555 S 2nd St

San Jose, CA 95112

$8,280,000C

39 bd · 1482.0 ba · 20,521 sqft · Built 1928 · MultiFamily · Active · 97 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $94,553/mo
• Mortgage (P&I): −$43,421
• Tax + insurance: −$15,714
• HOA: −$0
• Vac / Maint / Mgmt: −$19,856
• Net cashflow: $15,561/mo
• Annual: $186,737/yr
• Cap rate: 8.55%
• Cash-on-cash: 8.05%
• DSCR: 1.36
• 1% rule: 1.14%
• Cash to close: $2,318,400

Investor read

• This is a 39 × 1-bed/?-bath units multifamily listed at $8.28M.
• At list price, monthly cash flow is $16k ($187k/yr) — positive. Per door: $399/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($95k rent vs $8.28M).
• It's been on market 97 days — a 9% lower offer ($7.53M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $7.53M (9.0% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $57k of loan paydown is wiped out by about $248k 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.
• Watch-outs: built in 1928 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+4.2%/yr); 106 active listings in the ZIP; 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.
• 5 sale attempts since 12y ago 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 8.5% 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.
• At $94,553/mo this rent would consume 1273% 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

• It's been on market 97 days. Have you received any prior offers? Is the seller open to a 9% concession, seller financing, or rate buy-down credit?
• 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?
• Built in 1928 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• 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?
• 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.