Average Tenant Buyout Was $45K in San Francisco Last Year
February 3, 2021
With a moratorium on evictions having been in place for most of last year, landlords in San Francisco inked a total of 333 legally recorded tenant buyout agreements, which was down from 365 inked agreements in 2019 and included a few deals which had been in the works since early 2016.
According to our queries, the average buyout agreement totaled $44,713 in 2020 or $29,216 per tenant, which was down 6.9 percent from an average of $48,006 ($31,491 per tenant) in 2019.
For the third year in a row, the Mission was the San Francisco neighborhood with the most inked buyout agreements (59), followed by Haight-Ashbury (28), Eureka Valley (24), the Tenderloin (22), and SoMa (19).
And while down from a record-setting deal that paid out $325,000 to a single tenant in North Beach in 2019, the highest reported buyout last year still totaled $248,975, an amount which was paid to the tenant of a little single-family home in Noe Valley “with possibilities.”
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If you have the entire dataset, the median and standard deviation would also be interesting.
Paying 248k to a SFR tenant who was not under rent control sounds unusual.
The
meanmedian buyout amount was $32,250. And protections for tenants of a single-family homes do exist but depend upon the original date of occupancy or if the tenancy followed a prior no-fault eviction.I think SFRs were grandfathered when Costa Hawkins was implemented. So someone would have had to have been there for over 20 years.
I did a tenant buyout in 2019 for $61K with my one tenant whose rent was at market at the time. I had to proceed with the buyout for condo conversion purposes. The unit is a 2/2 in pacific height.
I feel extremely appreciative that my tenant agreed with the $61K as the condo conversion of the entire building was dependent on this. That said, I would never ever do condo conversion again. Never ever again…
Why would you never do a condo conversion again? Were you doing an “expedited” 2-unit conversion?
No, it was a 5-unit “expedited conversion” that we did. My unit in this 5 unit building was tenant occupied, and I was blocking everyone’s pathway to condo because of my tenant.
Would never do conversion because there are so many un-predictables in the process. Just because you satisfy all the conversion “criteria” does not mean you can convert. There are so many administrative hurdles too, that you wont know exist until you are in the process. DBI can block you, DPW can block you, CPC can block you…
I’m curious how many of these hurdles exist for 2-unit fast track conversions. I’ve talked to multiple lawyers now and trying to learn as much about the process as I can before actually buying a building.
It is true that 2-unit conversions will face less hurdles. Still, you never know what is going to come up in your DBI inspection. For example, how much un-permitted work has been done to the building? And then, 2-units are also priced not that much lower than condos.
Chump change if actually under rent control, they’re getting that back in the first 12 moths if that.
Your statement is kind of meaningless since being “under rent control” doesn’t mean that the rent is necessarily below market. If someone has lived in a rent-controlled property for decades, your statement might be true. If they’ve lived in a rent-controlled property for a year, they are basically paying market rent.
Or possibly 25 percent above market, currently.
That would be the case in my buyout. Had my tenant not taken the $61K buyout and stayed, he would be paying above market rent now. That said, I am very appreciative of him taking it at the time to allow the building to condo convert, we are still friends today.
I’ll be your friend, too, ST, if you give me $61,000.
ST probably made well into six figures on the condo convert and can now easily afford to make new, higher echelon friends.
So you dont have to pay rent, can’t get kicked out, and get paid to leave? What could go wrong….
“dont have to pay rent, can’t get kicked out, and get paid to leave?”
When you put it all together like that it makes me think there will be a wave of “buyouts” that cancel out rent arrears. If someone runs up $40k of rent arrears, but are worth a $45k buyout maybe they just get net $5k and have the $40k of debt wiped clean. I’d assume that in a case like that the gross ($45k) amount gets reported to the city? Wonder how you’d track something like this…
A friend, an East Coast transplant of a wealthy family, was in a 3-bedroom Romeo flat in Noe Valley for 5 years. He eventually became the master tenant. He decided to charge market rate for the rooms as they came up.
The building owner offered to buy them out for $30k. He didn’t tell the others -just that it was time to go and that as the last “original” tenant (he wasn’t) they’d have to pay market rate if they wanted to stay. The others just moved out, totally unaware. He got 2.5 years of rent back plus the margin he was making off the other two rooms. He took the money and used it for a down payment on a beautiful midwestern single family home.
Rent control and the buy out programs could use some oversight, no???
Why? Subtenants aren’t entitled to buyouts since they are not on the lease. As for passing through market rate rents, that is already illegal.
Maybe you need to pick friends who don’t spend their time defrauding people and breaking the law. None of that was legal, and of course it was unethical.
What is the difference on the map between the dots that are solid orange v. the dots that are white with orange outlines?
An outlined dot represents more than one agreement at the same building address.
UPDATE: Tenant Buyouts Ticked Up In San Francisco Last Year (2021)