Investment property in San Francisco

[Sailesh Kumar]

There is a property that I am interested in in SF Cole Valley area. Here is a link to the property: https://www.zillow.com/homedet...

This has 6 unit large apartments and 3 commercial properties on the ground floor.  The total rent from everything is roughly $45K per month at the moment (4K per apartment, 10K from a restaurant and 5K each from a nail spa and a hair saloon) and I believe there is a small upside in rent after pandemic.  The asking price is 8.5M after 500K reduction.  It does sound like an expensive property but it has good location and cap rate is relatively good for SF even based on current income.  Any thoughts you have on whether its a good investment and what's the right price for this in your mind.  I will really appreciate any insights.

[Johnson H.]

@Kathy Utiss The reason that building you found has a better GRM is because it's in a bad part of town. Owning that building is not for the faint of heart. A lot of experienced owners in the city won't invest in that area. It is a lot of trouble and the area is not getting any better.

The OP's building is a trophy property in an amazing part of the city. You don't buy in SF for day 1 or year 1 cash flow, you buy for the appreciation and to build wealth. This is why apartment building's in the city routinely trade for above 17 GRM before covid and around 15 GRM now on average with mixed use even lower due to the shutdown of the city.