523 N 2nd St

San Jose, CA 95112

$10,600,000F

1209 bd · 741.0 ba · 18,305 sqft · Built 1948 · MultiFamily · Active · 335 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $9,105/mo
• Mortgage (P&I): −$55,588
• Tax + insurance: −$20,286
• HOA: −$0
• Vac / Maint / Mgmt: −$1,912
• Net cashflow: $-68,680/mo
• Annual: $-824,163/yr
• Cap rate: -1.48%
• Cash-on-cash: -27.77%
• DSCR: -0.24
• 1% rule: 0.09%
• Cash to close: $2,968,000

Investor read

• This is a 3 × 2-bed/1-bath units multifamily listed at $10.60M.
• At list price, monthly cash flow is $-69k ($-824k/yr) — negative. Per door: $-23k/mo.
• To cash-flow at today's rent, offer at most $1.04M (90.2% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $910k (91.4% below list).
• It's been on market 335 days — a 12% lower offer ($9.33M) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $910k (91.4% below list) — sets the bar for 1% rule.
• Local home prices are declining (-3.0%/yr); year-one equity from $73k of loan paydown is wiped out by about $318k 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 1948 — 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 22y 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 -1.5% vs local median 1.6% in San Jose — below-typical yield; the buyer is paying a premium for something (appreciation thesis, condition, location) that the cap rate doesn't capture.
• At $9,105/mo this rent would consume 123% 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

• 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 335 days. Have you received any prior offers? Is the seller open to a 91% 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 1948 — 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?