Please help new buyer !!!

[Alex Sanchez]

https://www.compass.com/listin...
please I’m going to buy this multi family. It’s a great location in SF. Please give some advice what do you think about this property as investment.

[George Azita]

According to my calculations you will have a negative cashflow of almost $1900 per month. I don't have your exact numbers because I don't know the following expenses.

Trash removal
Water
Electric for the house meter
Sewer Use Fees
Business Licenses
Annual fire department fees
Annual County Housing Inspection Fees
Property management costs.
Property insurance plus annual increase

With today's high prices I don't think properties will appreciate more than 2% annually, or may go down.

I don't know exactly what property taxes are in San Francisco, but in Los Angeles the property taxes are 1.25% of the purchase price plus property taxes increase by 1% every year. I purchased a $1.95 million property in 2001 and my property taxes were about $20,000 and now the taxes are $48,000 every year. So, the property tax and increases are very significant and those numbers are not included in my charts, below. Maybe, I will put the taxes calculations in my charts later tonight to see how much more investors lose out on profits.

According to the marketing package the loan interest rate is less than 3% and I think the current rate is higher than 4%.

I've been wrong a million times when giving advice. So, don't listen to me, but this property is not a sure-thing, does not fit my business model, could bog you down and I don't take risks.

When not including profit from principal paydown you will lose $221,000 in 10 years.

I appreciate all arguments to show where my projections are not accurate.

If you have the kind of money this property will take to purchase you can do much better by purchasing a 10+ unit property. The only way you can make a profit on this property is if it appreciates significantly and I would not bet on that. I put $60 per month for rent increases every year in my calculations and since the tenants are already paying $3,916 per month per unit I would not count on being able to increase rents even one penny for a few or several years, but I don't know and I definitely don't increase rents enough for my own rentals. But...when I am not sure I don't take the risks. I like to but sure-things with zero to very limited risk.

I find that most sellers mysteriously forget to put the correct operating expenses in the marketing packages. I am really mad at myself for letting a seller get away with lying to me on a 6-unit property I purchased in March 2021. The seller bragged about his installation of a solar hot water system and told me his gas bill for heating hot water and the laundry room was only $75 per month. I was stupid, lazy, trusted the seller and did not do my own evaluation. After I purchased the property, I found the solar hot water system was super hokey, had two electric pumps with frozen motors and the system did not produce any hot water. Then, I found the building had a Master Gas Meter for all 6 units plus the laundry room and I paid for the heating and kitchen stoves in all 6 units. My gas bill is more than $400 per month vs. the $75 the seller put in the marketing package. The day I took over the building the tenants said they never had enough how water during the evenings and I found out the 6 units was supplied by only a 50-gallon hot water heater. So, I had to install a tankless water for a cost of $8,000 out of my pocket and since I am a plumbing contractor that was my actual cost due to the installation of new water piping, gas piping, electric wiring and permits.