31851 Sea Level Dr #2

Malibu, CA 90265

$949,999B

3 bd · 4.0 ba · 2,906 sqft · Built 1974 · SingleFamily · Active · 496 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $11,380/mo
• Mortgage (P&I): −$4,982
• Tax + insurance: −$1,650
• HOA: −$0
• Vac / Maint / Mgmt: −$2,390
• Net cashflow: $2,359/mo
• Annual: $28,306/yr
• Cap rate: 9.36%
• Cash-on-cash: 10.94%
• DSCR: 1.49
• 1% rule: 1.20%
• Cash to close: $266,000

Investor read

• This is a 3-bed/4.0-bath single-family listed at $950k. Condition is rated excellent.
• At list price, monthly cash flow is $2k ($28k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($11k rent vs $950k).
• It's been on market 496 days — a 12% lower offer ($836k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $836k (12.0% below list) — sets the bar for market timing.
• In year one you build about $12k of equity ($7k loan paydown + $6k appreciation (0.6% local appreciation)).
• Location reads 53/100 on livability (#979 in CA) — a working-class tenant base; expect higher turnover. Strengths: employment A+, schools B; Watch: housing C-, crime F, amenities 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: flood insurance adds $66/mo.
• Market conditions: Rents falling (-3.4%/yr); 627 active listings in the ZIP; 9 comparable units currently listed for rent nearby; rentals lingering (median 44d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 67% of comp listings sitting > 30 days — soft ceiling on asking rent; 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.
• 3 sale attempts since 2y ago; this cycle's ask has dropped $50k (5%) from the opening price — seller is motivated, your offer sets the floor, not the list.
• At projected returns (0.6% appreciation + 0.0% rent growth), your $266k cash investment doubles in ~7 years — after that, you're playing with house money.
• By year 5, paydown + projected appreciation supports a ~$61k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Climate carrying-cost: major flood risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 9.4% vs local median 0.7% in Malibu — 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 $11,380/mo this rent would consume 69% of the median local household income ($197k/yr) (locally 420% 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 496 days. Have you received any prior offers? Is the seller open to a 12% concession, seller financing, or rate buy-down credit?
• Built in 1974 — 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?
• 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 B-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.