2465 Palermo #5

Palermo, CA 95968

$18,000D+

2 bd · 1.0 ba · 480 sqft · Built 1966 · Manufactured · Active · 65 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $929/mo
• Mortgage (P&I): −$94
• Tax + insurance: −$26
• HOA: −$0
• Vac / Maint / Mgmt: −$195
• Net cashflow: $614/mo
• Annual: $7,363/yr
• Cap rate: 47.20%
• Cash-on-cash: 146.10%
• DSCR: 7.50
• 1% rule: 5.16%
• Cash to close: $5,040

Investor read

• This is a 2-bed/1.0-bath manufactured listed at $18k.
• At list price, monthly cash flow is $614 ($7k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($929 rent vs $18k).
• It's been on market 65 days — a 6% lower offer ($17k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $17k (6.0% below list) — sets the bar for market timing.
• Local home prices are declining (-1.0%/yr); year-one equity from $124 of loan paydown is wiped out by about $176 of value loss. Plan a longer hold.
• Location reads 48/100 on livability (#1,219 in CA) — a working-class tenant base; expect higher turnover. Strengths: housing B+; Watch: schools F, crime F, amenities F.
• Palermo Union Elementary (town): math 20% / reading 33% proficiency, ranked #1,149 of 1,400 in CA (top 82%) — low school quality limits family demand, transient renter base, plan for 1-2y turnover; 72% free/reduced lunch — lower-income household profile, screen leases tightly.
• Market conditions: 10 active listings in the ZIP; 946 units permitted in Butte County in 2024 (254 in 5+ unit buildings).
• Butte County population projected at +10% 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 (-1.0% appreciation + 3.0% rent growth), your $5k cash investment doubles in ~1 year — after that, you're playing with house money.
• Climate carrying-cost: severe wildfire risk; extreme-heat days projected 7→16/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 47.2% vs local median 3.8% in Palermo — 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.

Questions for listing agent

• It's been on market 65 days. Have you received any prior offers? Is the seller open to a 6% concession, seller financing, or rate buy-down credit?
• Built in 1966 — 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 F-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?
• 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.