Purchased for $2.38 million in February of 2018, the two-bedroom unit #31C on the 31st floor of LUMINA’s Tower B (201 Folsom Street, at the corner of Beale) returned to the market with a $2.688 million price tag three months ago, a sale at which would have represented anticipated appreciation of 12.9 percent over the past year.
The 1,495-square-foot unit features “spectacular city views facing South, East and N/W,” with floor-to-ceiling windows, two full bathrooms and a designated parking space in the garage.
And having been first reduced to $2.575 million after a few weeks on the market, and then to $2.449 million last month, the resale of 201 Folsom Street #31C has now closed escrow with a contract price of $2.36 million, representing depreciation of 0.8 percent since the first quarter of last year with a tenant in place paying $8,500 a month and monthly HOA dues of $1,160 for those running the numbers at home.
$8.5K rent – $1.1K HOA – $2.4K tax = $5K income/mo = $60K/yr
$60K/2.36M = 2.5% Cap rate
That math worked when the market was on fire, problematic when the market is down. And that’s with a $8.5K rent! At least the agents made money…
I would guess these owners aren’t in it for the rental investment return.
Michael, are you assuming an all-cash purchase? If financed at 50% down that would add another $4k of debt servicing (just interest, not factoring principal repayment here). That leaves a meager $1k/month
so a cap rate of 0.04%
badatmath, indeed. It would appear you forgot to multiply that monthly income by 12. But more importantly, cap rates should be calculated on an unleveraged basis.
Nice unit, I suppose, but god-almighty $1,160/month HOA dues (now, sure to go up in the future) are simply insane.
I was going to say that it’s all about signalling (It’s a luxury building), but then when you read the listing you see it has an on-site gym, swimming pool, multiple common areas with high-end finishes that require regular maintenance to maintain their appearance and a doorperson. Given all of that $1,160/mo is actually reasonable.
A nice very modern pied-a-terre, relatively large, but too small for a primary residence of a person who can afford this price. It would be interesting to know the demographics of people who buy in this building.
This was an all cash purchase. Client already lived/lives in the building and was upgrading from the 20th floor.