89 Heather Ave

San Francisco, CA 94118

$3,995,000A-

144 bd · 12.0 ba · 9,678 sqft · Built 1951 · MultiFamily · Pending · 39 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $52,520/mo
• Mortgage (P&I): −$20,950
• Tax + insurance: −$2,592
• HOA: −$0
• Vac / Maint / Mgmt: −$11,029
• Net cashflow: $17,948/mo
• Annual: $215,381/yr
• Cap rate: 11.68%
• Cash-on-cash: 19.25%
• DSCR: 1.86
• 1% rule: 1.31%
• Cash to close: $1,118,600

Investor read

• This is a 12 × 1-bed/1-bath units multifamily listed at $4.00M.
• At list price, monthly cash flow is $18k ($215k/yr) — positive. Per door: $1k/mo.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($53k rent vs $4.00M).
• It's been on market 39 days — a 3% lower offer ($3.88M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $3.88M (3.0% below list) — sets the bar for market timing.
• In year one you build about $344k of equity ($28k loan paydown + $316k appreciation (7.9% local appreciation)).
• Location reads 76/100 on livability (#90 in CA, #3,143 nationally) — a middle-class / working-renter tenant base. Strengths: amenities A+, commute A+, employment A+; Watch: crime F, cost of living F.
• San Francisco Unified (urban): math 50% / reading 56% proficiency, ranked #322 of 1,400 in CA (top 23%) — acceptable for families but not a draw, mixed tenant base, ~2y average lease.
• Watch-outs: built in 1951 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+17.1%/yr); 54 active listings in the ZIP; high-income renter base; 750 units permitted in San Francisco County in 2024 (688 in 5+ unit buildings).
• San Francisco County population projected at +39% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• Current owner paid $449k; list at $4.00M implies a 790% gain — meaningful room to come down on a strong offer.
• At projected returns (7.9% appreciation + 8.0% rent growth), your $1.12M cash investment doubles in ~2 years — after that, you're playing with house money.
• By year 2, paydown + projected appreciation supports a ~$551k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Cap rate 11.7% vs local median 2.1% in San Francisco — 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 $52,520/mo this rent would consume 384% of the median local household income ($164k/yr) (locally 1780% 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 39 days. Have you received any prior offers? Is the seller open to a 3% 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 1951 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are B-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?
• 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.