3557 San Felipe Rd

San Jose, CA 95135

$1,265,000D+

None bd · None ba · 3,032 sqft · Built 1945 · MultiFamily · Pending · 37 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $11,208/mo
• Mortgage (P&I): −$6,634
• Tax + insurance: −$1,522
• HOA: −$0
• Vac / Maint / Mgmt: −$2,354
• Net cashflow: $699/mo
• Annual: $8,386/yr
• Cap rate: 7.07%
• Cash-on-cash: 2.79%
• DSCR: 1.12
• 1% rule: 0.89%
• Cash to close: $354,200

Investor read

• This is a 5 × 1-bed/1.0-bath units multifamily listed at $1.26M.
• At list price, monthly cash flow is $699 ($8k/yr) — positive. Per door: $140/mo.
• The deal already cash-flows at list — no discount required.
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $1.12M (11.4% below list).
• It's been on market 37 days — a 3% lower offer ($1.23M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $1.12M (11.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-1.6%/yr); year-one equity from $9k of loan paydown is wiped out by about $20k 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.
• Evergreen Elementary (urban): math 61% / reading 66% proficiency, ranked #132 of 1,400 in CA (top 9%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Zoned schools: Evergreen Elementary (573 students, 13% FRL); Chaboya Middle (853 students, 14% FRL); Evergreen Valley High (math 76% / reading 83%, grade A-, #45 of 1,170 statewide, top 4%, 2,767 students, 13% FRL).
• Zoned-school proficiency averages 80% at this address vs 64% district-wide (+16 pts) — the actual schools serving this property are materially stronger than the Evergreen Elementary average implies; a family-tenant draw the district grade alone would hide.
• Watch-outs: flood insurance adds $125/mo; built in 1945 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: 80 active listings in the ZIP; 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: in FEMA flood zone A (mandatory federal flood insurance); extreme-heat days projected 7→14/yr by 2055 (HVAC capex compounding) — expect insurance premiums to compound above CPI over the hold.
• Cap rate 7.1% 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.

Questions for listing agent

• It's been on market 37 days. Have you received any prior offers? Is the seller open to a 11% 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 1945 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What's the actual annual flood-insurance premium (NFIP or private), and is the property in a SFHA with mandatory coverage?
• 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?