385 E San Fernando St

A unique rental property, directly across the street from San Jose State University. This 5-unit apartment
building actually has 6 legal units! There are three (3), two bedroom/one bath units; two (2) one
bedroom/one bath units; and one (1), fully permitted, legal, four bedroom/two bath unit. The building is
classified as 5-unit building only because there are 5 on-site parking spaces, but there are six (6) legal,
permitted units.
All the units are fully rented. The four-bedroom unit is currently being rented as an SRO unit (Single Room
Occupancy), meaning the bedrooms are rented out individually. The unit can continue to be operated in
this manner or it can be rented out as a fully functional 4BD/2BA unit as it has a kitchen and a large living
room. There is also a laundry room with appliances within this unit.
There is large upside potential with this property. The rents are below market, especially due to its
proximity to San Jose State University, and although the units are in reasonably good condition, they
could be upgraded to generate considerably higher revenue. At present the building generates $11,935 in
monthly revenue. But could be generating up to $15,300/month with renovations and strong
management.
The building was constructed in 1951 on a 5,850 SF, level lot. The building was constructed with stucco
over wood framing on a concrete perimeter foundation. The total square footage of the 6 units is more
6,000 square feet in size. (Buyer to verify measurements.)
The building is ideally located for both student or workforce rentals. The multifamily market in San Jose
has seen compelling growth over the past 20 years. Silicon Valley's tech economy's success has driven
large increases in employment and income and generated strong growth in housing demand.
Competition for for-sale and rental housing in the premier Silicon Valley suburbs has pushed housing
costs to some of the highest levels in the nation. Average apartment rents are the third highest in the U.S.,
after New York and San Francisco, while for sale housing is out of the reach of many residents.
Accordingly, the vacancy rate is projected to remain low as the number of new apartment deliveries
increases over the next two years.
The for-sale housing market remains expensive. With house prices continuing to rise and mortgage rates
at approximately 7%, San Jose has the nation's widest affordability gap between buying and renting. That
means most new households will become renters rather than owners, creating a backstop for apartment
demand.