash-on-cash: -1.36%
• DSCR: 0.94
• 1% rule: 0.72%
• Cash to close: $100,800

Investor read

• This is a 3-bed/2.0-bath single-family listed at $360k.
• At list price, monthly cash flow is $-114 ($-1k/yr) — negative.
• To cash-flow at today's rent, offer at most $340k (5.6% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $260k (27.9% below list).
• Only 3 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $260k (27.9% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $2k of loan paydown is wiped out by about $11k of value loss. Plan a longer hold.
• Location reads 57/100 on livability (#734 in CA) — a working-class tenant base; expect higher turnover. Strengths: housing A+, health & safety A, amenities A-; Watch: employment C-, crime F, commute F.
• Stockton Unified (urban): math 23% / reading 46% proficiency, ranked #295 of 517 in CA (top 57%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 78% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: San Joaquin Elementary (746 students, 70% FRL); Edison High (math 20% / reading 41%, grade F, #710 of 1,170 statewide, top 61%, 2,558 students, 74% FRL).
• Market conditions: Rents soft (-0.6%/yr); 139 active listings in the ZIP; 6 comparable units currently listed for rent nearby; rentals at typical pace (median 17d on market — plan ~3-4 weeks tenant-placement turnaround); solid renter incomes; 3,779 units permitted in San Joaquin County in 2024 (0 in 5+ unit buildings).
• San Joaquin County population projected at +17% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Current owner paid $87k; list at $360k implies a 314% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: moderate flood risk; extreme-heat days projected 7→15/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 5.9% vs local median 3.6% in Stockton — 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.
• This rent runs 37% of the median local income ($83k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

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?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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?
• 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.
• How much new for-sale + rental construction is in the pipeline within 1–3 miles? Heavy new supply typically softens prices + rents 12–24 months out; constrained supply supports both.