The house was just sold below asking.
In the description, annual income is around $70k. With my limited knowledge, I would expect the rental income to exceed $100k. Am I way off?
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Shoot, the auspicious address number is worth a few hundred K alone… 
Wow. 40K net income out of 1633K price. Cap rate = 2.4%. Even by prime Bay Area standard that’s pretty pathetic. I would expect around 4% to 5% cap and double the net income.
Rent is definitely too low.
San Jose has rent control so you need many years to increase rent to market.
Price of $1.6 seems too low. Multiple family is not selling well in South Bay.
Yeah, rent seems very low. I called the apartments nearby a while ago. These apartment complexes were renting out 2br units for over $2500.
With rent control to cap 3.5% annual increase, it will take about 10 years to catch up with market rate even if market rate keeps stagnant.
I thought it’s 5%?
I looked it up, you’re right. the maximum annual increase is 5%.
Friends don’t let friends buy rent-controlled apartments in Bay Area!! Just don’t do it.
Ok, so what is the rule in San Jose about owner move-ins? Do you have to pay per occupant like in SF for them to move out? So, I would have targeted the largest unit, move in and then proceed to try to get the rest of the units vacated somehow.
From what I know, San Jose doesn’t have the similar rule as SF. It is in active work though from this draft dated a week ago: https://www.sanjoseca.gov/DocumentCenter/View/65482.
So that would be the strategy I guess. Owner move-in, even if you have to pay and then figure out ways to get rid of the others. How about capital improvements and remodeling of units that you ask tenants to move out temporarily from? If you can pass along a good portion of the capital expenditure, that might work right? They may end up not wanting to pay the additional amount and if your remodeling for some reason takes forever they may already have settled in and thus would not want to come back after all esp at a higher rent amount.
Ok, if not, people will know West San Jose after this…
Yes, it is too low with current rates. The old owner may be changing that much. 2Bed room rent may be around $2000 (lowest) and 3 bed room in $2750 (lowest) appx rate.
Not sure data is correct at all in this article.
It says median price for 95130 is $799,000, but when i searched sold history for 95130 for the last 1year in redfin, average sold price of “sfh+townhome+condo” was 1.21million. There were only a few homes sold under $800k and most of them don’t look like regular transaction (ie sold price less than half of redfin estimate).
Does median price $800k for 95130 make sense to you? Not to me.
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I must defer to our Fearless Leader on that. It wouldn’t be the first time a SFGate story was off. But thanks for possibly the heads up…
This house was sold at $920K 4 months back:
https://www.redfin.com/CA/San-Jose/2055-Mayfield-Ave-95130/home/1203289
Maybe it wasn’t far off that the media price was $799,000 a year ago?
This house was sold at $1,568,000 on 06/08/2017.
Although this house looks like it was remodeled recently, it is still entry level 3bed/2bath SFH.
Thus, I guess $1,568,000 represents the median price of SFH home in this neighborhood today.
The news article says median price between the end of 2016 and the beginning of 2017 was $799,000 in this neighborhood.
This means 100% gain in 6 months.
I don’t think last 6 months was that crazy.
BTW, average price of $1.21 million that I quote from redfin was based on sold history of past 1 year.
The period they used to calculate median price was placed in the middle of my search period.
I couldn’t find the option to choose end date of search. End date seems to be fixed as today.
Thus, I tried to put their search period in the middle of my search period to be as fair as possible.
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Absolutely sfgate was totally off. You’re not going to get a home in West San Jose for under 1M! Things haven’t been under 1M since 2014!
An average home in 95130 today costs around $1.3M…
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