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  • #113: Bay Area Cash Cows + Oakland Development Opportunity

#113: Bay Area Cash Cows + Oakland Development Opportunity

This week's issue: South SF SRO with 8.23% cap rate, San Diego SRO analysis, shovel-ready Oakland development, and Clairemont pool flip

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South San Francisco SRO Hotel - Bay Area Cash Cow

📍 Address: 216-220 Linden Ave, South San Francisco, CA 94080
💰 Price: $6,995,001 ($101,377/unit)
🏢 Property: 69 units (68 SROs + 1 3BR + 2 commercial)
🏦 Cap Rate: 8.23% Current | Optimized: 19% Cash-on-Cash

Why This is a Great Investment:

At just $101k/unit with an 8.23% cap rate in the Bay Area, this SRO hotel offers incredible cash flow with massive optimization potential! Recently renovated in 2022 means no deferred maintenance, while RUBS implementation and vacancy lease-up can push returns to 19% cash-on-cash. This represents institutional returns at mom-and-pop pricing in one of the country's most expensive markets.

Perfect for experienced operators seeking high cash flow with optimization upside.

Current Performance 📝

Investment Metrics (30% Down)

Down Payment

$2,098,500

Current NOI

$575,928/year

Current Cash Flow

$168,000/year

Current Cash-on-Cash

8.0%

Optimization Strategy 📝

Value-Add Opportunity

Annual Impact

RUBS Implementation

+$81,600

Lease 17 Vacant Units

+$229,500

Self-Management

+$27,600

Total NOI Increase

+$338,700

Optimized NOI

$784,628

New Cash Flow

$397,896

New Cash-on-Cash

19.0%

Key Success Factors:

  • Implement RUBS ($100/unit utility charge)

  • Professional SRO management experience required

  • Lease vacant units at $1,250/month average

  • Self-manage initially to maximize returns

Oakland Temescal Development Syndication

📍 Location: 345-347 51st St & Manila/Coronado Ave, Oakland, CA 94618
💰 Investment: $2,000,000 equity raise
🏗️ Project: 4 detached homes (1,391-2,801 SF)
🏦 Returns: 25.2% to investors | Timeline: 12-14 months

Why This is a Great Investment:

Shovel-ready infill development in Oakland's hottest neighborhood eliminates typical development delays! With permits issued, grading complete, and foundation ready to pour, this project offers development returns with construction-phase risk mitigation. The Temescal/Rockridge border location and experienced developer (285+ projects) provide strong execution probability.

Perfect for investors seeking development returns without development headaches.

Contact: [email protected] OR click the button below!

Investment Structure 📝

Project Economics

Total Project Cost

$5,076,000

Projected Sale Price

$7,600,000

Total Net Profit

$2,524,000

Investor Share (20%)

$504,813

Investor ROI

25.2%

Timeline

12-14 months

Project Details 📝

Home

Size

Features

Est. Sale

345 51st St

2,801 SF

5BR/4BA, rooftop deck

$2,100,000

347 51st St

2,109 SF + ADU

3BR/2.5BA + 273 SF ADU

$2,000,000

5010 Manila

2,151 SF

3BR/2.5BA, rooftop deck

$1,850,000

4981 Coronado

1,391 SF

3BR/1.5BA, entry-level

$1,650,000

Risk Mitigation:

  • Permits issued for 3 of 4 homes

  • Grading and site work complete

  • 35+ years developer experience

  • Conservative pricing ($790-850/SF vs $950 market)

San Diego Hillcrest SRO - Comparative Analysis

📍 Address: 3942 8th Ave, San Diego, CA 92103
💰 Price: $4,185,000 ($135,000/unit)
🏢 Property: 31 SRO units (133 SF average)
🏦 Cap Rate: 5.06% Current | Market: 6.78%

Why This is a Great Investment:

Prime Hillcrest location with 31 tiny SRO units offers modest returns but requires intensive management. At $135k/unit for 133 SF rooms, this represents premium pricing for specialized product type. While location is excellent (Walk Score 90+), the management complexity and moderate returns make this suitable only for experienced SRO operators.

Best suited for operators with extensive SRO experience seeking stable but modest returns.

Investment Analysis (40% Down) 📝

Investment Metrics

Down Payment

$1,674,000

Current NOI

$211,604/year

Market NOI Potential

$283,756/year

Monthly Cash Flow

$8,389

Cash-on-Cash Return

6.0%

SRO Management Considerations 📝

  • High turnover with 31 small units (133 SF each)

  • Master-metered utilities ($28,792/year expense)

  • Shared bathrooms increase management complexity

  • No HVAC in 1925 building

  • Tenant screening absolutely critical

Verdict: Reasonable for experienced SRO operators only. The 6% cash-on-cash return is acceptable given prime Hillcrest location, but this is NOT for passive investors.

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