Say goodbye to the Galileo Court apartment complex at 1229 Francisco. And say hello to the Francisco Palms, a down to the studs renovation, and an ambitious seventeen unit TIC development by Maven Investments. That’s right, our own little “Melrose Place” down in the Marina, complete with four palm trees and a fountain (but no swimming pool).
According to the developer, the first four units (2 two bedrooms and 2 three bedrooms) will hit the market after Labor Day (9/10/06) and are currently slated to be priced from $950,000 to $1,050,000 (~$750/sqft). The Bank of Marin will be offering individual financing (6.95% fixed for 5 years, interest only with a ten year term, and 1 point up front) for up to 75% of the purchase price, and the developer will be offering to carry a second mortgage (8% fixed with a five year term) for another 5% (i.e., 20% down payments).
We had a chance to take a sneak peek a couple weeks back and were relatively impressed by the quality and thoroughness of the renovation. (Our major quibble was the decision to configure a few of the three bedroom units with only one bathroom.) The big question, however, is how the market will respond to million dollar TICs that are priced in-line with condos, but will never have the opportunity to convert (residential buildings over six units aren’t eligible).
And while it’s true that the individual financing will mitigate at least one of the major drawbacks associated with TICs (i.e., shared risk of loan default or delinquency), it doesn’t adequately address another: liquidity (more on this later). That being said, one could make the argument that the demand for these units will be a fantastic indicator of how the market is truly valuing the traditional benefits of home ownership (versus a speculative investment in real estate) in San Francisco these days. We’ll keep you posted.
∙ Maven Investments [maveninvestments.com]
∙ The Francisco Palms (coming Soon) [1229 Francisco]