1042 6th St

Santa Monica, CA 90403

$4,450,000B

8 bd · 16.0 ba · 9,900 sqft · Built 1963 · MultiFamily · Active · 97 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $78,401/mo
• Mortgage (P&I): −$23,336
• Tax + insurance: −$2,655
• HOA: −$0
• Vac / Maint / Mgmt: −$16,464
• Net cashflow: $35,946/mo
• Annual: $431,351/yr
• Cap rate: 15.99%
• Cash-on-cash: 34.62%
• DSCR: 2.54
• 1% rule: 1.76%
• Cash to close: $1,246,000

Investor read

• This is a 16 × 8-bed/1.0-bath units multifamily listed at $4.45M.
• At list price, monthly cash flow is $36k ($431k/yr) — positive. Per door: $2k/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($78k rent vs $4.45M).
• It's been on market 97 days — a 9% lower offer ($4.05M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $4.05M (9.0% below list) — sets the bar for market timing.
• In year one you build about $26k of equity ($31k loan paydown + $-4k appreciation (-0.1% local appreciation)).
• Location reads 72/100 on livability (#178 in CA) — a middle-class / working-renter tenant base. Strengths: schools A+, amenities A+, commute A+; Watch: health & safety C-, crime F, cost of living F.
• Santa Monica-Malibu Unified (urban): math 61% / reading 74% proficiency, ranked #123 of 1,400 in CA (top 9%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Market conditions: Rents soft (-0.1%/yr); 93 active listings in the ZIP; high-income renter base; 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.
• 4 sale attempts since 3y 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.
• At projected returns (-0.1% appreciation + 0.0% rent growth), your $1.25M cash investment doubles in ~3 years — after that, you're playing with house money.
• By year 8, paydown + projected appreciation supports a ~$298k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• 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 16.0% vs local median 1.2% in Santa Monica — 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 $78,401/mo this rent would consume 772% of the median local household income ($122k/yr) (locally 2265% 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 97 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 1963 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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?
• 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?