January 4, 2008
Might $22,500 A Month In Rent Actually Make More Financial Cents?
As has been noted by readers and a number of tipsters alike, they’re now accepting rental applications for the Theodore Eden designed “Renaissance Italian Villa” at 2550 Lyon Street (which sports a design, location, and rooftop garden we just so happen to love).
And while the $22,500 monthly (asking) rent might seem mighty steep to some, do keep in mind that it remains available for purchase at $9,800,000 as well. At this level you're probably capable of running the numbers yourself (or have "people" to do it for you). And in either case, let's not forget those invitations to the housewarming.
∙ Listing: 2550 Lyon Street (4/5.5) - $9,800,000 [Joel Goodrich]
∙ For Rent: $22500 / 4br - Italian Villa; 4 brm/5.5 ba; unobstructed Views! [Craigslist]
∙ The Hanging Gardens Of San Francisco: 2550 Lyon [SocketSite]
∙ The Six Million Dollar
Man Single-Family Renovation Sells For Eleven [SocketSite]
First Published: January 4, 2008 4:00 AM
Comments from "Plugged In" Readers
Quality rentals are widely available. Who needs to buy at twice the price and take all that risk of a decline?
Posted by: Tipster at January 4, 2008 7:12 AM
I came across this commentary on one of the blogs that seems apropos here:
"A year from now, one group will stand supreme. These people will be smug. At work, you’ll be able to identify them by their coffee mugs emblazoned with the words: “I told you so.” They will wax lyrical about the joys of not having to do yardwork and not having to pay to replace a broken air conditioning compressor. I’m talking about renters, and especially about renters who could have bought, but wisely chose not to.
Renters will be the winners of 2008."
At least for my particular circumstance (YMMV), renting in SF has been a spectacular winner for me since late 2002. I am extremely happy that I did not buy, and so is my investment portfolio.
Posted by: Satchel at January 4, 2008 7:52 AM
Is making "financial cents" supposed to be a pun on financial sense, or did you forget to feed the monkeys last night?
Posted by: anon1 at January 4, 2008 8:19 AM
must ... keep ... breakfast down
Maybe I'm just an architectural hayseed but this looks to me like a 90s era stucco box with flourishes tacked on. Not very genuine or attractive. Surely an architect can achieve the same style without making it look so obviously fake.
But I do like the rooftop patio.
Posted by: The Milkshake of Despair at January 4, 2008 9:42 AM
Let's do the rent-vs-buy. Rent is $22,500/mo.
Buying would cost $10,500/mo in taxes + $42,000/mo in lost opportunity cost (10 mil * 5% zero-risk rate of return) = $52,500/mo to buy. Anyone likely to buy this place wouldn't need a mortgage so I didn't bother to factor in tax writeoffs. I bet there would be some maintenance and utility costs for this property too but I have no idea what they would be. $1500/mo?
Renting costs something like 41% of the cost of buying. Other than the glaring hideous-ness of the property, the rent is a pretty awesome deal!!
Posted by: Jimmy (Bitter Renter) at January 4, 2008 11:55 AM
I think some people would rather buy than rent because it just sounds (and feels) better - and do you blame them? It's like the difference between owning a home in Aspen and "buying" a fractional condo in Sun Valley, or maybe like the difference between paying cash for your Range Rover versus leasing one, or the difference between carrying a Netjets card and owning the plane outright. At some point we all consume based on the emotional appeal of the act at least as much as for the financial gain. Wouldn't renting an $11,000,000 home feel a bit like playing dress up? I'm thinking about the whole "if you have to ask you can't afford it" question? Which in this case could be translated to:"If you have to run the numbers about renting an $11 million home versus buying, you're out of your league."
I think I would have a tough time explaining the decision to rent this to friends/peers/employees without feeling like I'm living beyond my means. I just can't imagine whipping out a calculator and a spreadsheet over cocktails to explain what I'm doing by renting an $11 million home.
Posted by: happybuyer at January 4, 2008 12:43 PM
happybuyer -- look on the bright side, you could buy two new Ferraris a year with the money you save renting!
That would go a long way to consoling me for my "emotional distress" at being a mere (bitter) renter of an $11M house.
Posted by: Jimmy (Bitter Renter) at January 4, 2008 12:47 PM
Not sure if there is some photo-shopping going on there, but that place is in a jungle and this is probably the best angle you're going to get w/o it looking like you are in a rain forest!
Posted by: eddy at January 4, 2008 12:48 PM
To boil it down to basics, the only down-side to renting is the loss of equity appreciation as opposed to the actual down-side of losing money at transaction exit for home ownership.
Haven't been in this house, but $9m actually seems reasonable for this type of house in this location. The rent cost seems more than reasonable. Personally, if I were in this market I'd be waiting for another better property.
Posted by: eddy at January 4, 2008 12:54 PM
Dear god that is ugly!
I think my eyeballs have been seared by the spurts of bubbling cheese.
What was the question?
Posted by: kaya at January 4, 2008 1:26 PM
happybuyer - If you feel like you have to justify your decision to rent versus buy to your "friends/peers/employees" you need new "friends/peers/employees".
"If you have to run the numbers about renting an $11 million home versus buying, you're out of your league."
The people I know that could actually afford this house would be the first to whip out their calculators. They didn't accumulate their wealth by making bad investment decisions.
The real irony in your comment is that NetJets which is a subsidiary of Buffett's Berkshire Hathaway is booming because for most people it makes more financial sense to rent a jet rather than own.
Posted by: Michael at January 4, 2008 1:28 PM
If this house were worth 9.8 million, it would have sold.... Property Shark shows that the house is about 4250 square feet. That makes the asking price $2300 a foot. That's simply too high for a late 90s remodel that is already sort of dated. I think $1500 per foot is more logical - that would make the asking price around 6.4... which is in keeping with recent comps in the neighborhood, like 2600 Lyon which closed escrow last spring for 6.2.
Posted by: Sleepiguy at January 4, 2008 1:53 PM
"...for most people it makes more financial sense to rent a jet rather than own."
That's for sure. I'd go so far as to say that unless you spend 10 hours / 7 days a week / 52 weeks a year flying then renting is far more sensible than owning. An aircraft and crew sitting on the ground still requires cash. That's why NetJets and every other profit driven airline keeps their fleet in the air as many hours as possible.
The only people who own jets are those who are fabulously wealthy and don't care about wasting cash. Then there are others who own simply out of vanity.
I think the sellers of this house are hoping for just the sort of person who will to buy out of vanity, as happybuyer alludes. With a slow moving property like this, it doesn't really hurt much to fish for a sucker for a little while. If they can pull it off, then why not take the extra $3.4M above sleepiguy's fair market value estimate ?
If you ever want a fun read, open up a copy of the Robb Report ("The magazine for the affluent lifestyle"). In there you'll see ads for all kinds of grossly overpriced stuff to appeal to the vanity of people with low IQ/$ ratios. You can even buy a special breed of Egyptian cat that will guarantee you the same level of immortality that the pharaohs enjoyed back in the day.
My guess is that the seller will hold out at least 6 months waiting for that Gulfstream owning, 18K gold accented Hummer driving, Egyptian cat cradling buyer before accepting a fair market price.
Posted by: The Milkshake of Despair at January 4, 2008 3:14 PM
The exterior looks like a very ornate ... tomb. But that's just me.
Posted by: S&S at January 4, 2008 6:38 PM
I guess for the style of house this is, it is finished nicely, but it's not modern in design. So why was'nt the idea to put a chic spiral stairway with modern tubing as railing in a house filled with ornate iron work, nicked.
Posted by: viewlover at January 4, 2008 7:23 PM
"With a slow moving property like this, it doesn't really hurt much to fish for a sucker for a little while. If they can pull it off, then why not take the extra $3.4M above sleepiguy's fair market value estimate?" [The Milkshake of Despair]
Unfortunately, milkshake, the shakedown already started in SF and, even for overpriced (or not) properties like these, it is ONLY GETTING WORSE. In fairly short order, there won't be enough "suckers with money" left who haven't already figued out that property values will continue to drop. And, there will be a plentiful supply of properties like this from which the "suckers with money" will be able to choose.
Posted by: Smiling Millionaire Renter at January 4, 2008 8:28 PM
Italian villa my ass.
This is one of the ugliest monstrosities to ever defile a street.
So much more could be done with this site. And increase its value.
Please, someone, anyone, buy it and tear it down now.
Palladio weeps for this sin.
Posted by: Greg at January 4, 2008 9:07 PM
I think this house is very pretty !
Posted by: waahwaahskyisfalling at January 4, 2008 10:55 PM
Here is proof that San Francisco is not a city ready to be put under glass. You call this "Italian" or a "Villa"?! About 450 miles south in that city we dare not mention the name of, there are "villas" by architects such as Wallace Neff, Gordon Kaufman and George Washington Smith (among others) who built California versions of mediterranean villas that were classic, simple, and worked well with our climate. I still make a point of pulling off 101 at Monteceito to drive by some of the turn of the century villas of George Washington Smith. This is just awful, and a prime example of a city that tries to hard to be cute instead of interesting. As Frank Lloyd Wright wrote, San Francisco would be a very ordinary city architecturally if not for the hills and views that make the ugliest buildings seem spectacular.
Posted by: Morgan at January 5, 2008 8:49 AM
frank Lloyd wright built some butt ugly stuff who is he to criticize
Posted by: me at January 5, 2008 10:13 AM
At least Frank Lloyd Wright did interesting ground breaking work. If one were to imagine San Francisco as a flat city in the central valley near Stockton, would the homes and towers seem so charming? Hiding bad architecture behind trees and views is not a solution for our city which has a long history of boring conservative architecture. To even think that this home has any sophisticated architectural thinking behind it is an insult to Palladio and other "villa" architects.
Posted by: anonflw at January 5, 2008 10:40 AM
Some of us are more into quality and depth instead of superstar household names. Just because you are famous doesn't mean you are good.
Posted by: me at January 5, 2008 11:11 AM
this place just proves that age old adage. money can't buy taste.
Posted by: james at January 5, 2008 11:22 AM
If you think it is ugly in the photo, go drive by it! (even worse).
Posted by: Smiling Millionaire Renter at January 5, 2008 11:36 AM
Wasn't this house a lot less obnoxious before the "restoration"? It is a shame as the Lyon Street location is unique. First Diane Feinstein rips up the historic garden-piazza on the Lyon Street steps, and now we have villas being made to look like they are the facades of the Small World ride in Fantasyland at Disneyland. What next can happen?
Posted by: anonfedup at January 5, 2008 6:35 PM
All the critics, please post pictures of your homes, so we can nitpick every ugly detail (and I'm sure there are A LOT!!)
Posted by: mmemmememe at January 6, 2008 10:14 AM
All the critics, please post pictures of your homes, so we can nitpick every ugly detail"
Architecture is the most public of arts and it also needs to be the most logical and functional. You will find most people have opinions about a house or building because it is part of their spatial world. When a 1RinconHill rises, it changes everyone's enviroment, therefore, everyone has a reaction. If buidings are backround music, some of them seem to be like fingernails scratching a chalkboard. One thing for sure, this house does everything it can to make sure you take notice of it.
Posted by: Morgan at January 6, 2008 5:32 PM
What's really hideous is the "heart" sculpture in the middle of Feinstein's otherwise gorgeous garden. Someone needs to rip it out and replace it with a bust of Newt Gingrich! Lyon is a cool street, but this rental house sits down in a hole with little sun. It's a $6 million house.
Posted by: gh at January 7, 2008 10:49 AM
I hate Feinstein's garden. It's a big mess. I much preferred the low-key formality of the previous garden. Now it looks like someone went crazy in the garden section of Home Depot and bought everything in sight.
Posted by: Sleepiguy at January 7, 2008 11:05 AM
How was Feinstein able to rip out that glorious garden on the Lyon Street steps above this house? Is the plaza on the steps to the west of her house public property or private? I used to love that garden as it was an example of tasteful understatement that I would bring out of town friends to experience. Now, it is just a joke. Again and again throughout the city, some of our trophy properties are being made to look more like they belong in Orange County, instead of a city that used to claim to be "Paris on the Pacific".
Posted by: anon at January 7, 2008 2:59 PM
Here's the sfgate article regarding Feinstein and the garden. She says it was destroyed without her knowledge, which I find very hard to believe.
Posted by: Sleepiguy at January 7, 2008 3:24 PM
Back on at $6.5
Posted by: eddy at September 10, 2010 1:12 PM