It’s not every day you come across a newly remodeled two bedroom, two bath unit in the Lower Haight (Hayes Valley) with a wood burning fireplace and parking that’s listed for $575,000 (863 Haight #2). There are, however, a couple of things to note: one, it’s a Tenancy In Common (TIC) in a five unit building; and two, the building (863 Haight) was Ellis Acted in 2005.
Keep in mind that Supervisor Peskin’s legislation (section 1396.2 of the Subdivision Code) limits (or prohibits) condominium conversions for buildings in which certain types of evictions occurred (after May 1, 2005). Assuming none of the evictions in 863 Haight involved senior, disabled, or catastrophically ill tenants, you’re probably looking at 16 years before conversion. (With a senior, disabled, or catastrophically ill tenant eviction on the books, it’s not going to happen without a change in legislation.)
And for potential investors, don’t forget that your rent roll will be limited to the amount evicted tenants were paying for a period of five years. And if an evicted tenant requested and exercises a “first right to return,” their rent will be limited for ten years.
∙ Listing: 863 Haight Street #2 (2/1) – $575,000 [MLS]
∙ Prohibition On Condominium Conversion Passes [SocketSite]
∙ Ellis Act Evictions [sftu.org]
Don’t forget – you can’t do any capital improvements to your building that involves moving the tenants for any period of time if an elderly or disabled tenant lives there (be sure to frequently shove your nose into your tenant’s privacy so that you are up to date on their health status). This would qualify as a no-fault eviction and make your building PERMANENTLY ineligible for future condo conversion.
Sadly, many great buildings in San Francisco will ultimately deteriorate since you can NEVER replace the plumbing or electrical!!
Does Peskin really matter? His amendment just makes it worse for first time homebuyers by tightening the market further still. And with homeowners moving on average every 3-5 years, who’s going to wait around for a condo lottery taking 8-12 years anyway, Ellis or no?
TIC’s–like NY coops–seem like the future for SF to me.
And the units are appreciable assets. At that price point, it looks to me like a great way to enter SF’s real estate market.