Purchased for $4.1 million in December of 2014 and relisted for $6.5 million the following September along with plans to transform the legal 3-unit building into a contemporary 7,000-square-foot home, “designed to be used as a single family residence,” the sale of 2620 Buchanan Street has closed escrow with a reported contact priced of $4.7 million.
As the list price for the Pacific Heights property was reduced to $4.7 million in February, the sale will be counted as having officially closed “at asking” according to industry reports and stats.
Still a tidy profit, no?
I was curious about that. My rough math says they probably broke even or lost money:
Assumes 25% down (or $1,025,000 on $4.1M purchase price). I think jumbo rates were about 4.0% in dec. 2015. Mortgage on 30 yr jumbo for $3,075,000 balance $14,680/month w/ $10,250/month going towards interest. 16 months x $10,250 = $164,000. Seller also pays 5% realtor commissions, or $235K off $4.7M selling price.
So they would have grossed about $200k in profit after selling costs? So, after taxes, assuming they are wealthy income bracket, about $100k?
And I’m guessing they spent minimum $100K in permit filings, architect renderings, etc. if they did actually go down the path of getting this converted from 3 unit building to a SFH.
This all assumes they purchased traditionally as one would to live in the home and not a corporation or gazillionaire, which admittedly probably wasn’t the case. And rough math also doesn’t assume cash value of $1M+ in down payment money lost investing elsewhere over these past 16 months.
I know there could be a lot of variables here, but again rough math, guessing they probably didn’t turn much profit, right?
doubt they got a 4.1M mortgage.
yes, i agree that is likely scenario, but one would have to assume if they paid cash, negating interest costs, even if they barely broke even after the fees for plans and permits, realtor commissions, etc. they would have been doing better putting that $4.1M in anything, even bonds, for 16 months.
Sorry – I just double-clicked down into the previous post about new plans, renderings… holy cow, this is not an area of specialty but that kind of investment in total architectural rebuild would have to cost several hundred thousand dollars, correct? This definitely looked like they lost money.
Ok my pappy once told me, Come in with cold hard facts, or stay home!
Never the less.
History Record # 1 : FINANCE
Mortgage Recording Date: 01/13/2015
Mortgage Transfer Type: Stand Alone Finance
Mortgage Document #: 00000K003902
Lender: Bank Of America Mortgage
Term: 15
Document Type: Trust Deed/Mortgage
Vesting Type: Company
Loan Amount: $2,500,000
Borrower 1: 2620 Buchanan Llc
History Record # 2 : SALE/TRANSFER
Buyer: 2620 Buchanan Llc
Seller: Millett Maureen
Transaction Date: 12/04/2014
Sale Price: $4,095,000
Recording Date: 12/08/2014
Sale Price Type: Full Value
Recorded Doc #: 00000J984392
Title Company: First American Title
Document Type: Deed Transfer
Nothing against people spending money but we see this time and time again. A multi-unit building turned into a huge SFH for likely a couple of people. This hollows out the city over time.
Many of these homes started out life as a SFH and were converted into apartments. If you own the entire building and it’s vacant, there should be zero barrier to making it into a SFH if you plan to get out of the rental business.
Butchering a home like this, using cheap materials aka China, having chop shop guys work on should be a crime. We will never get good old American Craftsmen like the guys who built these homes I am doing work on an 80 year old house right now. Besides a tiny leak in the back, the bones are still in original condition.