As a reader points out, we now have evidence of the first attempted flip of a One Rincon Hill condo:
I have a 1 bedroom 1 bath unit above the 40th floor, with a balcony, aproximately [sic] 750sqft(not including balcony) reserved in the highly sought after 08 stack(which is the a corner facing Downtown and the Waterfront). My reserve price is $870k, but 1)developer has raised them $60k 2)you probably could not even get this stack because they are all reserved 3)if you go through sales office, you must owner occupy for at least 1yr, but this one is grandfathered because reserved early.
I am asking $920k, or best offer for my unit. We would sign purchase agreement together and close escrow, from which I’d quit claim off title.
Loophole? Anomaly? Trend? This is going to get interesting. And we can hear the lawyers scrambling from here…
UPDATE: The craigslist post has been updated [thanks John]. Don’t worry, the unit in the 08 stack is still available, but apparently 04 and 05 stack units have been added to the flippers inventory as well.
∙ Comments: The Infinity: A Study In Contrast [SocketSite]
∙ $920000 – 1BR w/Water Views and Balcony at One Rincon Hill [craigslist]
A quick flip? Or are people starting to get cold feet now that they’re already in contract and can’t get their deposit back?
$50k or so profit for ponying up a 5% deposit for around 18 months? Sounds like a flip to me!
What I’d like to know is if and why One Rincon would allow an unrelated third party to sign the purchase agreement if they were really serious about stopping people buying to flip?
Dang, $920,000 for a 1 bedroom 1 bath! AWESOME! Good value baby yeah!
That’s a cheap price b/c there’s NO SUPPLY coming onthe market! Stock market on fire means we are all rich rich rich!
LOL, BulllMarket. Now, let’s see if we have any takers …
Whether it’s a flip, somersault, whatever you want to call it, when it comes down to the nitty-gritty, these developers’ ultimate goal is to sell, sell, sell! Whatever it takes …
For a mere $1227/sq. ft., you could live in a highrise shoebox. Now serving Sucker Number 387 …
This could be a guerilla marketing technique by the developers/agents… desperate times call for, well, you know the rest.
I don’t think the developers are at all desperate – there still seem to be plenty of greater fools er I mean savvy investors around in SF…
The developers at One Rincon are hardly desperate.
Developments that ARE clearly desperate to sell off their remaining inventory are the Beacon and the Lansing. I’ve also heard that the Watermark and the Palms have units that aren’t moving.
And you can speculate all you want on why someone would be selling their unit at One Rincon – there could be a million reasons. In any case, I also think $920k for a 1BR/1BA is steep… but I very vividly remember thinking that $550 psf was ridiculous two years ago. We have no idea in which direction this market will move.
Will, I have a good idea where this market will be moving next year: DOWN. But I sure hope they keep building these huge projects to add more inventory while the adding is good.
I’m with you, SaveYourMoney!
OneRincon currently has a few previously reserved condos back on the market. Apparently, a number of buyers are backing out or their 3% check bounced. I went there yesterday and this is a partial list of their availability:
4901 (49th floor, model #1, 1 bed), $925K.
1706 (2 bed), $990K.
2203 (2 bed), $1115K.
2503 (2 bed), $1165K.
2806 (2 bed), $1265K.
3506 (2 bed), $1290K.
Looks like the flipper has some competition! 😉
Ohhh … this is just the beginning …
The Craigslist ad has been deleted by the Author. I wonder if he attracted too much attention (maybe from OneRincon?, lawyers?, spams?).
Actually, it’s been re-posted:
http://sfbay.craigslist.org/sfc/rfs/186611942.html
Now, the the ad claims to have several units available!
I can’t help but wonder if the Craigslist poster is a greedy broker who’s now trying to cash in before everyone wises up. My impression is, he’s got three (3) units he’s now trying to unload?
“Playing the Housing Bubble” By Lisa Scherzer Published: July 27, 2006, SmartMoney.com
“But the heady days of flipping condos for a quick buck are ending.”
1 Rincon Hill Future offered on Craig’s List for $920K. 1 bedroom 1 bath unit above the 40th floor, Seller holds a reserve price is $870k.
It is assumed the Seller would pay the City Transfer tax of .75% or $6,900. Netting the Seller $913,100. With the Seller holding the property for 1 day to 1 week, to close the resale, the Seller would get to pay the IRS a 50% short term capital gain and the State 10+-% or 60% of his gain. So a net return to the Seller of $17,240.
Also the Seller is asking for a price, to be agreed upon now, of $920K or $50K over his price. Assuming the unit will not be occupied for 2 1/2 years that represents an annual gain of 2.2%.
What happens if the market turns down by the time the sale closes? Who losses the 3% deposit if the Buyer(s) do not close the sale?
1 Rincon Hill is on today’s leading edge of SF high-rise construction, just ask the owners at the Metropolitan, 1/2 block away, where 16 units are on the market for sale today.
How many of the 342 owners were told by the developer/broker that 1 Rincon Hill or the 2 phases of the Infineon (600 units in 2 towers and 800 units in 2 additional towers) were going to happen, when the Met was 1st occupied in 2004? What is going to happen to the views at the Metropolitan when the 4 towers at The Infineon are completed?
Now, what is going to happen to the views at 1 Rincon and its sister tower? How high is the new building at the 76 gas station across the street to be (40+)? How about the new building at the Union Hall on the other corner (40+) and The Californian, further down Harrison? Will these new buildings block views to the east and north, from units on the 40th floor and lower at 1 Rincon Hill? How about the 4 towers at the Infinity, how will they change the views from 1 Rincon Hill? How about the new 40+ story (400+ condos) Millennium Partners building, now under construction across from the Trans Bay Terminal on Mission St?
And the best is yet to come. How will the two 850 foot tall buildings on Mission St, next to the Trans Bay Terminal change the views?
And finally, how about the 1,000 ft tall building that the Planning Dept & the Mayor are supporting? Will that block the 50+ story – 1 Rincon Hill?
The City is exploding, with the 350+ reservations at 1 Rincon Hill and 200+ reservations at The Infinity. With the leverage offered to buyers with a 3% deposit, no wonder 500 gamblers have played their cards.
But, those possible buyers better do some research, to find out what they are really going to get for a view.
Frederick
As far as the building that has the most promise, as the owner/user building in the next 5 years, in the Rincon SOMA area, you have to consider if this facination with high rise living in San Francisco is going to be long lasting. If you look at the entire SF market for condominiums and coop apartments, the sales of high rise apartments is still a small % of the total SF sales.
You must remember that most of the sales of new construction since 1995 were done directly between the developer/sales marketing team and the buyers. The real estate brokerage community has been discouraged from representing buyers of new product for over 11 years.
The developer/sales marketing team as usually paid a 1% commission to an agent representing a buyer, as compared to the 2 1/2% to 3% commission that an agent representing a buyer is normally paid in the re-sale market. Thus an agent representing a buyer, faces two issues in trying to assist a buyer in SOMA.
(1) They have to work for a 67% discount (when was the last time your boss said “Work for 1/3 of what you are use to getting?”. and (2) any agent representing a buyer found it near impossible to find out recent comparable sales to help their buyer’s as to what the current market price to pay for units in the same building that sold in the last 6 months to a year. It was and is, Buyer Beware.
The developer had no responsibility to share with future buyers, what actually had been the selling prices for closed units, including any discouts or credits, that the developer may have had to credit the other buyers with to close the previous sales in the same building.
In addition, each project from the Oriential Wharehouse to all 3 towers of The Brannan, to 200 Brannan, to Embarcadero South, to The Four Seasons, The St Regis, and virtually all the new projects built in the past 10 years, worked with the assessors’s office to keep the acutal sales quite, from the public. Each project had it’s own special manner of keeping the actual sales prices from the public. So a real estate agent could not help a buyer with advice as to how to make a competitive offer.
Therefore Buyers were often not represented, when they purchased. Just ask your neighbors in SOMA/Rincon Hill, if they had ever heard of the projects under construction, approved or being considered (over 25,000 units according the the SF Planning Department).
If fact, today, the orignial purchase price of over 4,000 units in San Francisco have never been credited as being sold by Data Quick or Metro Scan, which buy data from the assessor’s office, but which data the assessor’s office makes it difficult for these data processing companies to find out about or publish. Even though the St Regis has closed escrow on the sale of 106 condominiums, last week, at an average price of $2.4M, no one knows. Not Metro Scan, not Data Quick, not the San Francisco MLS and certainly not the public. But there are people living in most of these 4,000 condominiums.
Getting back to the building with the most promise, a Buyer should consider (1) what buildings have been approved by the Planning Department and the height/size/number of units/floor plan size/parking & amenties that are near the building the buyer is interested; (2) what buildings are proposed in the Rincon Hill and TransBay Terminal plans and (3)what other projects that may be approved/built that may be competitive with those properties including, but not limited to The Ritz, 8 Washington at Drumm(180 units across the street from the Ferry Building with water views), The Musto Builing on Battery and 55 Francisco St.
Who knows what will happen with the Port of SF properties on each side of their sea wall lots from Pier 39 to Candelstick Point (some are specualting housing, similiar to the deal the Port made to build the Watermark).
In the end, if future buyers can adjuct to the congestion/density of the new Rincon/Transbay area, then TODAY, I would bet on the 2nd tower of the Infinity. It sould not have the traffic gridlock that most other Rincon Hill buildings will have to deal with AND, if you get a floorplan that is over the Hills Brothers buildings (20_+ floors) you should be able to keep the view of the Ferry Building and Bay to the north and the Bay Bridge to the east/south.
Each of the other buildings to be built will have it’s own special issues both positive and negative.
Another factor to consider is the wave of new retail that is about to “blow apart the SF Retail market”. Since the 1950’s & 1960’s when the SF Retail market was king in retail sales in Northern California, the City has not dominated the retail market. The emergence of retail centers in the Peninsula, the South Bay, East Bay and Marin satisfied consumers.
Now, within a month or two the new Westfield San Francisco Centre is set to open. The project will feature the second largest Bloomingdale’s and Nordstrom in the country. In addition, the project will maintain a mix of 200 specialty stores and exclusive boutiques, a state-of-the-art Century Theatre Multiplex, an International Gourmet Marketplace, and first-class office space on the top three floors, making Westfield San Francisco Centre a self-contained business hub that answers the call for commerce, couture, community, cuisine, culture – and more.
Rumor has this complex will tripple the number of shoppers to come to SF. How exactly will this new flow of commerce affect the proposed mid-Market housing boom?
If you live here, enjoy the ride, if you don’t live here yet, the best is yet to come, even the Giants may win the World Series.
Frederick
It seems a bit capricious to sell your “reservation” when you don’t even have a binding contract for the sale of real property. I can imagine a myriad of unpleasant scenarios for the “seller” developing from this type of behavior. (i.e. sellers sells reservation, Rincon Hill says there is no contract, new buyer sues seller for breach of contract.)
It looks like the flippers have lost money on this one! BTW: It’s 2008 now and unemployment is at a 14-year high.