1231 40th Ave

San Francisco, CA 94122

$1,195,000D+

3 bd · 2.0 ba · 1,800 sqft · Built 1911 · SingleFamily · Pending · 34 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $8,553/mo
• Mortgage (P&I): −$6,267
• Tax + insurance: −$1,302
• HOA: −$0
• Vac / Maint / Mgmt: −$1,796
• Net cashflow: $-811/mo
• Annual: $-9,738/yr
• Cap rate: 5.48%
• Cash-on-cash: -2.91%
• DSCR: 0.87
• 1% rule: 0.72%
• Cash to close: $334,600

Investor read

• This is a 3-bed/2.0-bath single-family listed at $1.20M.
• At list price, monthly cash flow is $-811 ($-10k/yr) — negative.
• To cash-flow at today's rent, offer at most $1.05M (12.0% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $855k (28.4% below list).
• It's been on market 34 days — a 3% lower offer ($1.16M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $855k (28.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $8k of loan paydown is wiped out by about $36k of value loss. Plan a longer hold.
• 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.
• Zoned schools: Lilienthal (Claire) Elementary (669 students, 19% FRL); Giannini (A.P.) Middle (1,192 students, 34% FRL); Lowell High (2,632 students, 37% FRL) — zoned schools average 30% FRL vs 49% district-wide (19 pts lower); this property's tenant base skews higher-income than the district average.
• Watch-outs: built in 1911 — expect roof / HVAC / electrical / plumbing capex.
• Market conditions: Rents rising fast (+9.7%/yr); 65 active listings in the ZIP; 13 comparable units currently listed for rent nearby; rentals at typical pace (median 19d on market — plan ~3-4 weeks tenant-placement turnaround); 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.
• 7 sale attempts since 30y 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.
• Current owner paid $607k; list at $1.20M implies a 97% gain — meaningful room to come down on a strong offer.
• Cap rate 5.5% 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 $8,553/mo this rent would consume 70% of the median local household income ($146k/yr) (locally 2227% of renters already pay >50% of income on rent) — very limited rent-growth headroom before tenants either downsize or default.

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 34 days. Have you received any prior offers? Is the seller open to a 28% concession, seller financing, or rate buy-down credit?
• Built in 1911 — 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?
• 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?
• 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.