2795 Garden Ave San Jose, CA 95111 PROPERTY HIGHLIGHTS Offered at $1,575,000 4.7% Cap rate; 14.7 GRM NOT SUBJECT TO RENT CONTROL! Large, fully remodeled Units Four 2 bed / 1 bath units, ~920 SF each 2 parking spaces per unit Prepared By Numerous upgrades: All Units remodeled: kitchens, bathrooms, flooring, Double-pane windows, Copper plumbing. Constructed in 1986, Remodeled in 2016/2017 Section 1 Termite work completed. Best fourplex offering in San Jose! Patios or balconies for each unit On-site laundry facilities Covered and uncovered parking each unit 235 Oak Meadow Drive Los Gatos, CA 95032 www.siliconvalleymultifamily.com
Table of Contents Executive Summary... 3 Property Information... 4 Investment Details... 5 Property Description... 6 Unit Mix Report... 7 Property Photos... 8 Location Map... 9 Maps and Aerials... 10 Financial Information... 12 Annual Property Operating... 13 Financial Indicators... 14 Loan Analysis... 15 Pro Forma Summary... 16 Sales Comps... 17 Sale Comparables... 18 Demographics... 22 Demographics... 23 Disclaimer... 24
EXECUTIVE SUMMARY Acquisition Costs Purchase Price, Points and Closing Costs $1,590,326 Investment - Cash $507,708 First Loan $1,032,618 Investment Information Purchase Price $1,575,000 Price per Unit $393,750 Price per Sq. Ft. $427.99 Income per Unit $26,742 Expenses per Unit ($7,534) Income, Expenses & Cash Flow Gross Scheduled Income $106,968 Total Vacancy and Credits ($3,168) Operating Expenses ($30,136) Net Operating Income $73,664 Debt Service ($60,958) Cash Flow Before Taxes $12,706 (After Tax Results) Total Interest (Debt Service) ($43,550) Depreciation and Amortization ($31,171) Taxable Income (Loss) ($1,056) Tax Savings (Costs) $448 Cash Flow After Taxes $13,154 Financial Indicators Cash on Cash Return Before Taxes 2.50% Optimal Internal Rate of Return (yr 5) 10.22% Debt Coverage Ratio 1.21 Capitalization Rate 4.68% Gross Rent Multiplier 14.72 Gross Income / Square Feet $29.07 Gross Expenses / Square Feet ($8.19) Operating Expense Ratio 29.03% Page 3
S E C T I O N I P r o p e r t y I n f o r m a t i o n
INVESTMENT DETAILS ANALYSIS Analysis Date March 2018 PROPERTY Property Property Address 2795 Garden Ave San Jose, CA 95111 Year Built 1986 PURCHASE INFORMATION Property Type MultiFamily Purchase Price $1,575,000 Fair Market Value $1,575,000 Units 4 Total Rentable Sq. Ft. 3,680 Resale Valuation 3.0% (annual appreciation) Resale Expenses 6.0% FINANCIAL INFORMATION Down Payment $492,382 Closing Costs $5,000 LT Capital Gain 20.00% Federal Tax Rate 33.0% State Tax Rate 9.4% Discount Rate 3.00% LOANS Type Debt Term Amortization Rate Payment LO Costs Fixed $1,032,618 30 years 30 years 4.25% $5,080 $10,326 INCOME & EXPENSES Gross Operating Income $103,800 Monthly GOI $8,650 Total Annual Expenses ($30,136) Monthly Expenses ($2,511) Page 5
PROPERTY DESCRIPTION Ideal fourplex for first time investor! This fourplex offers an investor the opportunity to own a multifamily property that is in very good condition and is NOT subject to rent control. It currently generates a 4.87% cap rate and a 14.3 GRM, which are currently the highest offered return of any fourplex on the market. These four large (approx. 920 sf) units have been completely remodeled in 2016/2017. Remodeling includes: kitchens with granite counters, new cabinetry, appliances and flooring, remodeled bathrooms, quality laminate flooring throughout, and double-pane windows. The decks in the front were recently replaced and the building also boasts copper plumbing throughout. The owner had the roof recently inspected and it did not need maintenance work. The owner has also completed the work outlined in the termite report. The property offers unique tenant amenities for a fourplex: 2 parking spaces per unit, one covered and one uncovered, a balcony for upstairs units and large patios for downstairs units. There is also an onsite laundry room with owned equipment which generates approximately $114 additional income per month. Each unit is individually metered for water, gas & electric. The utilities for the laundry room are included with unit A. The current owner pays a portion of the utility bill for unit A. The property is NOT SUBJECT TO RENT CONTROL because it was built in 1986. Therefore, rents can be adjusted to market level without interference from the City of San Jose. There are four, large 2BR/1BA units. Two units are rented to Housing Authority tenants at the market rate of $2,250/month, one unit is rented at $2,150/month and one unit has been left vacant for the listing period. This unit can be rented prior to close of escrow or left vacant, according to Buyer's wishes. Page 6
UNIT MIX REPORT Units Type Approx. SqFt Avg. Rents Monthly Mkt Rents Monthly 1 2BR / 1BA (HA unit) 920 $2,250 $2,250 $2,250 $2,250 1 2BR / 1BA (HA unit) 920 $2,250 $2,250 $2,250 $2,250 1 2BR / 1BA (vacant) 920 $2,150 $2,150 $2,250 $2,250 1 2BR / 1BA 920 $2,150 $2,150 $2,250 $2,250 4 3,680 $8,800 $9,000 UNIT MIX UNIT MIX SQUARE FEET 2BR / 1BA (HA unit) 2BR / 1BA (HA unit) 2BR / 1BA (vacant) 2BR / 1BA 2BR / 1BA (HA unit) 2BR / 1BA (HA unit) 2BR / 1BA (vacant) 2BR / 1BA UNIT MIX INCOME UNIT MIX MARKET INCOME 2BR / 1BA (HA unit) 2BR / 1BA (HA unit) 2BR / 1BA (vacant) 2BR / 1BA 2BR / 1BA (HA unit) 2BR / 1BA (HA unit) 2BR / 1BA (vacant) 2BR / 1BA Page 7
PROPERTY PHOTOS 4 Large, 2 bed / 1 bath units, 920 SF each Very Good Condition. Upgrades throughout Front 8 parking spaces Remodeled Kitchens Living Room Laminate Floors Deck or patio each unit Page 8
LOCATION MAP Page 9
MAPS AND AERIALS Page 10
MAPS AND AERIALS Page 11
S E C T I O N I I F i n a n c i a l I n f o r m a t i o n
ANNUAL PROPERTY OPERATING DATA Description Year 1 Year 2 Year 3 Year 4 Year 5 Rental Income $105,600 $110,880 $116,424 $122,245 $128,357 Laundry $1,368 $1,368 $1,368 $1,368 $1,368 GROSS SCHEDULED INCOME $106,968 $112,248 $117,792 $123,613 $129,725 Turnover Vacancy ($3,168) ($3,326) ($3,493) ($3,667) ($3,851) General Vacancy $0 $0 $0 $0 $0 GROSS OPERATING INCOME $103,800 $108,922 $114,299 $119,946 $125,875 Expenses Property Tax (est) ($23,875) ($24,114) ($24,355) ($24,598) ($24,844) Insurance ($988) ($1,018) ($1,048) ($1,080) ($1,112) Utilities - Gas & Electric ($1,164) ($1,199) ($1,235) ($1,272) ($1,310) Maintenance & Repairs ($2,185) ($2,251) ($2,318) ($2,388) ($2,459) Misc. & Supplies ($257) ($265) ($273) ($281) ($289) Permits/Fees ($541) ($557) ($574) ($591) ($609) Miscellaneous & Advertising ($700) ($721) ($743) ($765) ($788) Legal & Accounting ($426) ($439) ($452) ($466) ($479) TOTAL OPERATING EXPENSES ($30,136) ($30,563) ($30,997) ($31,440) ($31,891) NET OPERATING INCOME $73,664 $78,359 $83,302 $88,506 $93,984 Page 13
FINANCIAL INDICATORS Description Year 1 Year 2 Year 3 Year 4 Year 5 Gross Rent Multiplier 15.17 14.89 14.61 14.34 14.07 Capitalization Rate 4.68% 4.98% 5.29% 5.62% 5.97% Cash On Cash Return b/t 2.50% 3.43% 4.40% 5.43% 6.50% Cash On Cash Return a/t 2.59% 3.17% 3.67% 4.19% 4.63% Debt Coverage Ratio 1.21 1.29 1.37 1.45 1.54 Gross Income per Sq. Ft. $29.07 $30.50 $32.01 $33.59 $35.25 Expenses per Sq. Ft. ($8.19) ($8.31) ($8.42) ($8.54) ($8.67) Net Income Multiplier 22.02 21.32 20.66 20.03 19.43 Operating Expense Ratio 29.03% 28.06% 27.12% 26.21% 25.34% Loan To Value Ratio 62.58% 59.67% 56.83% 54.06% 51.36% * b/t = before taxes; a/t = after taxes Page 14
LOAN ANALYSIS Description Year 1 Year 2 Year 3 Year 4 Year 5 LOAN 1 Debt Service Analysis Principal Payments $17,409 $18,163 $18,950 $19,771 $20,628 Interest Payments $43,550 $42,795 $42,008 $41,187 $40,330 Total Debt Service $60,958 $60,958 $60,958 $60,958 $60,958 Principal Balance Analysis Beginning Principal Balance $1,032,618 $1,015,209 $997,046 $978,096 $958,325 Principal Reductions $17,409 $18,163 $18,950 $19,771 $20,628 Ending Principal Balance $1,015,209 $997,046 $978,096 $958,325 $937,697 Page 15
PRO FORMA SUMMARY UNIT MIX & MONTHLY SCHEDULED Type Units Actual Total Market Total 2BR / 1BA (HA unit) 1 $2,250 $2,250 $2,250 $2,250 2BR / 1BA (HA unit) 1 $2,250 $2,250 $2,250 $2,250 2BR / 1BA (vacant) 1 $2,150 $2,150 $2,250 $2,250 2BR / 1BA 1 $2,150 $2,150 $2,250 $2,250 TOTALS 4 $8,800 $9,000 INVESTMENT SUMMARY Price: $1,575,000 Year Built: 1986 Units: 4 Price/Unit: $393,750 RSF: 3,680 Price/RSF: $427.99 Lot Size: 8,160 sf Floors: 2 Parking Spaces: 2/unit APN: 497-30-029 Cap Rate: 4.68% Market Cap Rate: 4.79% GRM: 14.72 Market GRM: 14.4 FINANCING SUMMARY Loan Amount: $1,032,618 Down Payment: $492,382 Loan Type: Fixed Interest Rate: 4.25% Term: 30 years Monthly Payment: $5,080 DCR: 1.21 ANNUALIZED INCOME Description Actual Market Gross Potential Rent $105,600 $108,000 Less: Vacancy ($3,168) ($3,240) Misc. Income $1,368 $1,368 Effective Gross Income $103,800 $106,128 Less: Expenses ($30,136) ($30,648) Net Operating Income $73,664 $75,480 Debt Service ($60,958) ($60,958) Net Cash Flow after Debt Service $12,706 $14,522 Principal Reduction $17,409 $17,409 Total Return $30,114 $31,930 ANNUALIZED EXPENSES Description Actual Market Property Tax (est) $23,875 $23,875 Insurance $988 $1,500 Utilities - Gas & Electric $1,164 $1,164 Maintenance & Repairs $2,185 $2,185 Misc. & Supplies $257 $257 Permits/Fees $541 $541 Miscellaneous & Advertising $700 $700 Legal & Accounting $426 $426 Total Expenses $30,136 $30,648 Expenses Per RSF $8.19 $8.33 Expenses Per Unit $7,534 $7,662 Page 16
S E C T I O N I I I S a l e s C o m p s
SALE COMPARABLES 8% Cap Rate 24.0 Gross Rent Multiplier 7% 21.0 6% 5% 18.0 15.0 Avg. 18.133 4% 3% Avg. 3.4 12.0 9.0 2% 6.0 1% 3.0 Subject 1 2 3 Subject 1 2 3 $400,000 Price per Unit $504 Price per Sq. Ft. $350,000 $300,000 Avg. $356,917 $441 $378 Avg. $408.63 $250,000 $315 $200,000 $252 $150,000 $189 $100,000 $126 $50,000 $63 Subject 1 2 3 Subject 1 2 3 Page 18
SALE COMPARABLES S NOTES (4) 2/1 units 2795 Garden Ave San Jose, CA 95111 Sale Price $1,575,000 Units 4 Price/Unit $393,750 Price/SqFt $427.99 Cap Rate 4.68% Year Built 1986 GRM 14.72 # Units Unit Type 1 2BR / 1BA (HA unit) 1 2BR / 1BA (HA unit) 1 2BR / 1BA (vacant) 1 2BR / 1BA 1 Sale Date 1/9/2018 Pearl Fourplex 3074 Pearl Ave San Jose, CA 95136 Sale Price $1,495,000 Units 4 Price/Unit $373,750 Price/SqFt $496.02 Cap Rate 3.1% Year Built 1963 GRM 19.4 # Units Unit Type 4 Two Bedroom One Bath 2 Sale Date 7/6/2017 Canfield Fourplex 868 Canfield Ct San Jose, CA 95136 Sale Price $1,496,000 Units 4 Price/Unit $374,000 Price/SqFt $317.35 Cap Rate 3.5% Year Built 1979 GRM 17.0 # Units Unit Type 2 Two Bedroom Two Bath 1 One Bedroom One Bath 1 Three Bedroom Two Bath Page 19
SALE COMPARABLES 3 Sale Date 8/1/2017 Perrymont Fourplex 318 Perrymont Ave San Jose, CA 95125 Sale Price $1,292,000 Units 4 Price/Unit $323,000 Price/SqFt $412.52 Cap Rate 3.6% Year Built 1955 GRM 18.0 # Units Unit Type 4 Two Bedroom One Bath Page 20
SALE COMPARABLES S 2795 Garden Ave San Jose, CA, 95111 $1,575,000 1 3074 Pearl Ave San Jose, CA, 95136 $1,495,000 2 868 Canfield Ct San Jose, CA, 95136 $1,496,000 3 318 Perrymont Ave San Jose, CA, 95125 $1,292,000 Page 21
S E C T I O N I V D e m o g r a p h i c s
DEMOGRAPHICS Population Characteristic 1 Mile 3 Mile 5 Mile Ages 0-4 2,032 18,719 45,747 Ages 5-9 2,407 21,757 53,294 Ages 10-14 2,109 18,969 46,799 Ages 15-19 1,952 17,386 43,269 Ages 20-24 1,863 17,219 43,526 Ages 25-29 1,828 17,514 44,411 Ages 30-34 1,923 18,016 45,515 Ages 35-39 2,023 18,972 47,550 Ages 40-44 2,139 19,726 49,704 Ages 45-49 2,186 19,901 50,833 Ages 50-54 1,908 17,832 46,470 Ages 55-59 1,692 15,530 40,748 Ages 60-64 1,409 12,651 33,419 Ages 65-69 1,123 9,824 26,053 Ages 70-74 974 7,365 19,407 Ages 75-79 888 5,280 13,739 Ages 80-84 662 3,439 9,136 Household Income 1 Mile 3 Mile 5 Mile Median Household Income $55,860 $70,665 $73,654 < $10000 431 3,530 9,847 $10000-$14999 514 3,874 8,735 $15000-$19999 417 2,968 8,251 $20000-$24999 255 3,329 8,565 $25000-$29999 499 3,173 7,838 $30000-$34999 329 3,325 7,558 $35000-$39999 323 3,055 7,671 $40000-$44999 264 3,259 8,696 $45000-$49999 315 2,393 6,632 $50000-$60000 787 5,491 13,538 $60000-$74000 812 7,753 20,194 $75000-$99999 1,550 11,370 28,334 $100000-$124999 839 8,292 21,648 $125000-$149999 517 4,916 15,229 $150000-$199999 568 5,821 17,203 > $200000 595 5,129 16,242 Race Characteristic 1 Mile 3 Mile 5 Mile Characteristic Housing 1 Mile 3 Mile Non Hispanic White 9,096 99,499 288,981 Housing Units 9,834 82,263 Population Black 607 6,849 16,772 Occupied Housing Units 9,502 79,390 Population Am In/AK Nat 105 1,127 2,997 Owner Occupied Housing Units 6,402 44,613 Renter Occupied Housing Units 3,100 34,777 Vacant Housing Units 332 2,873 Page 23
DISCLAIMER DISCLAIMER All materials and information received or derived from Silicon Valley Multifamily Group (SVMG) its directors, officers, agents, advisors, and/or any third party sources are provided without representation or warranty as to completeness, veracity, or accuracy, condition of the property, compliance or lack of compliance with applicable governmental requirements, developability or suitability, financial performance of the property, projected financial performance of the property for any party s intended use or any and all other matters. Neither SVMG its directors, officers, agents, or affiliates makes any representation or warranty, express or implied, as to accuracy or completeness of the any materials or information provided, derived, or received. Materials and information from any source, whether written or verbal, that may be furnished for review are not a substitute for a party s active conduct of its own due diligence to determine these and other matters of significant chance to such party. SVMG will not investigate or verify any such matters or conduct due diligence for a party unless otherwise agreed in writing. PLEASE NOTE: The Seller(s) desires to sell the property in "its present physical condition (as-is) subject to inspection and reports. EACH PARTY SHALL CONDUCT ITS OWN INDEPENDENT INVESTIGATION AND DUE DILIGENCE. Any party contemplating or under contract or in escrow for a transaction is urged to verify all information and to conduct their own inspections and investigations including those through appropriate third party independent professionals selected by such party. All financial data should be verified by the party including by obtaining and reading applicable documents and reports and consulting appropriate independent professionals. SVMG makes no warranties and/or representations regarding the veracity, completeness, or relevance of any financial data or assumptions. SVMG does not serve as a financial advisor to any party regarding any proposed transaction. When analyzing this property buyer should use income, vacancy and expense levels that will accurately reflect the manner in which it plans to operate the property. Broker, Agent and Seller are making no representations or warranties as to the level of income or expenses Buyer will incur at the property. Building square footage, unit square footage and lot sizes are not guaranteed. Broker, Agent and Seller have not measured the units, lot or the building and are making NO representation as to the accuracy of square footage figures. Data source for building size and lot size is provided by an online resource such as that provided by Chicago Title Company. SVMG is not responsible for errors in the data. Buyer should measure all units, lot and the building prior to purchase and should not rely on any square footage figures provided by Broker, Agent or Seller. All data and assumptions regarding financial performance, including that used for financial modeling purposes, may differ from actual data or performance. Any estimates of market rents and/or projected rents that may be provided to a party do not necessarily mean that rents can be established at or increased to that level. Parties must evaluate any applicable contractual and governmental limitations as well as market conditions, vacancy factors and other issues in order to determine rents from or for the property. Legal questions should be discussed by the party with an attorney. Tax questions should be discussed by the party with a certified public accountant or tax attorney. Title questions should be discussed by the party with a title officer or attorney. Questions regarding the condition of the property and whether the property complies with applicable governmental requirements should be discussed by the party with appropriate engineers, architects, contractors, other consultants and governmental agencies. Do Not Disturb -- Please respect the Seller's request that the tenants not be disturbed. Unless otherwise indicated, all offers are to be written subject to inspection. The Seller will provide access for the Buyer to inspect the interiors of all units within a reasonable period following a fully executed purchase contract. Seller requests that all inspections be made on the same day. Representation -- This information is given with the understanding that all negotiations relating to the purchase of the property described herein shall be conducted through SVMG. All properties and services are marketed by SVMG in compliance with all applicable fair housing and equal opportunity laws. Page 24
DISCLAIMER OFFERING MEMORANDUM NOTES Gross Annual Scheduled Income & the Gross Rent Multiplier are based on current rents shown in the Rent Roll. These rent levels are current rent levels at the time this package was prepared and subject to change without notice. Buyer should review most recent rent roll prior to purchase. The laundry income was based on either previous year actual levels or annualized current income. Gross Annual Scheduled Income & Gross Income Multiplier (Market or Pro Forma) assumes the units are all rented at the rent levels shown in the Pro Forma Summary. These rent levels are not guaranteed to be achievable by Seller, Broker or Agent. Buyer should use rent levels it thinks it can obtain for the subject property. Capitalization Rate is based on rents, expenses and vacancy figures shown in the Operating Statement. Pro Forma Capitalization Rate is based on rents, expenses and vacancy figures shown in the Pro-Forma Operating Statement Pro-Forma (Market) column. See Pro Forma Operating Statement Footnotes and Disclaimers in this section of the Offering Memorandum. Year Built: Data source is provided through the Chicago Title Company online resource. Seller, Broker and Agent are making no guarantee or representations as to when the improvements were built. Buyer should conduct its own investigation to determine age of improvements. UNIT MIX/SCHEDULED INCOME OVERVIEW FOOTNOTES Current Rent Column is based on current rents shown in the Rent Roll. These rent levels are current rent levels at the time this package was prepared and subject to change without notice. Buyer should review most recent rent roll prior to purchase. Pro Forma or Market Rents assumes the units are all rented at the estimated market rent levels shown in the rent roll. Please note that current rents are not at these levels. Pro Forma rent levels are not guaranteed to be achievable by Seller, Broker or Agent. Buyer should use rent levels it thinks it can obtain for the subject property. Purchase Information including Fair Market Value, Resale Valuation and Resale Expenses are provided for illustrative purposes only and will vary depending on market conditions and other factors. SVMG, its Brokers and Agents can not be held accountable for these numbers. Buyer should use the numbers it thinks most appropriate. Financial Information including Down Payment, Closing Costs, LT Capital Gain, Federal and State Tax Rates and the Discount Rate are provided for illustrative purposes only. Actual numbers may, and probably will, vary depending on the Buyer s individual situation. Loans This information is provided for illustrative purposes only. Buyer should use the loan information he or she thinks attainable and realistic for the property. Annual Property Operating Data Notes and Disclaimers Rental Income is based on current rents shown in the Rent Roll Miscellaneous income is based upon information provided by the owner or manager. General Vacancy is estimated to be at current market levels or provided by owner. Taxes are estimated based on list price and based on current tax rate reported by Santa Clara County. Other Expenses All other expenses are as reported by owner or property manager. Loan Payment is based upon information provided in the LOANS section of page 4. Buyer should use the loan information it thinks attainable and realistic for the property. Income Taxes is based upon a 33% or greater tax rate and is provided for illustrative purposes only. Buyer should consult with a licensed tax professional in determining the most realistic and appropriate tax rate. NOTE: THE 5 or 10 YEAR PROJECTIONS ARE PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY. BUYER SHOULD USE THE PROJECTIONS HE or SHE THINKS ARE REALISTIC AND ATTAINABLE. Rent Roll Notes General Notes: Rent levels, occupancy, deposit amounts and terms are subject to change without notice. Move-In dates are subject to change as units turnover. Buyer should obtain updated information and confirm all rent levels, lease terms, move-in dates, amount of last rental adjustment and deposit amounts prior to purchase. Market Rent column reflects projected rents, not current rent levels. Projected rent levels are not guaranteed to be achievable by Seller, Broker or Agents. Buyer should use rent levels it thinks it can obtain for the subject property. Page 25