I've been through Newmark's offering memorandum, the October rent roll, the owner's 2025 and 2026 operating statements, and every recorded sale of a 5 to 16 unit building in 92109 over the last two years. 2003 Emerald is a clean, well-kept corner building. Six of the eight units are already renovated, the newest leases are signed at market, and the owner has kept putting money into it, about $83,000 in remodels since early 2025.
The rents are already full, and the expenses are light. I pulled every Pacific Beach lease on the MLS over the last 24 months. East of Ingraham, one-bedrooms leased at a median of $2,350 and two-bed, one-baths at $3,195. The renovated units here already lease at $2,600 to $2,850 and $3,750, at the top of those ranges, and the OM's $3,850 two-bedroom is above every two-bed, one-bath lease in this part of PB. Where the OM stretches most is the cost to run it. The owner pays the gas, water and sewer here, and the owner's own books show $27,480 in utilities last year against the $12,000 the OM carries. Add a real insurance number, 6% management, and repairs at what the building actually spends, and the return at the asking price is , not the 4.35% on the cover.
The sales tell the same story. Emerald sits about a mile and a half from the sand, in the band where buildings traded at a median of $575 a square foot and $406,250 a unit. The ask is $786 a foot and $493,750 a unit. The strongest case for a higher number is next door: 1948–52 Emerald sold for $601,250 a unit last July, all cash. It's a 1988 building with eight two-bedrooms on about half again as much land, so it sets the ceiling for this block, not the value of this building.
The upside is real and specific. Two units are still original, one is vacant, and the utility bills sit almost entirely with the owner. The gas runs through one master meter, so the owner pays for every unit's hot water. Renovating units 1 and 4 as they turn over and moving to a utility billing program could add $30,000 or more a year in income (Speculation). California's rent cap and the existing leases set that pace, so I'd pay for the building as it operates today.
The money is the good news. On U.S. Bank's terms as written, 6.74% with the loan sized at 1.25× coverage, your $2,350,000 covers a purchase up to about with no special approvals. That's a cleaner fit than 849–855 Emerald, which needed the bank to agree to interest-only.
My recommendation is to open at $3,500,000, plan on landing between $3,600,000 and $3,650,000, and stop at $3,700,000. My most probable value is $3,650,000. The building has been on the market almost three months with no buyer at the ask, the marketing package already says "reduced price," and the seller's own operating statements make our case on price. We lead with certainty: a bank letter in hand, close to 60% of the price in cash, and a close before year-end.
The one open item is the bank's letter. The one we have is written for 1478 Hornblend, and Alan Risch needs to confirm the same terms for this address before we write the offer. I spoke with Erik Anderson at Newmark today. He describes the owner as a large portfolio owner that isn't under pressure to sell and wants something close to its asking price. If that holds, there's about $250,000 between us, and I'd rather walk to 849–855 Emerald than pay the seller for income you'd have to create yourself.
With Gratitude,
![Kip Boatcher signature]()
849–855 Emerald figures are from its October 26 opinion, which used the earlier 6.99% rate. Its fit at 6.74% would improve slightly. Needs verification