Four of six TIC units in a newly remodeled Queen Anne Victorian have hit the market in Cow Hollow with list prices ranging from $479,000 to $699,000. And we’ll note: “No Ellis, no post ’97 OMI” and individual financing with “as little as 10% down” (which isn’t a selling point as far as we’re concerned, but hey, we tend to be conservative when it comes to our fellow tenants in common).
∙ Listing: 2831-2833 Webster #1 (1/1) – $479,000 (TIC) [MLS] [2831-33webster.com]
∙ Listing: 2831-2833 Webster #2 (2/1) – $549,000 (TIC) [MLS] [2831-33webster.com]
∙ Listing: 2831-2833 Webster #3 (1/1) – $499,000 (TIC) [MLS] [2831-33webster.com]
∙ Listing: 2831-2833 Webster #4 (3/1) – $699,000 (TIC) [MLS] [2831-33webster.com]
∙ Prohibition On Condominium Conversion Passes [SocketSite]
∙ Tenants In Common (TIC) Thursday [SocketSite]
So far as I can tell the TIC market hasn’t taken any disproportionate hit so far. TIC loans already required high downpayments and credit scores, so I’m not sure whether the credit crunch has made these loans any less available than they’ve ever been. Anyone have any info on this? But then again, the psychological factor of buying into a TIC in a soft market is something else entirely…
I agree that I would generally be very reluctant in this market to buy into a TIC where co-owners only put 10% down. If prices tank another 10% (a very real possibility), there would be a tremendous risk that one or more co-owners would just walk away leaving the others liable for their loans.
That said, I believe that individual financing takes this risk away from co-owners and puts it on the lender, doesn’t it?
What a difference a view makes!
#1 1/1 $479k/572sqft = 837 $/sqft
#2 2/1 $549k/932sqft = 589 $/sqft
#3 1/1 $499k/610sqft = 818 $/sqft
#4 3/1 $699k/1102sqft= 634 $/sqft
TIC loans on any terms are radical.
Only 10% down sounds risky to me,
but I’m not a bank so it’s okay?
Looks like a nice color scheme for one of my fellow University of Michigan alums – Go Blue!
My mistake! The front units probably cost more because they have to pay the electric bills for that yellow facade. My eyes!
Given that this is a 6-unit building, I’ll bet these loans are fractionalized, which means that you are not responsible for anyone else’s loan, just your own. If a co-owner defaults, the bank can foreclose on their unit and resell it but cannot touch your unit.
Non-fractionalized loans are really only done these days for 2- or 3-unit TICs. Fractionalized loans for 6-unit buildings DO have higher interest rates, though–usually about 0.75 percentage points– so even though the price for the units is probably cheaper the monthly payments will be similar to a more expensive building. Buyers can reap big returns, though, if they can convert to condo in a reasonable time frame. It’s a gamble (like all real estate).
Ragardless of loan type, however, you are all on the same deed which means that property tax is owed jointly by all owners. Many TICs (including my own) deal with this by having the property tax paid in every month with the HOA fees– that way you ensure that everyone has the cash to pay the property tax.
Great point jeccat, but if someone doesn’t have the cash to pay the mortgage they probably don’t have the cash to pay their monthly HOAs either.
I also have a feeling that any foreclosure would negatively impact the value of the other units in the building.
Forget about delinquent HOA dues…I think the fluorescent paint will negatively impact the value of the units in the building.
I haven’t heard of a fractionalized loan being tested in court to see what the rights of the various parties really are in the event of a default. The loan documents were written by the lender.
Before investing in something like this, it would be prudent to spend 3-4 hours on a lawyer to let him review the documents and tell you just what would happen in the event of a default by one of your low money down co-owners.
The low down is warning me that the lender may not really be the only one on the hook.
And no doubt the developer will come on here and tell us that everything is fine, fine, but I’d still check.
The TIC agreement usually calls for at least a couple of months of mortgage reserves so that if anyone cannot meet the payments, there is a fund to dip into, at least temporarily.
Beautiful building, great locaion. Prices don’t seem expensive at all.
I saw these this weekend and loved the prices…hated the layout. Putting the horrible feng sui aside (since not everyone buys into that sort of thing), the floorplans are choppy, the rooms are tiny, the units on the bottom floor have horribly low ceilings. The 3/1 upstairs has a great view but I have to think that the majority of people would be like me and consider a masterbedroom that has double-doors leading to the living room to be less than desirable and a huge riskfactor to resale? Worst of all is the greedy seller, who is keeping the garage spaces so he (or she) can get a nice little annuity back from leasing those parking spots to the units. Just my opinion…
I went to see the place too. Very, very nice place. I agree with the comments on the choppiness. The 3/1 will go quickly as it’s a very good price(if it’s not already gone). I also believe the 3/1 gets a garage spot. The views are not that great though. The owner is taking the top floor, and I have to assume all the views are up there.
All are in contract now.