68040 Club Cir

Desert Hot Springs, CA 92240

$560,000D-

12 bd · 9.0 ba · 1,950 sqft · Built 1967 · MultiFamily · Active · 163 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $4,860/mo
• Mortgage (P&I): −$2,937
• Tax + insurance: −$363
• HOA: −$0
• Vac / Maint / Mgmt: −$1,021
• Net cashflow: $540/mo
• Annual: $6,481/yr
• Cap rate: 7.45%
• Cash-on-cash: 4.13%
• DSCR: 1.18
• 1% rule: 0.87%
• Cash to close: $156,800

Investor read

• This is a 2×1bd/1ba + 1×2bd/1ba units multifamily listed at $560k.
• At list price, monthly cash flow is $540 ($6k/yr) — positive. Per door: $180/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 $486k (13.2% below list).
• It's been on market 163 days — a 12% lower offer ($493k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $486k (13.2% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $4k of loan paydown is wiped out by about $17k of value loss. Plan a longer hold.
• Location reads 49/100 on livability (#1,149 in CA) — a working-class tenant base; expect higher turnover. Strengths: housing B+; Watch: crime D+, schools F, amenities 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.
• Market conditions: Rents rising (+3.7%/yr); 515 active listings in the ZIP; 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.
• 3 sale attempts 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.
• Climate carrying-cost: major wildfire risk; extreme-heat days projected 7→20/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 7.5% vs local median 3.9% in Desert Hot 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 $4,860/mo this rent would consume 108% of the median local household income ($54k/yr) (locally 2095% 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 163 days. Have you received any prior offers? Is the seller open to a 13% 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?
• Built in 1967 — 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 D 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?