140 E Reed St #4

San Jose, CA 95112

$374,337D

2 bd · 1.0 ba · 1,100 sqft · Built 1910 · Condo · Active · 248 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,197/mo
• Mortgage (P&I): −$1,963
• Tax + insurance: −$624
• HOA: −$500
• Vac / Maint / Mgmt: −$671
• Net cashflow: $-561/mo
• Annual: $-6,737/yr
• Cap rate: 4.49%
• Cash-on-cash: -6.43%
• DSCR: 0.71
• 1% rule: 0.85%
• Cash to close: $104,814

Investor read

• This is a 2-bed/1.0-bath condo listed at $374k. Condition is rated good.
• At list price, monthly cash flow is $-561 ($-7k/yr) — negative.
• To cash-flow at today's rent, offer at most $293k (21.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $320k (14.6% below list).
• It's been on market 248 days — a 12% lower offer ($329k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $293k (21.7% below list) — sets the bar for cash-flow.
• Local home prices are declining (-3.0%/yr); year-one equity from $3k of loan paydown is wiped out by about $11k 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: Gardner Elementary (math 12% / reading 22%, grade F, #1,340 of 1,571 statewide, top 88%, 389 students, 68% FRL); Herbert Hoover Middle (math 20% / reading 38%, grade F, #224 of 498 statewide, top 46%, 971 students, 61% FRL); Abraham Lincoln High (math 31% / reading 54%, grade F, #466 of 1,170 statewide, top 40%, 1,693 students, 54% FRL) — zoned schools average 61% FRL vs 38% district-wide (23 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Zoned-school proficiency averages 30% at this address vs 46% district-wide (-16 pts) — the specific schools serving this property underperform the San Jose Unified average; the district grade overstates school quality for this exact location.
• Watch-outs: built in 1910 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+4.2%/yr); 113 active listings in the ZIP; 40 comparable units currently listed for rent nearby; rentals lingering (median 34d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 52% of comp listings sitting > 30 days — soft ceiling on asking rent; 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.
• 2 sale attempts with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• 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 4.5% 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.
• This rent runs 43% of the median local income ($89k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

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?
• It's been on market 248 days. Have you received any prior offers? Is the seller open to a 22% concession, seller financing, or rate buy-down credit?
• Built in 1910 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• 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?