TICs Loans Available, But Affordable?

I’m being contacted regularly by buyers in the $400,000-$500,000 price range, who are exploring real estate purchase possibilities. Many such individuals have been renting for a while, and are starting to feel that owning their first home is within reach.

Though condo prices are declining, the bulk of the units in this range currently on the market are tenancy-in-common (TIC) units in 3+ unit buildings. (This is an ownership scenario wherein you own an interest in a building, not the unit itself.

TIC units in this price range will typically involve “fractional” financing—all owners obtain individual loans. (This is in contrast to the traditional TIC loan of the past, wherein all owners were on one group loan.)

The TIC interests themselves are priced within first-time home buyer range, but how many buyers can actually qualify for these fractional loans?

A quick check with Henry Jeanes over at Sterling Bank reveals that TIC buyers for fractional loans will have to meet the following requirements:
- Minimum of 20% down (rates are at 7.25% with 20% down; they get lower as your down payment increases)
- Credit score of 700 (for W2 employees)
- Proof of at least six months of reserves on hand, post closing.

Of course, sellers are working within the confines of these requirements, and it is possible for buyers to negotiate rate buydowns and other financial incentives in order to complete a sale. And some sellers are able to offer slightly lower interest rates on renovated buildings in which a lender like Sterling is already providing the underlying commercial financing. (This is the case at 450 Vallejo at Kearny, a five-unit TIC offering.)

But it’s good to for first-time home buyers to know the initial cost of ownership for these types of purchases.

TICs vs. Condos on 3rd Ave

617_3rdMy broker tour brought me to Third Avenue between Balboa and Cabrillo this week, to check out two TICs and one condo all listed in a similar price range. 673 3rd (above) is a 2+BR/2BA Edwardian TIC, listed at $895,000. This top-floor unit has been recently renovated, and is about 1725 square feet. Though it has one-car parking and storage, there’s no outdoor space. That’s because the other, first-floor unit—soon to be on the market after its own renovations are complete—spans two levels, and has a deeded garden. (The master suite is on the garage level, so a shared yard would obliterate any sense of privacy.) Stay tuned for this lower unit: It’s about 2,000+ square feet, has two-car parking, and is expected to be priced at about $100,000 more than the top floor.

673_3rdNext up was 673 3rd, a 3BR/2BA first-floor TIC unit priced at $819,000. This unit is also remodeled, and has a solid floorplan. The landscaped garden is shared, and the owner of the whole two-unit building will stay on in the top unit to complete a condo conversion.

692_3rd692 3rd enjoys the best curb appeal of the three. It’s a 3BR/1BA, top-floor unit with a large, deeded undeveloped attic space. This will close as a condo, and the unit’s listed at $835,000. It seems the owners of the building will stay on and live in the lower unit.

Sunnyside Fixers Hit the Market

Looking for a property for under $500,000 to serve as a pleasant abode—or a construction project? Head on over to Hearst Avenue in Sunnyside, where you’ll find two possibilities.

350hearstFirst up is 350 Hearst (above), a pint-sized cottage that features one bedroom off the kitchen, a living area, kitchen and a large yard with a workshop. At $478,000, this could be a nice abode for a single, first-time home buyer.

142hearstOver at 142 Hearst, you’ll find what’s being billed as a “fixer upper.” In reality, it’s a teardown best suited to a contractor who’ll renovate the property and resell it as a new single-family home. List price is $312,000, so all you contractors out there can make your bids and see who ends up in court. (Jury’s out on whether the car and the truck are included.) This is a probate sale, meaning the best offer will be chosen, a court date will be set, and a first overbid will be established. Those who are willing to bid above the court price can duke it out and win the right to renovate.

76 Montcalm: First-Time Home Buyer Haven

76montcalmReportedly attracting 200 visitors at last Sunday’s open house, 76 Montcalm on Bernal Heights’ east slope has spent the past few days charming the masses with its modern-yet-quirky layout, views, and, most importantly, $750,000 list price.

The only issue I had with Montcalm was the fact that there’s only one easily accessible bedroom. The second bedroom is not for the vertigo challenged. You can only reach it via a steep ladder that extends from the main bedroom. (The staircase pictured above leads to what’s been deemed a “meditation” space.) So you’re essentially looking at a one-bedroom home with a few additional “spaces” that could be used as an office, hiding place, or bedroom. My guess is that the house will be purchased by a very young couple that’s not concerned about sore knees or a practical floor plan at this point in their lives.

Tootin' Trulia's Horn

One of my favorite real estate sites is Trulia. It provides an easily searchable property database, along with very comprehensive listing detail pages. (See my current listing profile at 590 6th Street #309 for an example.

A unique Trulia feature is Trulia Voices, where you can post questions and get quick answers from real estate professionals. I’ve actually answered quite a number of intelligent questions from buyers and sellers regarding neighborhoods and properties in San Francisco.

Loft Market Gets a Lift

650_2ndListed most recently in January for $2,750,000, 650 2nd Street #502 closed escrow last week for $2,450,000 in an all-cash transaction.

This 4,190 square foot, 5BR/4BA has had an interesting ride over the past few years. It was on the market for a good part of 2008 at a $2,895,000 asking price, and last changed hands in 2004 for $2.3M. Prior to that, it sold for $2.6M in 2000.

Three units were combined to create the current property, and it features 60′ windows and three-car parking. I’m guessing the $1,340 monthly HOA dues won’t be a problem for the new owner.

SF Market Down, But Not Out

The first quarter of 2009 is winding to a close, and it’s time to check out how well San Francisco is positioned heading into April.

A quick look at what properties are pending is an excellent indicator of market health. As of March 18th, a total of 165 single-family homes were pending, along with 94 condos and 26 TICs.

To put things into perspective, 200 single-family homes sold in April 2008, as well as 191 condos and 45 TICs. So we’ll be unexpectedly down in volume this year if all the currently pending sales close in April. But sales are on track to happen nonetheless, which is good news.

Average list prices for everything in contract? $702,049 for houses; $744,899 for condos; and $625,923 for TICs—proving once again that the mid-market price range of $400,000-$900,000 is the sweet spot for San Francisco real estate right now.

Sellers Slip Under Water in Noe

In addition to the short sales and foreclosures that are creeping into San Francisco, there’s another trend afoot: Owners are putting their homes on the market at prices which indicate they’ll lose money or barely break even if their homes sell at list price.

One neighborhood where the trend is growing is Noe Valley. A check on the details behind the 38 single-family homes currently for sale reveals that 12 were purchased five or fewer years ago, at prices that don’t add up to appreciation now. Here’s the rundown:

469 Clipper
Sold for $1,020,000 in 7/08
Current Price: $825,000
*Construction project

4214 26th Street
Sold for $1,553,000 in 6/07
Current Price: $1,499,000

1504 Sanchez
Sold for $840,000 in 6/04
Current Price: $885,000

601 Grand View
Sold for $1,076,000 in 3/04
Current Price: $1,095,000
*Short sale

3730 26th Street
Sold for $1,250,000 in 6/04
Current Price: $1,148,000

1507 Dolores
Sold for $1,310,000 in 2/06
Current Price: $1,198,000

3963 22nd Street
Sold for $1,337,500 in 12/06
Current Price: $1,295,000

826 Duncan
Sold for $1,325,000 in 5/05
Current Price: $1,295,000

414 27th Street
Sold for $1,550,000 in 4/07
Current Price: $1,544,000

76 Jersey
Sold for $1,590,000 in 2/06
Current Price: $1,595,000

4545 25th Street
Sold for $2,725,000 in 2/07
Current Price: $2,625,000

1424 Sanchez
Sold for $1,335,000 in 11/06
Current Price: $1,360,000

Note to buyers: This type of activity doesn’t necessarily indicate that there will be bargains afoot in Noe Valley. The only way that will happen is if any of the owners of the above homes—and the other properties on the market—absolutely have to sell, and will be able to accept sales prices for their homes that are reflective of the current market.

Rent to Own at Cubix Yerba Buena

I toured the units at Cubix Yerba Buena over on Harrison at 4th Street several months ago. Though very small, all the studio condos were nicely designed and efficient, with list prices in the $200,000-$400,000 range. I was kind of into the very walkable location, and thought the building would be great for first-time home buyers or empty nesters looking for a pied-a-terre in San Francisco.

Now the folks at Cubix are offering a rent-to-own deal on the “penthouse” units–you can start out renting at only $995 per month, with the goal of owning your unit, which is priced at $225,000. Though that doesn’t include parking, you’re very near public transportation, and there’s a City Car Share pod in the garage. Not a bad way to get a leg up on your first home in the city–or your second home, for that matter.

Mission House Gets Modern Price

Purchased in July 2005 for $1.1M, 2707 21st Street at York enters the market this week with a fresh, modern list price of $1,175,000.

Featuring four bedrooms, two bathrooms, an open floor plan, three-car tandem parking and great Victorian curb appeal, the property offers nice space for those who need more than two bedrooms. But will the few buyers with the means to purchase a $1.2M house in the current market elect to spend their money in the outskirts of The Mission? And of course, the unfortunate factor is that short sales and foreclosures have had an impact on the Mission, cutting into property appreciation.

Blink & You'll Miss It: 417 Linden

Technically on the market for only about five days, 417 Linden in Hayes Valley received an offer after its first Sunday open house this past week.

This 3BR/2BA condo has about 1,328 square feet across two levels, and is located on Linden (cross streets: Octavia and Laguna, Hayes and Fell). At a list price of $849,000, the fury with which this unit went into contract was surprising. But there is a deeded roof deck included, it’s within a two-unit building, and the property is located smack dab in the middle of all the Hayes Valley action. Who says the San Francisco market’s calmed down?!

Get On Your Walk Score

If you’re considering buying a home in a neighborhood in which you’re not sure about access to services, restaurants, parks and transportation, check out Walk Score.com.

Type in any address in San Francisco, and the site will rate how walkable your neighborhood is. For example, I put my home address into the system (I’m in Upper Noe Valley), and our location received a 91 out of 100. The site then lists all the grocery stores, coffee shops, restaurants, libraries, bookstores, etc. which surround your address. There’s also a corresponding map that lets you click on the symbols surrounding your location; you can then see the name of a nearby business, its address, and links to Yelp review. Fabulous. Don’t overlook this site, especially if you’re new to San Francisco.

Rousseaus Popular Choice in Sunset

roussouhouse San Francisco is probably most known architecturally for its Victorians and Edwardians. And three out of five prospective buyers with whom I meet voice their appreciation for this type of charming architecture.

But one somewhat underappreciated architectural style is the Rousseau. This style was originated by an individual named Oliver Rousseau, in the 1930s in the Sunset district. Though Henry Doelger built the largest number of these types of single-family homes, it was Rousseau who constructed the most ornate versions. These were designed to look like French chateaus or Spanish castles, and featured step-down living areas and open spaces.

You can find the largest concentration of Rousseaus—about 100—on 33rd, 34th, 35th and 36th Avenues between Judah and Kirkham in the Sunset.

Help for Homeowners

Obama’s foreclosure fix is now open for business. If you’re a homeowner who’s potentially facing foreclosure, head on over to The Homeownership Preservation Foundation. The federal government, in conjunction with several non-profit organizations, is working with borrowers and their loan servicers to head off foreclosure situations. The goal is to prevent homeowners from having to default in order to get assistance.

If you’d like to actually speak with someone, you can call 1-888-995-HOPE (4673). There is also online counseling assistance.

New Twist on TICs in NoPa

215cole Got a three-unit building you want to sell, but don’t want to tread the choppy waters of the multi-unit TIC ocean? Take a tip from the sellers over at 215-217 Cole in the North Panhandle: Create an “airspace” subdivision of a three-unit building. Turn the top unit into Parcel A, and designate it a planned unit development, or PUD. Turn the middle and lower flats into Parcel B, and market them as two TIC interests. Then you can end up selling a two-unit building—much more marketable than three units due to the condo conversion requirements—and a PUD, which can be sold in a very similar manner to that of a condo.

Both parcels can, according to the disclosure documentation, “share the use and enjoyment of the land and certain elements of the building.” There’s one association that is then subject to a declaration which governs the building. Everybody pays monthly association dues as specified in the disclosures.

In the case of 215-217 Cole, the top unit was sold as a PUD in December for $775,000 after being on the market for 208 days. What remain are the two units, priced at $809,000 and $805,000 and first listed in November 2008. The units were in contract recently, but the deal fell through.

A word out there to prospective buyers: Consult with an attorney before you consider an ownership arrangement such as this one. It’s worth paying for a consultation so you know what you’re getting into.