431 Desert Lakes Cir

Palm Springs, CA 92264

$499,000D

3 bd · 3.0 ba · 2,452 sqft · Built 1972 · Townhouse · Active · 30 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $5,801/mo
• Mortgage (P&I): −$2,617
• Tax + insurance: −$832
• HOA: −$1,704
• Vac / Maint / Mgmt: −$1,218
• Net cashflow: $-570/mo
• Annual: $-6,840/yr
• Cap rate: 4.92%
• Cash-on-cash: -4.90%
• DSCR: 0.78
• 1% rule: 1.16%
• Cash to close: $139,720

Investor read

• This is a 3-bed/3.0-bath townhouse listed at $499k. Condition is rated good.
• At list price, monthly cash flow is $-570 ($-7k/yr) — negative.
• To cash-flow at today's rent, offer at most $417k (16.5% below list).
• Meets the 1% rule at list price ($6k rent vs $499k).
• It's been on market 30 days — a 2% lower offer ($492k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $417k (16.5% below list) — sets the bar for cash-flow.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $15k of value loss. Plan a longer hold.
• Location reads 66/100 on livability (#348 in CA) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+; Watch: crime F, cost of living F, health & safety F.
• Palm Springs Unified (suburban): math 21% / reading 42% proficiency, ranked #328 of 517 in CA (top 63%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases; 73% free/reduced lunch — lower-income household profile, screen leases tightly.
• Zoned schools: Cahuilla Elementary (421 students, 93% FRL); Raymond Cree Middle (708 students, 98% FRL); Palm Springs High (math 30% / reading 51%, grade F, #508 of 1,170 statewide, top 44%, 1,584 students, 97% FRL) — zoned schools average 96% FRL vs 73% district-wide (22 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Watch-outs: HOA is 29% of rent.
• Market conditions: Rents soft (-0.4%/yr); 782 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals lingering (median 111d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 70% of comp listings sitting > 30 days — soft ceiling on asking rent; solid renter incomes; 9,195 units permitted in Riverside County in 2024 (1,512 in 5+ unit buildings).
• Riverside County population projected at +22% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 5 sale attempts since 19y 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 $422k; 18% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• Climate carrying-cost: extreme-heat days projected 7→21/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 4.9% vs local median 2.5% in Palm Springs — 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 $5,801/mo this rent would consume 90% of the median local household income ($78k/yr) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• Built in 1972 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• 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?
• 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.