Assumptions
Price & financing
Land vs improvement & cost segregation
Short-term rental (2026)
Long-term / furnished conversion
Tax, growth & exit
Property
C
57/100
7420 Teasdale Ave, San Diego, CA 92122
University City · 4bd/3ba · 2,384 sqft · pool · built 1970
Best strategy by 5-yr IRR: Long-term rental⚠ verify STR license
Recommended offer
$1,565,069
This deal doesn't reach a 8% 5-yr IRR at any price near comps (it's a tax-deferral play, not a cash-flow play). This is the max price to break even on a 5-yr after-tax hold; the bigger value is the Year-1 depreciation refund.
Purchase price
$1,850,000
Initial cash in
$467,000
Improvement allocation
57%
strong
Year-1 depreciation
$407,372
22% of price
Year-1 tax benefit
$193,667
Year-1 after-tax CF
$120,443
Net Yr-1 outlay (after refund)
$346,557
5-yr IRR (STR→convert)
-1.1%
Profitability by strategy & horizon
| Strategy | 3-yr IRR | 5-yr IRR | 10-yr IRR | 5-yr profit | 5-yr mult | 10-yr profit |
|---|---|---|---|---|---|---|
| STR → convert (tax play) | -7.7% | -1.1% | 3.1% | ($23,521) | 0.95x | $201,310 |
| Short-term rental (hold) | -8.8% | -2.1% | 2.8% | ($41,522) | 0.91x | $157,600 |
| Long-term rental | -5.2% | -0.5% | 2.7% | ($13,948) | 0.97x | $217,139 |
IRR / profit are after-tax, including depreciation, the STR loophole (where material participation applies), suspended passive losses released at sale, and recapture + capital-gains tax on exit.
Rating breakdown (weighted)
Tax & cost-seg potential · w2292
57% improvement · Yr-1 depr 22% of price
Year-1 tax benefit vs cash in · w1595
$193,667 benefit on $467,000 cash
5-year after-tax IRR · w2027
-1.1%
10-year after-tax IRR · w1256
3.1%
Cash flow / debt coverage · w120
DSCR 0.37x (stabilized rental NOI ÷ debt)
Deal margin vs comps · w950
0.0% below comp value
STR license feasibility · w1055
Must verify availability
Cost segregation & depreciation
Improvement basis$1,055,872
Land (no depr.)$794,128
5-yr + furnishings$203,381
15-yr land improv.$190,057
27.5-yr structure$707,434
Year-1 deduction$407,372
Recommended offer logic
Comp / AVM value$1,850,000
Price for 8% IRR—
Price for 5-yr break-even$1,565,069
Recommended offer$1,565,069
This deal doesn't reach a 8% 5-yr IRR at any price near comps (it's a tax-deferral play, not a cash-flow play). This is the max price to break even on a 5-yr after-tax hold; the bigger value is the Year-1 depreciation refund.
Year-by-year pro forma — STR → convert
| Yr | Phase | NOI | Depreciation | Taxable | Tax effect | Pre-tax CF | After-tax CF |
|---|---|---|---|---|---|---|---|
| 1 | STR | $29,013 | $407,372 | ($461,112) | $193,667 | ($73,224) | $120,443 |
| 2 | Rental | $37,967 | $25,725 | ($69,386) | $0 | ($64,270) | ($64,270) |
| 3 | Rental | $39,772 | $25,725 | ($66,391) | $0 | ($62,465) | ($62,465) |
| 4 | Rental | $41,631 | $25,725 | ($63,274) | $0 | ($60,605) | ($60,605) |
| 5 | Rental | $43,546 | $25,725 | ($60,028) | $0 | ($58,690) | ($58,690) |
| 6 | Rental | $45,518 | $25,725 | ($56,648) | $0 | ($56,718) | ($56,718) |
| 7 | Rental | $47,550 | $25,725 | ($53,128) | $0 | ($54,687) | ($54,687) |
| 8 | Rental | $49,643 | $25,725 | ($49,460) | $0 | ($52,594) | ($52,594) |
| 9 | Rental | $51,798 | $25,725 | ($45,639) | $0 | ($50,439) | ($50,439) |
| 10 | Rental | $54,018 | $25,725 | ($41,657) | $0 | ($48,219) | ($48,219) |