1962-1976 Edwards

Merced, CA 95340

$1,165,000D

16 bd · 8.0 ba · 6,800 sqft · Built 1979 · MultiFamily · Active · 116 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $10,632/mo
• Mortgage (P&I): −$6,109
• Tax + insurance: −$2,064
• HOA: −$0
• Vac / Maint / Mgmt: −$2,233
• Net cashflow: $226/mo
• Annual: $2,711/yr
• Cap rate: 6.65%
• Cash-on-cash: 1.28%
• DSCR: 1.06
• 1% rule: 0.91%
• Cash to close: $326,200

Investor read

• This is a 8 × 2-bed/1.0-bath units multifamily listed at $1.17M.
• At list price, monthly cash flow is $226 ($3k/yr) — positive. Per door: $28/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 $1.06M (8.7% below list).
• It's been on market 116 days — a 9% lower offer ($1.06M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $1.06M (9.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $8k of loan paydown is wiped out by about $35k of value loss. Plan a longer hold.
• Location reads 73/100 on livability (#153 in CA) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, housing A+; Watch: employment D, crime F, cost of living F.
• Merced Union High (urban): math 20% / reading 46% proficiency, ranked #301 of 517 in CA (top 58%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Charles Wright Elementary (563 students, 80% FRL); Herbert Hoover Middle (614 students, 79% FRL); Golden Valley High (math 20% / reading 46%, grade F, #667 of 1,170 statewide, top 57%, 1,956 students, 81% FRL).
• Watch-outs: flood insurance adds $122/mo.
• Market conditions: Rents rising fast (+4.1%/yr); 140 active listings in the ZIP; 459 units permitted in Merced County in 2024 (0 in 5+ unit buildings).
• Merced County population projected at +12% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• Climate carrying-cost: in FEMA flood zone AO (mandatory federal flood insurance); severe wildfire risk; extreme-heat days projected 7→17/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.7% vs local median 3.4% in Merced — 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 $10,632/mo this rent would consume 179% of the median local household income ($71k/yr) (locally 1947% 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 116 days. Have you received any prior offers? Is the seller open to a 9% concession, seller financing, or rate buy-down credit?
• 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 1979 — 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?
• 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 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?