546 N 5th St

Banning, CA 92220

$518,000C-

3 bd · 3.0 ba · 2,162 sqft · Built 1955 · MultiFamily · Active · 6 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,978/mo
• Mortgage (P&I): −$2,716
• Tax + insurance: −$387
• HOA: −$0
• Vac / Maint / Mgmt: −$1,045
• Net cashflow: $829/mo
• Annual: $9,950/yr
• Cap rate: 8.21%
• Cash-on-cash: 6.86%
• DSCR: 1.31
• 1% rule: 0.96%
• Cash to close: $145,040

Investor read

• This is a 3 × 1-bed/1.0-bath units multifamily listed at $518k.
• At list price, monthly cash flow is $829 ($10k/yr) — positive. Per door: $276/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $498k (3.9% below list).
• Only 6 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $498k (3.9% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $4k of loan paydown is wiped out by about $16k of value loss. Plan a longer hold.
• Location reads 48/100 on livability (#1,192 in CA) — a working-class tenant base; expect higher turnover. Strengths: housing B+; Watch: crime C-, schools F, amenities F.
• Banning Unified (suburban): math 15% / reading 25% proficiency, ranked #1,258 of 1,400 in CA (top 90%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 76% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: built in 1955 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+3.6%/yr); 318 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 9,195 units permitted in Riverside County in 2024 (1,512 in 5+ unit buildings).
• Riverside County population projected at +22% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 8 sale attempts since 20y 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.
• Current owner paid $117k; list at $518k implies a 343% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: severe wildfire risk; extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 8.2% vs local median 3.0% in Banning — 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 $4,978/mo this rent would consume 95% of the median local household income ($63k/yr) (locally 1146% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Built in 1955 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are F-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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 apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.