502 E William St

San Jose, CA 95112

$999,000D

None bd · None ba · 2,785 sqft · Built 1992 · MultiFamily · Pending · 13 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $7,424/mo
• Mortgage (P&I): −$5,239
• Tax + insurance: −$1,952
• HOA: −$0
• Vac / Maint / Mgmt: −$1,559
• Net cashflow: $-1,326/mo
• Annual: $-15,915/yr
• Cap rate: 4.70%
• Cash-on-cash: -5.69%
• DSCR: 0.75
• 1% rule: 0.74%
• Cash to close: $279,720

Investor read

• This is a 2 × 3-bed/2-bath units multifamily listed at $999k.
• At list price, monthly cash flow is $-1k ($-16k/yr) — negative. Per door: $-663/mo.
• To cash-flow at today's rent, offer at most $765k (23.5% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $742k (25.7% below list).
• Only 13 days on market — expect competitive offers; lowballing is unlikely to land.
• Recommended offer: $742k (25.7% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $7k of loan paydown is wiped out by about $30k of value loss. Plan a longer hold.
• Location reads 78/100 on livability (#68 in CA, #2,559 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment A+; Watch: crime F, cost of living F.
• San Jose Unified (urban): math 39% / reading 52% proficiency, ranked #149 of 517 in CA (top 29%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Horace Mann Elementary (math 17% / reading 27%, grade F, #1,179 of 1,571 statewide, top 78%, 300 students, 68% FRL); Muwekma Ohlone Middle (math 12% / reading 32%, grade F, #388 of 498 statewide, top 80%, 630 students, 68% FRL); San Jose High (math 17% / reading 47%, grade F, #674 of 1,170 statewide, top 59%, 934 students, 68% FRL) — zoned schools average 68% FRL vs 38% district-wide (30 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Zoned-school proficiency averages 25% at this address vs 46% district-wide (-20 pts) — the specific schools serving this property underperform the San Jose Unified average; the district grade overstates school quality for this exact location.
• Market conditions: Rents rising fast (+4.2%/yr); 104 active listings in the ZIP; 2 comparable units currently listed for rent nearby; solid renter incomes; 3,838 units permitted in Santa Clara County in 2024 (1,886 in 5+ unit buildings).
• Santa Clara County population projected at +24% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Climate carrying-cost: extreme-heat days projected 7→14/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 4.7% vs local median 1.6% in San Jose — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• At $7,424/mo this rent would consume 100% of the median local household income ($89k/yr) (locally 4364% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• Can we see the unit-by-unit rent roll, current vacancy, and any below-market leases? What's the average tenancy length?
• What capital expenditures (roof, boiler, parking lot, exteriors) have been made in the last 5 years, and what's planned in the next 2?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Crime grade is F in this area — have there been break-ins, vandalism, or insurance claims at this property in the last 3 years? What carrier currently insures it and at what premium?
• The area grade is low — what's the realistic commute time and amenity access for the typical tenant pool here? Any planned neighborhood developments (good or bad) we should know about?
• What's the average days-on-market for RENTAL listings here right now (not sales)? A rising rental-DOM trend means longer vacancies and softer asking-rent achievability than the comps imply.
• What's the recent tenant-quality profile in this submarket — average credit score on applications, eviction rate, late-payment / NSF rate, and stable-employment percentage? A property-management company in the area should have these aggregated.