324 Railroad Ave

South San Francisco, CA 94080

$1,088,000B-

5 bd · 3.0 ba · 3,206 sqft · Built 1978 · MultiFamily · Pending · 28 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $11,567/mo
• Mortgage (P&I): −$5,706
• Tax + insurance: −$979
• HOA: −$0
• Vac / Maint / Mgmt: −$2,429
• Net cashflow: $2,453/mo
• Annual: $29,437/yr
• Cap rate: 9.00%
• Cash-on-cash: 9.66%
• DSCR: 1.43
• 1% rule: 1.06%
• Cash to close: $304,640

Investor read

• This is a 5-bed/3.0-bath multifamily listed at $1.09M.
• At list price, monthly cash flow is $2k ($29k/yr) — positive.
• The deal already cash-flows at list — no discount required.
• Meets the 1% rule at list price ($12k rent vs $1.09M).
• It's been on market 28 days — a 2% lower offer ($1.07M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $1.07M (1.5% below list) — sets the bar for market timing.
• Local home prices are declining (-3.0%/yr); year-one equity from $8k of loan paydown is wiped out by about $33k of value loss. Plan a longer hold.
• Location reads 65/100 on livability (#372 in CA) — a middle-class / working-renter tenant base. Strengths: commute A+, employment A+; Watch: amenities F, cost of living F, health & safety F.
• South San Francisco Unified (urban): math 38% / reading 47% proficiency, ranked #176 of 517 in CA (top 34%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Spruce Elementary (math 23% / reading 24%, grade F, #1,157 of 1,571 statewide, top 74%, 408 students, 61% FRL); Parkway Heights Middle (math 25% / reading 33%, grade F, #224 of 498 statewide, top 46%, 612 students, 55% FRL); South San Francisco High (math 37% / reading 64%, grade D+, #324 of 1,170 statewide, top 28%, 1,280 students, 41% FRL) — zoned schools average 52% FRL vs 33% district-wide (19 pts higher); higher-poverty schools than district average — tighter screening recommended.
• Market conditions: Rents rising fast (+6.0%/yr); 76 active listings in the ZIP; high-income renter base; 1,019 units permitted in San Mateo County in 2024 (484 in 5+ unit buildings).
• San Mateo County population projected at +24% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• At projected returns (-3.0% appreciation + 6.0% rent growth), your $305k cash investment doubles in ~9 years — after that, you're playing with house money.
• Climate carrying-cost: moderate wildfire risk — expect insurance premiums to compound above CPI over the hold.
• Cap rate 9.0% vs local median 2.1% in South 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 $11,567/mo this rent would consume 102% of the median local household income ($137k/yr) (locally 2470% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

Questions for listing agent

• Built in 1978 — 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 D-rated, which usually means shorter tenancies and higher turnover. Who's the typical renter profile here, and what's been the actual vacancy rate?
• 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.
• How much new apartment / multifamily construction is in the pipeline within 1–3 miles? Heavy new supply (>2% of stock underway) typically softens rents 12–24 months out; light construction supports rent growth.