497 Sebastopol Ave

Santa Rosa, CA 95401

$1,075,000D-

6 bd · 4.0 ba · 2,944 sqft · Built 1970 · MultiFamily · Active · 17 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $8,620/mo
• Mortgage (P&I): −$5,637
• Tax + insurance: −$1,072
• HOA: −$0
• Vac / Maint / Mgmt: −$1,810
• Net cashflow: $100/mo
• Annual: $1,204/yr
• Cap rate: 6.48%
• Cash-on-cash: 0.66%
• DSCR: 1.03
• 1% rule: 0.80%
• Cash to close: $301,000

Investor read

• This is a 2×2bd/1ba + 2×1bd/1ba units multifamily listed at $1.07M.
• At list price, monthly cash flow is $100 ($1k/yr) — positive. Per door: $25/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 $862k (19.8% below list).
• It's been on market 17 days — a 2% lower offer ($1.06M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $862k (19.8% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $7k of loan paydown is wiped out by about $32k of value loss. Plan a longer hold.
• Location reads 75/100 on livability (#112 in CA, #3,940 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment A+; Watch: schools C-, cost of living F.
• Santa Rosa High (urban): math 31% / reading 47% proficiency, ranked #703 of 1,400 in CA (top 50%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Watch-outs: flood insurance adds $66/mo.
• Market conditions: Rents soft (-1.4%/yr); 79 active listings in the ZIP; solid renter incomes; 1,039 units permitted in Sonoma County in 2024 (185 in 5+ unit buildings).
• Sonoma County population projected at +8% by 2050 — modest demand growth; plan on rents tracking national, not racing it.
• 3 sale attempts 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 $382k; list at $1.07M implies a 182% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: major flood risk; moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.5% vs local median 2.5% in Santa Rosa — 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 $8,620/mo this rent would consume 110% of the median local household income ($94k/yr) (locally 1525% 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 1970 — 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?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• 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.