11426 Gale

Hawthorne, CA 90250

$1,850,000D-

10 bd · 7.0 ba · 4,766 sqft · Built 1957 · MultiFamily · Active · 23 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $14,880/mo
• Mortgage (P&I): −$9,702
• Tax + insurance: −$1,167
• HOA: −$0
• Vac / Maint / Mgmt: −$3,125
• Net cashflow: $887/mo
• Annual: $10,640/yr
• Cap rate: 6.87%
• Cash-on-cash: 2.05%
• DSCR: 1.09
• 1% rule: 0.80%
• Cash to close: $518,000

Investor read

• This is a 6×1bd/1ba + 1×4bd/1ba units multifamily listed at $1.85M.
• At list price, monthly cash flow is $887 ($11k/yr) — positive. Per door: $127/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 $1.49M (19.6% below list).
• It's been on market 23 days — a 2% lower offer ($1.82M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $1.49M (19.6% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $13k of loan paydown is wiped out by about $56k of value loss. Plan a longer hold.
• Location reads 60/100 on livability (#597 in CA) — a middle-class / working-renter tenant base. Strengths: commute A+, housing B; Watch: crime F, cost of living F, health & safety F.
• Hawthorne (suburban): math 38% / reading 47% proficiency, ranked #673 of 1,400 in CA (top 48%) — 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: Eucalyptus (715 students, 67% FRL); Hawthorne Middle (721 students, 62% FRL); Lawndale High (math 16% / reading 42%, grade F, #770 of 1,170 statewide, top 66%, 1,921 students, 72% FRL).
• Zoned-school proficiency averages 29% at this address vs 42% district-wide (-14 pts) — the specific schools serving this property underperform the Hawthorne average; the district grade overstates school quality for this exact location.
• Watch-outs: built in 1957 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+1.9%/yr); 95 active listings in the ZIP; solid renter incomes; 19,697 units permitted in Los Angeles County in 2024 (9,426 in 5+ unit buildings).
• Los Angeles County population projected at +9% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• Climate carrying-cost: extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.9% vs local median 2.0% in Hawthorne — 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 $14,880/mo this rent would consume 228% of the median local household income ($78k/yr) (locally 6620% 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 1957 — 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.
• 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.