The Stacks

Highlights:

• Opportunity to acquire a newly renovated 14-unit apartment community in downtown San Jose in the heart of Silicon Valley.
• Incredible returns for a core Silicon Valley asset with a current cap rate of over 5% and a price per unit of less than $300,000 per unit.
• High rents allow for exceptional cash on cash returns and the ability to obtain debt at a maximum loan to value.
• Limited impact of rent control since most of the units are close to market rent.
• The unit interiors have been renovated with new kitchens, new bathrooms, new flooring, and paint.
• Extensive exterior capital improvements over the last 5 years including paint, new roof (2019), newer handrails, lighting fixtures, dual pane windows.

Description:

*PROPERTY TOUR on 3/17 and 3/20 from 11am-1pm*

Marcus & Millichap is pleased to present the opportunity to acquire The Stacks, a remarkable 14-unit apartment building situated in downtown San Jose in the heart of the Silicon Valley. The property, located at 617 S 9th St., is comprised of 12 studio units and two, one-bedroom/ one-bathroom units. Over the last 5 years, the property has been extensively renovated both on the interior and exterior. Interior improvements in most units include luxury vinyl tile flooring and upgraded light fixtures throughout, new counters, cabinets and appliances in the kitchen, mirrored closet doors, two-tone contemporary paint with four-inch baseboards in the living area, and new toilets, bath surrounds, vanities and plumbing fixtures in the bathroom. Exterior improvements include a striking new paint scheme, IPE hardwood, new signage, handrails, dual pane windows, increased on-site parking and an all-new roof installed in 2019.

The Stacks is uniquely positioned in today’s Bay Area for-sale apartment market that, because of rent control at a statewide and city level, has impacted investors immediate and short-term returns. Whereas the vast majority of properties being marketed today have a significant loss-to-lease (the difference between current rents and market rents), The Stacks presents an opportunity for an investor to acquire a property that is providing exceptional returns at the moment of acquisition. Not only does having higher rents have the obvious effect of substantially higher income, but it also affords an investor the ability to acquire a property with maximum loan-to-value and less down payment. Lastly, even though rents are close to market, they can be moved even higher based on rents actually achieved at the property further boosting gross income.

Situated only two blocks from San Jose State University, the property benefits from a surplus of renters due to the large and ever-growing student population. This results in low vacancy and the ability to push rents due to overall demand. And although, as with any area with a high student population, slightly higher turnover mitigates the negative impacts of rent control as rents can be increased with no limits on move-out. The property’s downtown location also offers residents a wide array of amenities within walking distance including restaurants, retail, and entertainment.