Annual value is not the market price of the property.
Annual value = Monthly market rent x 12. So property tax is very low.
$1.6 million property, rental yield 2.5% means annual value = $1.6 mil x 2.5% = $40k.
4% for owner-occupied = $1,600 p.a.
For rental, first $30k is 10%, second $10k is 12%, so $4,200 p.a.
Monthly rent excludes rentals for furniture and maintenance fees. For simplicity, ignore for above computation.
@sfdragonboy what about this duplex in inner sunset?
Sold for 940K only. What’s the story? Why’s it so cheap?
This is a single family house with an inlaw studio. Low price due to tenant occupied inlaw studio at $800 per month? The main house is vacant. Price is surprisingly low since it’s a single family house.
Refer to this price chart for Singapore property.
Between 1988 to 1998, price index shot up from 20 to 130, very spectacular rise, return beat any Singapore stocks hands down if you have bought in late 80s/ early 90s. For those who bought in 96-98, return is less than 10% after 18-20 years. I bought in 1993, so is 23 years, not 20 years 
.
We could be very close to 1996-8 equivalent or not already there.
+1 (bingo, @BAGB) Seems people are really shying away from tenant occupied or at least discounting a bit for it. Yeah, this is not really a duplex in the normal sense. And the upstairs needs to be gutted out and redone. Still, pricing is a tad low for inner Sunset. Like you said, some people thrive in the murky world of illegal units and tenant occupied units world.
How about this one? 5 unit building in the Sunset for 1.475M. Small units though but still pulled 93k in annual income. Even 2 vacant units for you. 4.66% cap rate
4 Cap seems to be the norm in prime Bay Area. But you know what I am gonna say right?
Is the 93k coming from 3 out of 5 units?
Or projected?
Listing says projected…“Sellers are story tellers and buyers are liars”…lol
I would bet they underestimate expenses, too
Well, 5 small units (mostly 1 bds and studio). Est general 1800 rent ave per unit generates 108K annual. Not far fetched, right?
Rent controlled. …so the $108k senario is fantasy. …I get that much gross on my building in South Lake Tahoe…Paid less than $700k…no rent control
Fair enough (presence of rent control) but these figures can be validated if one was really interested right? You do have 2 units vacant that will go out at market rate.
Again, we love South Lake Tahoe but that is a far commute to the Fab 7x7…
I think for multi-fam to make sense in the city you need to go higher end. Something that rents for 4 or even 5k per unit out of the gate. Tenants are of higher quality and rent control less of an issue.
But then you are talking about a real expensive piece of property which makes going outside the Fab 7x7 more sensible. With all the millennials making decent money, the grade of renters in SF is fairly decent or can be if one is fairly picky. No one is going to move to SF without a decent job these days.
Most of the SF tenants are illegal immigrants, low income people or elderly. Young tech tenants are a very small percentage. All the suburbs have better tenants
Wow, is there data on this? I picked up some where that the total housing stock in SF proper is
30% - rent controlled
30% - homes are owner occupied
some 10 or 20% - free market rent, thats why rent is so high
Def dated (but probably not much of a change considering), but has some data points for ya…
75% of SF rental housing are under rent control
San Francisco has a roughly thirty-five percent homeownership rate. Then 172,000 units of the city’s 376,940 housing units are under rent control. (That’s about 75 percent of the city’s rental stock.)
https://www.quora.com/What-percentage-of-San-Francisco-apartments-are-under-rent-control
I wonder what turnover is on rent control units? My guess is those people stay a super long time, since it’s such a deal.