A Closer Look - Gross Rent Multipliers

A Gross Rent Multiplier (GRM), which is derived by dividing the property price by its annual gross rents, is often considered an indicator of perceived future value. In general, an investor looking to buy might expect to pay a higher GRM if they believe future rent growth for the property will be higher compared to properties with a lower GRM.

Oct - GRM's.PNG

The average GRM for 5+ unit buildings in San Francisco has hit a new high of 17.8 for 2015 year-to-date. As a comparison, the 2009-2013 average GRM for 5+ unit buildings in San Francisco was 13.4. If one were to consider a 13.4 GRM as a long-term average, we're approximately 33% above what would be considered a historical market norm. 

New Listing: 3345 24th St | 307 Bartlett St, San Francisco

Price                  $2,650,000
Units                  9 ($294,444/Unit)
Building Size   5,840 sq ft ($454/sq ft)
Cap Rate           2.61%
GRM                   18.77
Stories               3
Construction   Wood Frame
Year Built         1922

Prime location on vibrant corner of 24th and Bartlett Streets with OVER 130% UPSIDE. JUST ONE BLOCK FROM 24TH ST BART STATION, this property consists of (6) studios, (2) 1 bedrooms, (1) retail, (6) vacant storage units and (4+) individually garaged parking spots. It is a 3 story, wood frame building built in 1922 with a concrete foundation. The property has been impeccably maintained including new garage doors, lots of remaining period details, improvements/repairs to the external staircase and dryrot removal. This is a well maintained building with good bones and huge rental upside.

Landlords fight back over new S.F. law regulating tenant buyouts

Ten days ago Ordinance 225-14 took effect which was passed by the San Francisco Board of Supervisors in October that requires owners of San Francisco apartment buildings to provide specific disclosures to tenants when negotiating buyouts. A number of groups that represent property owners including the San Francisco Apartment Association (SFAA) have filed a lawsuit seeking to overturn the new ordinance. Although the law was designed for the purpose of preventing tenants from feeling pressured into signing agreements, it is argued that the new ordinance violates right to free speech and privacy rights for both tenants and landlords.

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New Listing - 371 Turk Street

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Price                  $5,950,000
Units                  26 ($228,846/Unit)
Building Size   16,100 sq ft ($370/sq ft)
Cap Rate           4.08%
GRM                   14.07
Stories               7
Construction   Concrete
Year Built         1927

371 Turk is a 7 story, concrete building built in 1927.   The property consists of (7) One-Bedrooms, (1) Jr. One-Bedroom, (17) Studios, and (1) Retail unit. The property has been enrolled in the Ratio Utility Billing System (RUBS) program to minimize expenses and help assure future tenant reimbursements will keep pace with rising costs. It is separately metered for PG&E. The property is located on Turk Street (between Hyde and Leavenworth) just off of Market St. 371 Turk is an add value opportunity with significant upside in rents and located in a rapidly improving Tenderoin location.

Source: http://www.holyokealexander.com/371-turk-s...

After Boom, Bust Could Be Upon Apartment REITs

Concerns about overbuilding apartment units in many major metropolitan areas. San Francisco's concern? Underbuilding

In the past 5 years San Francisco's population has increased by roughly 45,000 people, while only 7,500 housing units have been constructed in the same time period. 

Great news for San Francisco apartment building owners and buyers. 

Source: http://www.wsj.com/articles/after-boom-bus...

San Francisco Faces Rent Control, ‘Housing Crisis’

Home to nearly 850,000 people and rapidly growing, the City of San Francisco is packed into a little less than 47 square miles. Having long been known as one of the primary financial, tech and cultural hubs of the United States, San Francisco is a place where many people want to be. Business is booming, companies are competing for employees, and the city is as culturally vibrant as ever. It seems like every week there is another article about San Francisco topping another a “best of” list.

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