A Torrance Fourplex at 6.11%: The Full Cash on Cash Math for 2026

Published July 25, 2026

A complete worked example, purchase price through NOI to cash on cash return, for a Torrance fourplex at today's commercial multifamily loan rates.

If you are pricing a Torrance fourplex against today's lending, the loan rate alone will not tell you whether the deal cash flows. A property bought at list price with a standard down payment can still land at a negative return once debt service is subtracted from NOI. Here is the full math, start to finish.

What a Torrance fourplex costs right now

Torrance currently has around 30 multifamily listings on the market, ranging from roughly $899,000 to just under $16 million, with a citywide median list price near $1.09 million across all home types (Redfin). Small multifamily buildings specifically list closer to a $1.55 million median (Homes.com), and apartment buildings in the area are pricing around $567 per square foot (LoopNet).

For this example I am using an illustrative fourplex, not a specific live listing: four 2 bedroom, 1 bath units, roughly 2,800 total square feet, priced at $1,595,000. That price sits inside the real range above and pencils out to about $570 per square foot, in line with the LoopNet average.

On rent, 2 bedroom asking rents in Torrance cluster between about $2,585 and $3,150 a month depending on the source and neighborhood, with most sites landing in the $2,600 to $2,800 range (Apartments.com, Rent.com). I am using $2,800 per unit here, the middle of that cluster.

The loan: 6.11% under $6 million, 5.70% above

As of July 24, 2026, Select Commercial's published California apartment loan rates split by loan size. Loans under $6 million price at 6.11% on a 5 year fixed term (up to 80% loan to value), while loans over $6 million price lower, at 5.70% on a 5 year fixed term (up to 75% LTV) (Select Commercial). A fourplex purchase almost always falls well under the $6 million threshold, so the 6.11% band is the relevant one here, not the lower large loan rate. Actual terms still depend on underwriting, and fourplexes are frequently financed through small balance or portfolio lenders rather than this exact program, so treat this as the rate band to compare against, not a guaranteed quote.

The full worked example: purchase price to cash on cash

Here is the complete run, at 75% loan to value and a 30 year amortization on the 6.11% five year fixed rate.

Purchase price: $1,595,000

Down payment (25%): $398,750

Loan amount (75% LTV): $1,196,250

Gross potential rent: 4 units x $2,800/month = $11,200/month, or $134,400/year

Vacancy allowance (5%): -$6,720

Effective gross income: $127,680

Operating expenses: Multifamily operating expenses typically run 35% to 50% of effective gross income, covering property tax, insurance, maintenance, and management (Azibo). Torrance's effective property tax rate averages about 1.19% of assessed value (Ownwell), which on this purchase price runs close to $19,000 a year before insurance, maintenance, and management are added. Using a 40% expense ratio as a reasonable midpoint: -$51,072

Net operating income (NOI): $76,608

Annual debt service: A $1,196,250 loan at 6.11%, amortized over 30 years, runs about $7,255 a month, or roughly $87,060 a year.

Annual cash flow: $76,608 NOI - $87,060 debt service = -$10,452

Total cash invested (down payment + ~2% closing costs): roughly $430,650

Cash on cash return: -$10,452 / $430,650 = about -2.4%

At full asking price with a standard 25% down payment, this deal loses money on a monthly cash flow basis at today's rate. That is the honest result of running the math rather than assuming a rate cut fixes the deal.

What changes the math: price and down payment

Two levers move this from negative to positive without touching rent.

Purchase price. Holding the down payment percentage, rent, and rate fixed, this deal breaks even on cash flow at a purchase price near $1.40 million, roughly 12% below the $1,595,000 asking price used here. That is the kind of negotiating room a buyer needs to identify before making an offer, not after closing.

Down payment size. Raising the down payment to 35% (a $1,036,750 loan) drops annual debt service to about $75,459, just under the $76,608 NOI, which brings the deal to roughly breakeven cash flow, though the cash on cash return stays close to zero because more capital is now invested. A bigger down payment protects monthly cash flow but does not by itself make the return attractive. The real lever is price.

This is the piece a rate headline never shows. Two fourplexes at the same 6.11% rate can land at very different outcomes purely on the strength of the purchase price and the size of the check at closing.

Common questions

Why use the under $6 million loan rate instead of the lower over $6 million rate?

Because fourplex purchase prices in Torrance run well under $6 million, so the loan itself will be under that threshold and price at the higher, smaller loan rate. The lower rate only applies to loans above $6 million, which would require a much larger property.

Does a 40% expense ratio hold for every Torrance fourplex?

No. Older buildings, properties with deferred maintenance, or those needing full third party management will run higher, closer to 45% to 50% of effective gross income. Newer or self managed buildings can run lower. Confirm actual taxes, insurance quotes, and expected repairs on any specific property before relying on this ratio.

Is a negative cash on cash return automatically a bad deal?

Not automatically. Some buyers accept early negative cash flow in exchange for appreciation, rent growth, or a value add renovation plan. But it should be a deliberate choice made with the real numbers in hand, not a surprise discovered after closing.

Last verified: July 25, 2026. Purchase price, rent, and expense figures in the worked example are illustrative, built from real Torrance market ranges cited above, not a specific live listing. Loan rates are as published by Select Commercial on July 24, 2026 and subject to change. This is general information for property owners, not investment or legal advice. Confirm current pricing and terms with a broker, lender, or licensed professional before acting.

Kellie

Schofield Properties

323 Richmond Street, El Segundo, CA 90245

Topics: investing, torrance, south-bay, cash-flow

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