817 16th St

Santa Monica, CA 90403

$3,250,000C-

2 bd · 2.0 ba · 800 sqft · Built 1952 · MultiFamily · Active · 77 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $29,438/mo
• Mortgage (P&I): −$17,043
• Tax + insurance: −$4,332
• HOA: −$0
• Vac / Maint / Mgmt: −$6,182
• Net cashflow: $1,881/mo
• Annual: $22,574/yr
• Cap rate: 6.99%
• Cash-on-cash: 2.48%
• DSCR: 1.11
• 1% rule: 0.91%
• Cash to close: $910,000

Investor read

• This is a 2-bed/2.0-bath multifamily listed at $3.25M.
• At list price, monthly cash flow is $2k ($23k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $2.94M (9.4% below list).
• It's been on market 77 days — a 6% lower offer ($3.06M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $2.94M (9.4% below list) — sets the bar for 1% rule.
• In year one you build about $19k of equity ($22k loan paydown + $-3k appreciation (-0.1% local appreciation)).
• Location reads 72/100 on livability (#178 in CA) — a middle-class / working-renter tenant base. Strengths: schools A+, amenities A+, commute A+; Watch: health & safety C-, crime F, cost of living F.
• Santa Monica-Malibu Unified (urban): math 61% / reading 74% proficiency, ranked #123 of 1,400 in CA (top 9%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1952 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents soft (-0.1%/yr); 93 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals at typical pace (median 25d on market — plan ~3-4 weeks tenant-placement turnaround); high-income renter base; 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.
• 9 sale attempts since 13y ago; this cycle's ask has dropped $500k (13%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• Current owner paid $2.52M; 29% above their basis — modest negotiation headroom, anchor on the comps not their cost.
• By year 8, paydown + projected appreciation supports a ~$217k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• 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 7.0% vs local median 1.2% in Santa Monica — 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 $29,438/mo this rent would consume 290% of the median local household income ($122k/yr) (locally 2265% 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 77 days. Have you received any prior offers? Is the seller open to a 9% concession, seller financing, or rate buy-down credit?
• Built in 1952 — 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 A-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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?
• 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.