Oakland, CA · Member since 2016 · 8 posts · 3 votes
Hello everyone, I'm looking to buy a duplex or triplex in Oakland or thereabouts and am have joined the forum hoping to get personal recommendations for local agents. I'm a little shy with my info so I won't say much more for the time being. As I read and get involved more I may naturally have more questions and comments. I did start a post with more detail in the Oakland forum as well. Thank you!
Rental Property Investor · Oakland, CA · Member since 2014 · 730 posts · 1k+ votes
9y
@Adam London No such thing as average cap in Oakland. Lately I've been seeing 3-4% in Lake Merritt/Temescal, 5-6% in West Oakland, and 6-8% in East Oakland.
Good rule of thumb to calculate operating expenses on a small multifamily is between 35-40% of gross rents for expenses (not including mortgage payment). If the water is separately metered, then 35% is a good starting point, but it's always good to be conservative. I always underwrite my deals at 40% and then if the actuals are better, that's icing on the cake. However, some properties are at 50%, so be weary.
Sadly, your deal above listed for $875K will probably sell for more than asking. There is just way too much cheap money flowing around right now and "investors" are chasing appreciation based on FOMO.
There are plenty of deals in Oakland that offer a decent COCR. Lately I have been averaging 20-25% COCR. They are usually value add deals, but there are plenty. Be creative.
Rental Property Investor · Oakland, CA · Member since 2014 · 730 posts · 1k+ votes
9y
@Adam London No such thing as average cap in Oakland. Lately I've been seeing 3-4% in Lake Merritt/Temescal, 5-6% in West Oakland, and 6-8% in East Oakland.
Good rule of thumb to calculate operating expenses on a small multifamily is between 35-40% of gross rents for expenses (not including mortgage payment). If the water is separately metered, then 35% is a good starting point, but it's always good to be conservative. I always underwrite my deals at 40% and then if the actuals are better, that's icing on the cake. However, some properties are at 50%, so be weary.
Sadly, your deal above listed for $875K will probably sell for more than asking. There is just way too much cheap money flowing around right now and "investors" are chasing appreciation based on FOMO.
There are plenty of deals in Oakland that offer a decent COCR. Lately I have been averaging 20-25% COCR. They are usually value add deals, but there are plenty. Be creative.
Oakland is HUGE so averaging the whole city is not going to give us much insight as to where the deals are. There are like..10 zip codes? The unit you are describing hit the market today(Assuming, there is only 1 at that price point!) and I can't see it until next Monday (No Show till 4/10). Pictures suggest this property def could use some updating which could be a mechanism to consider as a means of bringing those rents closer to market. The rents outlined in the listing are below market rate.
The 1 bed 1 baths have a bit of room for rent growth and the 2 bed has quite a bit of room.
Appreciation seems to be all the rage in Oakland investing. This part of Oakland has seen a large amount of growth already and I suspect those price points will start to slow down but currently we are still going up.
Positive cash flow is not something I'm seeing often in Oakland in the first year or two if you are getting deals off the MLS. Sometimes it takes a while to get tenants that are lease locked moved so you can get market rents, Oakland is tenant friendly (As I am sure you know) so this can be a hurdle that many do not anticipate when calculating bottom lines!
There were two triplex sales in 94611 within 15 months both went well above list price, one @ 605k the other at $1,450,000.
There have been 8 duplex sales in 15 months and they seem to be going a tad under list. Average list $1,005,068 and average sold $922,000
Single family is selling about 108% of list price for ~$1,200,000 Not all of these help to price a triplex but I'm trying to give ya a feel for pricing and urgency in this zip code.
Consider checking out property in 94601, lower entry points and similar market rental rates however on the average these properties require more TLC. =)
Realtor · San Jose, CA · Member since 2015 · 318 posts · 154 votes
9y
I agree with @Robert M. My triplex is in the 94601 zip code and it is cash flowing.. like @saj said you have to be creative. There were many positives to this property such as the previous owner did not do any rental increases ever, so even though market rents are still (which I am working on), I was able to increase the rents in all 3 units and thus cash flow. Of course, nothing is peachy clean, so I have other issues I am working on, but the main point COCR's are very possible.