Rental deal in Los Angeles: $1,325,000 purchase, $7,365/month — sanity check (4 bed)

E

EsmeAsh

Landlord
Established
I can either accept the broker's 6.7% gross yield or rebuild the deal from the ownership costs, and neither route feels comfortable without better evidence. The property is a 4-bed Los Angeles condo at $1,325,000, with projected rent of $7,365 per month.

My model deducts vacancy, management, regular upkeep and a substantial repair allowance, while purchase expenses may weaken the result further. The missing facts are the HOA dues and reserves, possible assessments, property tax, insurance and realistic turnover costs. Which of those tends to change the decision most, and would your required net return differ between a cash purchase and a financed one?
 
For a condo, I’d focus first on the HOA rather than ordinary maintenance inside the unit. Monthly dues are visible; special assessments and weak building reserves are the harder risks. Read the financials and recent meeting minutes, and ask what major shared work is being discussed. Also confirm whether the $7,365 rent is supported by signed comparables rather than an optimistic asking figure.
 
Is this intended as a cash purchase or financed? At this price, the financing assumptions could move the result more than small changes to vacancy or management. I’d also want the exact HOA dues, property-tax estimate based on your purchase, insurance quote, and any leasing restrictions before suggesting a worthwhile net yield.
 
I wouldn’t automatically treat the larger repair reserve as conservative if it only covers the condo interior. The expensive surprise may sit at building level and arrive as an assessment. Run a separate scenario with lower rent during turnover, leasing costs, and an assessment in the same year. If that case creates an uncomfortable cash call, the headline yield is doing too much work.
 
There’s a counterpoint: don’t double-count every building risk. If the HOA budget already funds routine common-area work and reserves adequately, adding a full duplicate reserve will make the deal look artificially poor. Separate owner expenses, HOA dues, and genuinely unfunded building exposure. The documents matter more than applying a generic percentage.
 
Tenant turnover deserves more attention with a 4-bed. Even if annual vacancy looks modest on paper, one move-out can combine lost rent, cleaning, repairs and a management or leasing charge. I’d model the cash flow month by month, not just subtract an annual vacancy percentage. That will also show whether financing and HOA payments remain manageable during an empty period.
 
Agreed on avoiding double-counting, but adequate reserves can’t be assumed from the dues alone. My practical sequence would be: verify achievable rent, obtain actual insurance and financing figures, calculate taxes and HOA costs, then inspect the association’s budget, reserves, meeting notes and assessment history. After that, compare the base case with a bad-turnover year. I wouldn’t choose a target net yield until those unknowns are priced.
 
Helpful points. I had included the monthly HOA payment but not treated a special assessment as a separate stress case, so that is a gap. I’m also going back to the rent evidence rather than accepting $7,365 because it fits the 6.7% headline. I’ll rebuild this as monthly cash flow with both financed and cash scenarios, plus a turnover year and an association assessment.
 
That should give you a much cleaner decision. One final comparison: calculate the return on total cash committed, including transaction costs and any initial work, not merely on the $1,325,000 price. Then ask whether the remaining net cash flow justifies condo-association exposure, tenant concentration in one 4-bed unit, and limited liquidity. If the deal only works in the smooth case, I’d pass rather than debate a precise target yield.
 
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