11646 Birch Ave

Hawthorne, CA 90250

$2,400,000D

18 bd · 13.5 ba · 10,236 sqft · Built 1966 · MultiFamily · Active · 46 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $21,647/mo
• Mortgage (P&I): −$12,586
• Tax + insurance: −$4,000
• HOA: −$0
• Vac / Maint / Mgmt: −$4,546
• Net cashflow: $515/mo
• Annual: $6,183/yr
• Cap rate: 6.55%
• Cash-on-cash: 0.92%
• DSCR: 1.04
• 1% rule: 0.90%
• Cash to close: $672,000

Investor read

• This is a 8×2bd/1.5ba + 1×3bd/1.5ba units multifamily listed at $2.40M. Condition is rated fair.
• At list price, monthly cash flow is $515 ($6k/yr) — positive. Per door: $57/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 $2.16M (9.8% below list).
• It's been on market 46 days — a 3% lower offer ($2.33M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $2.16M (9.8% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $17k of loan paydown is wiped out by about $72k 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: York (471 students, 70% FRL); Prairie Vista Middle (759 students, 63% 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.
• Market conditions: Rents rising (+1.9%/yr); 96 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.
• 5 sale attempts since 32y 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 $585k; list at $2.40M implies a 310% gain — meaningful room to come down on a strong offer.
• 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 6.6% 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 $21,647/mo this rent would consume 332% 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

• It's been on market 46 days. Have you received any prior offers? Is the seller open to a 10% 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?
• Have any recent inspections been done? Can we get a copy of the seller's disclosures and any deferred-maintenance estimates?
• Built in 1966 — 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?

Repairs flagged (vision-AI assessment)

• Minor: Kitchen countertops — Worn appearance
• Minor: Bathroom fixtures — Signs of wear
• Moderate: Exterior paint — Discoloration and wear
• Moderate: Flooring — Worn appearance
• Moderate: Interior paint — Faded appearance
• Minor: Windows — Need new hardware