A 1,600 square foot three-bedroom in San Francisco proper for $375,000? Yes.
But a couple of things to keep in mind: it’s being offered as one of three TICs in the building; the Ellis Act was enacted in September 2006; and the Ellis act was completed in September 2007 (which might suggest a protected tenant was involved).
Oh, and the “kitchens have been partially demoed” which could complicate your financing, but also makes us think the seller might be, well…let’s just say “motivated.”
∙ Listing: 135 Clayton Street (3/1.25) – $375,000 (TIC) [MLS]
∙ Listing: 131-135 Clayton Street – $1,350,000 [MLS]
∙ Prohibition On Condominium Conversion Passes [SocketSite 5/06]
I love the photo of the nearby St Mary’s Medical Center. The point? “And in case you have any concerns about that violently pissed off recently-evicted protected tenant coming around . . .”
can these units enter the condo lottery? The Ellis Act confuses me…esp if a protected tennant was involved. Comments would be helpful.
[Editor’s Note: Start here: Prohibition On Condominium Conversion Passes.]
Too bad about the ellis. That means you can’t rent it out except to the previous tenants for quite a while (10 years?). Also means no condo conversion ever, if more than one unit, or a protected tenant were involved.
With no conversion to condos possible, it doesn’t really make sense to buy this to own long term, especially in a down market where more condos are available cheaply. (And interest rates on TIC loans are still ridiculously high).
But it doesn’t make sense to buy it to rent it either, since you really can’t.
I would have suggested the previous building owner sell either the whole building or, if they wanted to try to divide it and get that extra profit, own the unit occupied by the protected tenant and sell the other two units. 2/3 owner occupied qualifies for condo conversion. Of course, you’d have a large carrying cost on that third unit, but the integrated carrying cost over the term of ownership may pale compared to what they are going to lose now.
Creation of affordable SF housing at $234/sf is what this says to me…
Actually, I was incorrect– if two or more units were involved the ban period is 10 years, not permanently. However, if a single protected tenant is ever evicted, the ban is permanent. See the link by clicking on my name and read the top of page 4
The units are demo’ed and currently un-livable. Therefore, no bank will lend a TIC loan on the individual units unless the buyer has a very large down pymt.
The building is also available; no action. Go figure.
From my experience, NO bank will loan on a partially demo’d TIC without a kitchen or a bath, PERIOD. The 375K price point is in hopes that somebody will pay 375K cash for an Ellis’d TIC. But I agree that for all these reasons the seller might be even further motivated. If that’s the case, fo someone with cash, know how, and a willingness to live in a TIC that will never condo convert, this could be a rare find.
And no parking. This is for an investor whose willing to put in some time and money, and maybe even pay less than the 1.375 mill asking price.
The owner paid $1.2 million in 2006. How about a little love for the aluminum replacement windows on the third floor. Seems like a good candidate for a multigenerational family compound. Ready for condo conversion when the grandparents pass in a decade.
L Whalen bought the building 7/11/06 for $1.2M.
Ellised a month later. No permits on file after
purchase. It’s rather easy to figure out this mess.
Let’s see:
1) TIC developers changing course.
2) andy sirkin moves out of SF.
3) andy sirkin’s peeps leaving to do other things.
4) B of Marin no longer offering fraction TIC financing.
conclusion: SF TIC’s are dead meat. at least for now.
Here’s how I’d play it. Offer $325k all cash. move in. help get the other 2 units sold to 2 people who can barely afford them but who put a reasonable down $$. wait for them to go bk. foreclose on them. take over the whole building and develop them at a much lower cost than mr. whelan.
Ellis is only bad if you want to condo under the current regime. Otherwise it is a very good system. The tenants get moving expenses, I think, of about $5000 each person. For a couple, it covers much more than just moving.
TICs are alive and well. Andy Sirkin is one popular and reputable lawyer who writes TIC agreements and advises on same, but there are and always were others. Bank of Marin is not the only fractional lending game in town either.
i tend to look at changes on the margin when investing. the recent anecodatal changes in TICs are directionally all negative.
can anyone provide the current DOM for TICs in SF, particularly districts 7 and 8??
I’m just thinking out loud but can someone buy ALL the units and convert it to a SFH? A 4,900 sq ft SFH for under $300 per sq ft is not bad isn’t it? Assuming you can make it a SFH, is it still under rent control?
You can’t remove units (for the most part).
I thought the Planning Dept actually has rules regarding what conditions would satisfy merging units. But I guess this is one of those things that are very hard to accomplish in real life.
“i tend to look at changes on the margin when investing. the recent anecodatal changes in TICs are directionally all negative.”
OK, fine. But that is not what you said/ what I responded to.
actually i do think there are enough things going wrong for TICs right now for them to be reasonably considered “dead meat”.
it’s clear the developers, finacers, and lawyers are running for the hills, and for good reason.
buyers simply do not want to take the risk right now of getting in bed with others. look at how many TICs are listed and how long they’ve been sitting. B of Marin says we still haven’t seen the first TIC loan default but it could be coming and if it does, it’s game over.
don’t get me wrong, i think TICs are a great idea but right now the supply of units is too great (and still increasing) and buyers are too risk averse – especially when renting or condo conversion are nearly impossible, as in this building.
“i think TICs are a great idea”
No, I don’t agree. It’s been clear from the start that the only reason SF has TICs is as a work-around to the condo conversion laws. That ownership structure has never been stress tested and we’re about to see how well that holds up.
“B of Marin says we still haven’t seen the first TIC loan default but it could be coming and if it does, it’s game over.”
No it won’t be game over. Why would one default cause a domino effect? It won’t. It’ll be just like any other unfortunate situation. But the fact that there are none so far is not for nothing.
They are not dead mean. They are facing real challenges in this environment, and you can see it, as can I. You keep wanting to blame bogeymen/ real estate pushers tho. What’s going on with buyers is that they’re factoring the added risk of other human beings + the added expense of the higher rates. The promise of lower rates is why a lot of people are even considering jumping into the sub 850K market right now. But I can also see that you want to keep on making big overrarching statements about the imminent death of TICs and then backing away from what you’ve just said when challenged. I’m bowing out of this one before 14 boo birds come out of the woodwork telling me how dumb I am.
anonn – what is said was “TICs are dead meat, at least for now”. that’s not the same as imminent death. can you really argue the following?:
1) the pricing spread of >2 unit TIC’s vs. comparable condos is higher that it was 2 years ago and continues to climb becuase of the partner risk factor and financing costs – i.e. TIC values are dropping faster than the average home.
2) developers have slowed/stopped the game of Ellis acting buildings, remodeling, and selling off as TICs. Developers like the one for this property who are caught mid-stream are screwed with their inventory.
3) real estate agents who specialize in partnering with developers and selling their TICs have fewer listings, longer days on market and lower incomes than the average agent.
4) TIC owners could be the last shoe to drop if the concept fails stress-test as diemos suggests.
I wouldn’t wanna be one right about now.
That said, I don’t think the ownership structure will go away for good. As long as we live in a socialist city with our tenant laws, TICs make a lot of sense. Now’s just the wrong time.
I don’t know, resp. Activity has slowed and I feel as if it’s down to the reasons I’ve stated more than the ones you’ve stated. People looking at TICs are by and large going to fall within superconforming limits. Yet TIC financing is more expensive. That’s quite a challenge. A glance at the TIC market since 4/1/09 shows 44 sales. Another 88 are pending or in contract. It aint a whole heck of a lot, but “dead meat” ?
a quick search of the public MLS showed this number of TIC listings (not in contract):
D1 – 33
D2 – 11
D3 – 0
D4 – 0
D5 – 64
D6 – 45
D7 – 22
D8 – 43
D9 – 35
D10 – 3
TOTAL = 256
256 unsold + 88 pending = 344 vs. 44 sold in the last ~6 weeks? (they’re not sold til they’re sold). so that’s about a rate of 8 per week selling or 344/8 = 42 weeks of inventory??
I don’t really want to parse “aint a whole heck of a lot” versus “dead meat.” Feel free tho!
For the right price, everything sells. It just means that TIC prices will fall faster than condo prices until the right price to risk ratio is reached.
As the defaults start to happen later this year, the actual defaults will be factored in and prices will fall even further, but the TIC market won’t die. The pricing will just have to adjust to the right level and it will be fine. SFRs and condos are selling right now at 2004 prices. Price a TIC at a 1999 price and it will sell just fine.
Anyone buying a TIC before the prices adjust is a fool, but once they adjust, the market will do just fine.
SFRs and condos are selling right now at 2004 prices. Price a TIC at a 1999 price and it will sell just fine.
You’re too much the way you’re always speaking so authoritatively. Very many neighborhoods in the city have properties selling for numbers that did not exist in 2004.
“Price a TIC” at 1999 prices and it wil ldo fine. Whatever. Like you would know, or have a way of knowing.
I’m being threatened with an Ellis Act and I live in the North Panhandle… it’s still happening. Meanwhile, new owners have begun construction on a third unit in the garage (the building is currently a two-unit with protected tenants residing upstairs) but it doesn’t say anything about a “third unit” on the building permit. How does this affect the Ellis Act if they should go through with the construction? I thought only two-unit buildings were eligible to skip the condo lottery if there are no protected tenants evicted? Ryan Steele is the new “property manager”.
San Francisco Tenants Union. Good luck.
@Elizabeth,
so you stand to get ~$5,000/person to move out of your rental? sounds great. esp. b/c the big re collapse must be making rental options plentiful.
sounds like you are getting a windfall. why do you care what the owner of the property is doing with his/her property?