Deal/Success Story in Process: Cash Flow in the SF Bay Area

[J. Martin]

Just under a month ago, I closed on a 4plex in (East) Oakland, CA in the San Francisco Bay Area. It was a HomePath property that had been on the market for just over 6 months, and was able to squeeze in with a conventional loan at a purchase price of $390K w/ a $5k seller's credit, or $385K. 3 vacant units, and other parts of the structure need about $45K in rehab/improvements, for a total cost of about $430K, to achieve my target rents of $5,100/mo, or about $60K/yr.

Purchase: $385K
Rehab: $45K
Total Cost: $430K
Target Rents: $5,100/mo; $60K/yr
Est GRM: 7
Est Cap Rate: 8-9% (8.5% @ 40% exp. ratio - all utilities metered & paid by tenants)
Est Cash Flow: 10-13% (leveraged, w/ 25% down)
Built-in Equity: $50-100K?
My share: 50%, w/ passive partner.

I haven't finished yet, so maybe early to post on the success stories forum, but I've had a lot of requests to put this information up, from people who came out to my 4plex for a meetup, and many others on BP who could not.. Getting into contract on this property and closing, was a success in itself, in my book, so I posted it anyway! Will be updating more as I get time!

Feel free to ask questions, yell at me for being insane for investing in *gasp* East Oakland, suggestions & constructive criticism, kudos/votes, or whatever else you'd like to throw my way :)

PS. I heard there is no cash flow in California! Or Bay Area..! Or Oakland..! :)

[J. Martin]

Like many 60's/70's building (and older) in Oakland, owners covered their beautiful hardwood floors with carpet. (All the rage!). There were lots of staples, nails, and some water damage on some parts of the wood.

But we stripped some of the painted hardwood strips and removed them from the closet to repair a few sections. Stripped it, restained, and resealed.