Bay Area 4-plex analysis

[Anthony Barbato]

Hello Oakland Investors,

I am interested in buying a fourplex as my first investment property here in the Bay Area. When analyzing deals that have recently sold in the area, the property at 719 35th St in Oakland stood out because it had an extremely high cash on cash return, even with debt service for an FHA 3.5% down loan, as well as conservative expense estimates. It seems like it was an unbelievable deal, and yet the sellers still took an offer that was $50k under the original asking price.

 I want to ask the investor community in town what they think about the deal, if it looks possible, or if there is anything that I haven't considered when looking at the numbers.

Here is a link to the sold MLS listing for the property:

https://maxebrdi.paragonrels.com/publink/default.aspx?GUID=65979a7a-9a34-4bd8-a56e-a0ab6f50746e&Report=Yes

Here is my Bigger Pockets spreadsheet plugging in the rent amounts from the current tenants, and taking for granted that I will be occupying the 4th unit:

[Account Closed]

Originally posted by @Amit M.:

@Account Closed what do you think of this bad boy?

Maybe he could legalize one or both units?

The City of Oakland is very tough to work with. They’ll likely want you to rip it all out and start from scratch. I wouldn’t bother. Above posting said it’s a risk due to insurance not covering, etc. Also consider being liable to having to pay a tenant all back rent as you’re not legally entitled to collect rent on illegal units - short term or regular tenancies. 

Legalizing illegal units in SF makes more sense as the land value is so high there is a ton of upside in paying to legalize. In Oakland you’d pay replacement cost and not create much equity.