The Surf House: ten units rebuilt in 2024, a block off Garnet Avenue
The Surf House is a well-executed rebuild. The owners took a 1969 building down to its systems and delivered it in June 2024: upgraded electrical, new plumbing, central hot water, fire sprinklers, foundation work, a new roof and windows, and steel stairs. Every unit has quartz counters, in-unit laundry, split-system heating and cooling and its own patio or deck, and the tenants pay their own gas and electric. It sits a block off Garnet Avenue. Day one, there's very little to fix.
The asking price is $5,500,000, or $550,000 a unit and $813 a square foot. On the August rent roll, the 2026 operating statements and property taxes reset to the price, the building returns at that price, against the 5.12% in the offering memorandum. The difference is the OM's 3% vacancy where a lender will use 5%, maintenance at about half the 2026 run rate, and insurance at $6,723 where I use $10,000.
The rents are already at the top of the market. Six of the ten leases run into 2027, and the one-bedrooms lease at $3,200 to $3,595, above AVA Pacific Beach. The realistic upside is about $23,500 a year as leases roll to market, half of it from Unit 9 at $2,495. That's real but modest, so I don't pay for it in the price.
The comparable sales and the financials support $4,850,000 to $5,150,000. That range understates this building, because the sales behind it are mostly older, un-renovated buildings. Of the 23 recorded sales, the 21 with a build date went up between 1948 and 1988, 17 of them before 1970, and the rents they sold on show it: the nine MLS sales carried a median of about $2,260 a unit a month, against $3,359 here. Five were bought with construction, rehab or bridge loans, and Bayard sold before its rebuild. In my experience, most of these buildings were in original condition or hadn't been updated in 20 years or more. The Surf House was rebuilt in the last two years.
That's where the added value is. Bringing an original building to this standard runs about $90,000 to $140,000 a unit, based on Bayard's construction ledger and our 849–855 Emerald estimate. At the $460,000 median, that's $550,000 to $600,000 a unit all-in, plus a year of construction and lost rent. Your $525,000-a-unit target is below that. Location is the one place the data holds it back: it's about six blocks from the beach on Mission Bay and about a mile from the Pacific, and these sales price off distance to the ocean.
Our original offer of $4,600,000 went in on October 16 and went unanswered. In several conversations since, Austin Huffman has told me the owners' only issue was price; they found the rest of our terms workable. He has also confirmed they won't entertain $5,000,000. To secure this building, plan on paying about $5,250,000, possibly more. My recommendation is to re-engage this week at $5,100,000 with the same terms and be ready to move to $5,250,000 or higher. Above what the sales support, you're paying for certainty on a building that needs almost nothing on day one. Re-engaging within the week keeps a close before year-end.
The financing is close. On the terms in U.S. Bank's October 29 letter for Bayard (6.785%, 30-year amortization, 60% maximum loan-to-value), with the loan set at $2,695,000 at our offer, your $2,350,000 covers a purchase up to about . At $5,100,000 you'd need about $80,500 more; at the $5,250,000 target, about $231,000 more. You plan to fund the difference with additional equity from your home, and rates have dropped since that letter, which narrows the gap. We'll get an updated letter for this address before the offer goes back.
With Gratitude,
| 1478 Hornblend | 4627 Bayard | |
|---|---|---|
| Units · asking price | 10 · $5,500,000 | 7 · $5,000,000 |
| Unit mix | 1 studio, 6 one-bed, 3 two-bed | 6 one-bed, 1 three-bed |
| Real in-place cap at the ask | 3.62% | |
| Most probable purchase price | $5,250,000 | $5,000,000 · the asking price |
| Offer | $5,100,000 · $510,000 a unit | $4,375,000 · $625,000 a unit |
| Your target | $5,250,000 · $525,000 a unit | $5,000,000 · $714,286 a unit |
| In-place cap at the most probable price | 3.62% | |
| Your $2.35M on the letter as written | Covers up to about ; the balance from home equity | About $3.17M needed at its $5.0M ask, about $823K over |
| Capital needed after closing | Almost none | Almost none |
| Distance to the beach | About six blocks to Mission Bay; about a mile to the Pacific | About 400 ft to the Pacific |
| Main upside | Unit 9 and renewals to market, about $23,500 a year | Unit 4635 turnover, garages, ADUs |
| Status | Revised offer at $5,100,000 · Oct 30 | Offer in at $4,375,000 · Oct 29; the seller expects the $5,000,000 ask |
Bayard figures are from its October 28–29 opinion; its caps are on its lender view. Hornblend's figures use U.S. Bank's $2,695,000 loan and 0.5% closing costs. Needs verification
Move the price, the down payment or the loan, and every figure below recalculates. The price stays in view as you scroll.
The studio stays at $2,600.
Operating expenses do not include the mortgage.
Set at 5%. The 2026 statements show 6%. Slide to 0% to see self-managing.
U.S. Bank's letter of interest: $2,695,000, 6.785% indicative, 5-year fixed, 30-year amortization, 1.25× minimum coverage, 60% maximum loan-to-value. Set the loan at the top of the panel.
Anything above this comes from additional equity.
Contingency periods count calendar days from acceptance; the deposit counts business days. The purchase agreement sets the final dates. Needs verification
Tap a pin or a row for the sale details. Filter by how the buyer paid.
Pin locations are approximate, placed from recorded addresses. Needs verification
Distance to the Pacific is the biggest driver of price in this set, so I measure each sale from its address to the nearest Pacific shoreline. Hornblend is about 0.96 miles from the ocean, in the 0.6 to 1.0 mile band, and about six blocks, roughly 0.57 miles, from the beach on Mission Bay. The OM's "six blocks from the beach" refers to the bay.
Seven methods, all resting on the sales and the financials, land between about $4.47M and $5.30M and cluster around $4.85M to $5.15M. The rents are already at market, so I weight the income methods most. The owners have said they won't entertain $5.0M, so my most probable purchase price is $5.25M. That's above what the sales and the income support on their own; the gap is the rebuild the older sales don't carry.
The owners, 1478 Hornblend LLC, bought the building on October 28, 2021 for $3,200,000 and rebuilt it. The tax history confirms it: the assessment reset to that $3.2 million base on the 2022 bill, before the redevelopment. The listing had 46 days on market on October 2, in a size range that's sitting: six active listings against nine sales in two years.
About $3.2 million to buy, plus the cost of the 2024 rebuild, which we don't have. At $5,100,000, the owners come out ahead before selling costs as long as the rebuild cost less than about $1.9 million. The permits will show the scope; the cost may never be disclosed.
Your $5,100,000 offer is $400,000 under the ask, and your $5,250,000 target is $250,000 under. A $5.5M buyer needs about in cash on bank terms, or all cash, for a yield. That's a thin pool.
Listing agent feedback is from Kip's conversations with Austin Huffman and hasn't been confirmed in writing. Collections, leases and expenses per the property manager's rent roll and statements. Sale, loan and listing history per the CRS property report through October 1, 2026. Needs verification
Everything below comes in during the contingency periods, before you release them. The timeline in the Offer Explorer shows when each period ends.
Disclosure and inspection requirements depend on the building and the purchase agreement; confirm the list with escrow and your attorney. Needs verification
2026 skews toward smaller, beach-close 5-unit buildings, which sell for more per unit.
Source: county recorder data (ICE Farm summary, 2026) supplied by Kip. Loan amounts and lenders as recorded. Distances are approximate. Needs verification
| Item | Detail |
|---|---|
| Address | 1478 Hornblend St, San Diego 92109, marketed as The Surf House |
| APN | 423-092-10-00 |
| Built | 1969; comprehensive permitted redevelopment delivered June 2024, per the OM |
| Systems | Upgraded electrical capacity, new plumbing, centralized hot water, fire sprinklers, foundation improvements, roof, windows, exterior finishes, gutters and steel staircases, per the OM |
| Interiors | Quartz counters, custom-style cabinetry, stainless appliances, vinyl plank flooring, in-unit washer and dryer, split-system HVAC in every unit, patios or rooftop decks; select ocean and bay views |
| Utilities | Each unit on its own gas and electric meters, paid by the tenants. Water is billed back about 80/20 tenant to owner, per the property manager. Trash runs about $6,700 a year |
| Tax record | 2025 assessed value $3,395,865 and taxes of $42,551. Improvements are assessed at $848,966 and haven't been reassessed for the 2024 construction |
| Ownership | Owned since October 28, 2021: bought by 1478 Hornblend LLC from Hodges Enterprises Inc for $3,200,000 (recorded December 10, 2021), per the CRS sales history |
| Management | BlankPage Property Management, 6% of collected rent, no leasing fee |
| Listing | Marcus & Millichap, Zorbas Huffman Group · Austin Ray Huffman · listed at $5,500,000 |
Building details per the offering memorandum, which Marcus & Millichap states it has not verified. Tax record from the county; ownership timing inferred from the assessment history. Distances measured from the address: about 0.57 mi to the Mission Bay shoreline and 0.96 mi to the Pacific. Needs verification
| Unit | Type | Sq ft | Rent | Lease per Aug 21 rent roll |
|---|---|---|---|---|
| 1 | 2BR/1BA | 863 | $3,950 | Jan 2026 to Nov 30, 2027 |
| 2 | 1BR | 620 | $3,220 | Apr 2026 to May 31, 2027 |
| 3 | 2BR/2BA | 863 | $4,130 | Dec 2025 to May 31, 2027 |
| 4 | 2BR/1BA | 863 | $3,750 | Aug 2026 to Jun 30, 2027 |
| 5 | 1BR | 620 | $3,595 | Jun 2024 to Jun 30, 2027; the one original tenant |
| 6 | 1BR | 620 | $3,450 | Leased; move-in pending on Aug 21 |
| 7 | 1BR | 620 | $3,200 | Aug 2025 to Sep 15, 2026; status to confirm |
| 8 | 1BR | 620 | $3,200 | Aug 2025 to Sep 13, 2026; status to confirm |
| 9 | 1BR | 620 | $2,495 | Oct 2025 to Oct 25, 2026; about $955 under the other one-bedrooms |
| 10 | Studio | 460 | $2,600 | Jul 2025 to Jul 31, 2027 |
Unit sizes are the OM's averages by floor plan. Five units carry $500 deposits, which reads like a move-in special. Needs verification
I set market rent unit by unit from the building's own leases and the unfurnished 12-month leases we verified for the other buildings. The one-bedrooms lease at $3,200 to $3,595, and Unit 6, the most recent, at $3,450, so I use $3,450 as market and keep Unit 5 at its $3,595. The two-bedrooms are already near the OM's own pro forma. The OM takes every one-bedroom to $3,595.
Rents per the property manager's August 21, 2026 rent roll. Units 7, 8 and 9 have reached the end of their lease terms; we need a current rent roll. Increases on existing tenants are limited to 8.2% through July 2027 under California's rent cap. Needs verification
Hornblend leases per the August 21 rent roll. MLS leases are the unfurnished 12-month leases verified for the 849–855 Emerald opinion. OM comparables are as Marcus & Millichap reports them, unverified; Felspar's $3,750 compares with about $2,347 a unit in place when it sold in October 2025. Bayard from its October 22 rent roll. Needs verification
| Lever | Added NOI a year | What it takes |
|---|---|---|
| Unit 9 to $3,450 at turnover | About $11,500 | Its lease ended October 25. If the tenant stays, the rent cap allows up to 8.2%, about $2,700 |
| Units 7 and 8 renewed at $3,450 | About $6,000 | Both leases ended in September; $3,450 is within the 8.2% cap |
| Unit 2 to $3,450 and Unit 4 to $3,950 | About $5,200 | Their leases run to May and June 2027 |
| Unit 3 to $4,200 | About $800 | Its lease runs to May 2027 |
| All rent levers above | About $23,500 | One to two years; this is what my market-rent case assumes |
| Self-managing instead of a 5% manager | About $19,700 | Your time. Lenders still underwrite a manager |
| An insurance quote under my $10,000 | Each $1,000 saved | About $15,000 of value per $1,000 a year at today's yields |
Speculation. Rent gains depend on tenant timing and the rent cap. The parking and utility billing programs are already in place, so there's no separate billing lever here. Needs verification
My other operating costs per year: insurance $10,000 (estimate), water, sewer and trash $7,500, repairs, maintenance, cleaning, landscaping and service contracts $17,966 (the 2026 P&L, annualized), reserves $3,000. That's $3,847 a unit. Needs verification
| Cash basis, per BlankPage Property Management, January–August 2026 | 8 months | Annualized |
|---|---|---|
| Rent collected | $243,062 | $364,593 |
| Parking, utility billing and other income | $8,044 | $12,066 |
| Operating expenses: management, repairs, cleaning, utilities | $30,223 | $45,335 |
| Net operating income, before property tax and insurance | $220,883 | $331,324 |
Collections ran below today's rent roll early in the year while units turned. The statements carry no property tax or insurance, which the owners pay directly, and no water or sewer bills. Needs verification