2911 S Palm Grove Ave

Los Angeles, CA 90016

$1,250,000D

9 bd · 5.1 ba · 3,960 sqft · Built 1930 · MultiFamily · Active · 22 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $11,563/mo
• Mortgage (P&I): −$6,555
• Tax + insurance: −$2,510
• HOA: −$0
• Vac / Maint / Mgmt: −$2,428
• Net cashflow: $70/mo
• Annual: $837/yr
• Cap rate: 6.77%
• Cash-on-cash: 1.70%
• DSCR: 1.08
• 1% rule: 0.93%
• Cash to close: $350,000

Investor read

• This is a 1×3bd/1.7ba + 1×4bd/3ba + 1×2bd/1ba units multifamily listed at $1.25M.
• At list price, monthly cash flow is $70 ($837/yr) — positive. Per door: $23/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 $1.16M (7.5% below list).
• It's been on market 22 days — a 2% lower offer ($1.23M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $1.16M (7.5% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $9k of loan paydown is wiped out by about $38k of value loss. Plan a longer hold.
• Location reads 68/100 on livability (#273 in CA) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment B; Watch: health & safety C-, schools D+, crime F.
• Los Angeles Unified (urban): math 29% / reading 54% proficiency, ranked #223 of 517 in CA (top 43%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 67% free/reduced lunch — lower-income household profile, screen leases tightly.
• Watch-outs: flood insurance adds $427/mo; built in 1930 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising (+1.1%/yr); 149 active listings in the ZIP; 1 comparable units currently listed for rent nearby; 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.
• 2 sale attempts since 10y 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 $726k; list at $1.25M implies a 72% gain — meaningful room to come down on a strong offer.
• Climate carrying-cost: in FEMA flood zone AE (mandatory federal flood insurance); extreme-heat days projected 7→21/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 6.8% vs local median 2.1% in Los Angeles — 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 $11,563/mo this rent would consume 189% of the median local household income ($74k/yr) (locally 3450% 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 1930 — 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.
• 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?
• 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?