Interesting Owner-Occupier Opportunity at the Right Price

This 4-unit building is located in beautiful and very popular Eureka Valley. The top floor unit could be a great owner-occupier unit with 2-3 bedrooms and space to add a second bathroom. There are beautiful views from this unit. The other 3 units are getting below market rents and one of the units has a protected tenant. Holding this property for the long run is the best strategy and in the meantime, live in a great unit, once it has been remodeled. I believe the asking price is too high. I ran numbers at $1,700,000 and this is how it looks on a cash flow basis:

Down Payment: $340,000 (20%)
Loan Amount: $1,360,000
Monthly Payments: $6891 at 4.5% interest, amortized for 30 years
PITI: $8791/m (PITI is Principal Interest Taxes Insurance)
Monthly Expenses: $8791 (PITI) – $4180 (Income) = $4611

To own this building and to live in the top floor flat with great views, parking and a garden, the cost is $4611. Over time, there should be some movement with the tenants and when there is, you should plan to remodel the vacant units and get market rents.

Read in my next post about Protected Tenants which is unique to San Francisco.