425%201st%20%232103.jpg
Okay, let’s get this out of the way. No, we’re not going to highlight every single One Rincon Hill condo to hit the resale (or rental) market. No, we’re not just trying to stir the pot. And yes, we do believe that many of the building’s lightening rod topics (area, architecture, dryers, parking, walkthroughs, closings, rents, no flip clauses, etc.) are of relevance to all.
That being said, while 425 1st Street #2403 was the first closed condo at One Rincon Hill to officially hit the resale market seven days ago, yesterday #2103 became the second. We noticed that #2103 is also being offered for rent at $4,600 a month if you’d rather rent than buy (or at least run the numbers). And five floors below, #1603 is asking for $4,500.
In terms of other rentals currently seeking renters at One Rincon Hill, we identified twenty-two others on Craigslist, twenty-one of which are one-bedrooms with rents ranging from $2,500 to $4,250 a month (asking of course).
Inside One Rincon Hill In Specific (And “No Flip” Clauses In General) [SocketSite]
∙ Listing: 425 1st Street #2103 (2/2) – $1,229,000 [MLS]
∙ For Rent: 425 1st Street #2103 (2/2) – $4,600/mo [Skybox Realty]
$4500 / 2br – BRAND NEW CONDO! [Craigslist]

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Comments from “Plugged-In” Readers

  1. Posted by Yosemite Stu

    woooooweee them pictures of 2103 are as sterile as a mule in a burn unit!

  2. Posted by Observer

    It’s been said before, but I think spending a little $$ on staging would really help here.

  3. Posted by marina girl

    well, from the tone of this segment it sounds like one rincon has been discussed ad nauseum. sorry to be late to the party. can we revisit just the basic question of what kind of weirdo would want to live here? i try to keep a “different strokes for different folks” open mind, but this one is beyond my powers of imagination. sorry. you’d have to pay me to live there, and not just a little. did you know there are 10,000ish houses for sale in detroit for $1? not a typo, $1. so there are places that people just won’t live, regardless of price. rincon is the detroit of san francisco, as far as i’m concerned.

  4. Posted by Satchel

    “No, we’re not just trying to stir the pot.”
    ROFL! Is this an example of irony from the SS editor, or just a try at reverse psychology?

  5. Posted by infinity buyer

    What the reason for this sale? Is it another *relocation*?

  6. Posted by Say Something Worthwhile

    Really who cares if you would live there or not? You’re one lonely, self-important person who feels the need to share your preferences with total strangers to feel like someone casre about you. No one does.

  7. Posted by hotep

    Is it just me or does 4600$ rent seem too cheap for a place that costs over 1.2 million$? (Alternatively, is 1.2 million$ too much for a place that can only rent for 4600$?). A rent of 55200$/year minus the 14k$ of property taxes and almost 10k$ of hoa fees leaves a return of only 2.6% on an investment of 1.229 million$. Even with all the rate cuts lately I’m getting better than that in my online bank account.

  8. Posted by Joe

    Speaking of not trying to stir the pot… “the detroit of san francisco?” and from someone with the handle of “marina girl”
    troll troll troll troll

  9. Posted by marina girl

    good point; think of how much less lonely i’d be if i lived there. all 140,000 of my friends would drive right by on the freeway next to my front window every day. fantastic. on the topic of loneliness, um, dude, you’re blogging. reality check!
    so seriously, what are the plusses of living here? isn’t real estate about location, location, location? am i really off-topic asking about the demand situation of a poorly-located dwelling site?
    but thanks for the personal attack, saysomething. way to add to the discussion!

  10. Posted by Stu

    What does a property management company take, 10% of the rent usually?

  11. Posted by Michael L.

    These places look lost. Very disapointed – overtly plain and far to humble.

  12. Posted by Trip

    Of course SS is stirring the pot. But with good reason. This development illustrates the bubble (and its deflating) in SF very well. Even if one assumes the recent buyer can get $4600/mo in rent — and I doubt it as one can get fantastic places all over the city for that — this is still far below the carrying costs (just property taxes and HOA fees alone are about $2000/mo — and you still have to add in the mortgage!). These units were priced at 2006 bubble levels, but this is now 2008 and a whole different world. The part that stuns me is that anyone decided to close at these prices when you could just walk away and take a much lower hit — and likely turn around and buy the same place in 6 months to a year at a steep discount.

  13. Posted by misha

    Come on guys. This place is awesome. You just wish you had a view like that. Lucky owner – wish i could afford getting a place like that.

  14. Posted by jamie

    It is hard to find a better location than the rising Rincon Hill neighborhood for a young professional who works in the FiDi or SoMa. I tend to agree with Richard Florida … I think the outer reaches of suburbia are going to become the slums – the next “Detroit”

  15. Posted by RinconHill_Res

    A. Yes, you are trying to stir the pot.
    B. Yes, all of the lightning rod topics you raised are of relevance to all; and
    C. That’s what investors or people who got in over their heads given the current market, do, they sell.
    The phenomena of selling one’s property is not unique to ORH. This is just sensationalist blogging to keep up readership, and it’s well played. It is also a good bit of marketing for the site and it seems to be working (note the various periodicals both online and offline that make reference to Socketsite).
    It also feels eerily similar to the aggressive marketing that goes on at this little known high-rise building near Harrison and 1st Street. Hmm, everything comes together, doesn’t it?

  16. Posted by louis

    these listings illustrate a problem for RE in SF and probably anywhere coastal california.
    rental economics never make sense compared to for sale economic–either for producing a new project — which is why there are so few new rental developments
    or for renting a newly purchased unit — where the rent will never seem the “equal” value of the sale price.
    land is too expensive and hard costs are virtually the same for either type of project — and they have inflated 50% in last 4 years.
    if you paid 2006 price for hi rise condo and really have to rent it out youre just be in a tight spot on your investment — and it really not the “fault” of anything wrong with ORH.
    interesting question is what does it do to the RH rental market if theres a few hundred condos put into the supply.

  17. Posted by brian

    ORH is reminding me more and more of “The Stratosphere” in Vegas. The Strat had huge buzz while it was being built, great views, but a crappy location waaaaaay down the Strip so you practically have to take a bus. But people thought that the great views and buzz would overcome the poor location. Just checked and weekend rooms are $59 a night.
    The 1RH views from floors 20+ make my jaw drop. They’re incredible! But alas, for all the reasons that have been pounded on before that make the location so horrible living-wise would keep me from ever living there.
    It is WAY too early to predict huge price drops, IMO. 1RH fills a very specific niche, and we will have to wait and see whether there are enough people in that niche to keep prices afloat.

  18. Posted by kaya

    I guess this post was destined to go to the trolls, but I don’t think it’s unfair for the editor to try and post this for an honest discussion… but given the responses to other posts ORH, this is kind of predictable.
    There’s a lot of hate out there for this development, and frankly, I don’t care about the views, high-rise living is quintiscentially un-San Franciscan… I don’t see the appeal. Still, I was hoping ORH would be successful and these kinds of developments would take pressure off the 2-4 unit housing or even SFH’s.
    I don’t know that any of us want to see this development take the huge hit a lot of you are so gleefully predicting (I’m waiting for those 20% price cuts in Noe Valley, Satchel ;)). That said, from the photos, at least, the views themselves don’t sell this place. I wouldn’t want to bother with staging costs if I was eating it on the purchase, either, but I’m surprised by how unattractive the place looks. I had to go back and check the listing for #2403 because I thought the photos were identical…

  19. Posted by anon

    Keep in mind the units in new construction are not rent-controlled, and 30-year mortgage payments are fixed. Property taxes increase by only a small fraction each year. And HOA budgeting for new buildings is pretty sophisticated; I would not expect huge increases down the road.
    Bottom line, 10 years from now rents on this unit will far, far surpass expenses. Building wealth requires a years or decades long outlook, not an analysis of next month’s cashflows.

  20. Posted by Jimmy (Bitter Renter)

    @anon: I like your style of investing! What should we call it… “wishful thinking”? You have a crystal ball… in it, you see ever-rising rents and a strong market that will sustain $5k, $6k heck why stop there? $8k/month rental returns on a mere 2/2 in ORH! Just take a small hit now on your monthly cashflow (Anyone who can’t absorb a $3k/month loss for a few years is probably a loser anyway), and down the road, sometime, (it’s just around the corner actually) this little slice of heaven, this magical place called ORH, will turn into a massive cash cow and you’ll be set for life!
    Genius! Where do I sign up??

  21. Posted by Bob

    UGH, I knew it was only a matter of time before someone questioned the “san franciscan-ness” of living in a highrise.
    People here have such painfully narrow views.
    provincial provincial provincial!

  22. Posted by Jeffrey W. Baker

    You can’t build wealth over a decade by ignoring the cash flows either. You’ll lose it all if you inadvertently become insolvent. It’s bridging that gap which is the trick to investment.
    Also I’m skeptical of your claim about HOA. In new buildings they are usually artificially low, until the place is sold solid and a lot of “unforeseen” structural costs get added in.

  23. Posted by gmlight

    My Take: One Rincon Hill would be a very unattractive place to live – for now. There really is no “neighborhood” in the immediate area to speak of: living up on that hill is a lot like living on an island. The area is a construction zone, and will be for at least another year and a half.
    However, I can see how it might make sense to buy a unit there. You invest in the concept of Rincon Hill (which will eventually become, I think, a very nice neighborhood), while putting up with the “construction island” for 1.5 years +.
    Now, to rent a unit there makes NO SENSE AT ALL to me. For $4600, I know there are a lot of nice 2 br apartments within walking distance to downtown and/or with easy access to the freeway with views.

  24. Posted by Trip

    Anon 9:40 — you may be right about rents in 10 years, but it is certainly not guaranteed. in 1998 when we bought our house, we were making the rent vs. buy decision. We looked at lots of 1 BR apartments in the inner mission for about $1500 (lines out the door). We bought instead. I see on craigslist that 1BRs in the inner mission today, 10 years later, appear to be fetching $1500 – $1800 in rent. Under your scenario, rents would have to skyrocket beyond any historical norms to make up for the huge, current hit an owner is taking on one of these places.

  25. Posted by Amen Corner

    I wonder what percentage of units in this building will end up being occupied by owners? Aren’t lenders a little leery of lending for condos in buildings where a significant portion of units are rented?

  26. Posted by badlydrawnbear

    ok I was trying to resist but their was just way to much funny for me in this thread
    1. Marina Girl “isn’t real estate about location, location, location? ” Yes it is and you apparently are living in a giant liquefaction zone that is likely to sink into the bay in a race with treasure island during a large earthquake.
    2.Jamie “it is hard to find a better location than the rising Rincon Hill neighborhood for a young professional who works in the FiDi or SoMa.” Well I am sure this is true with the collapse of Bear Sterns, Layoffs across the financial sector, and a slow down/recession under way, and SF LOSING population I don’t see these type of people providing enough demand to fill the tower(s).
    3Anon “Keep in mind the units in new construction are not rent-controlled, and 30-year mortgage payments are fixed. ” Keep in mind that they number of 30 year fixed mortgages used to buy these units is probably very low espcially when you consider that +70% of all mortgages in 2005 and 2006 were some form of ARM.
    so in conclusion, one persons crap location is another persons perfect location, counting on the “everyone wants to live here” mantra just isn’t enough in a sliding RE market and economy, and assuming traditional financing was used during an untraditional housing bubble to calculate ROI is a mistake.
    but thanks for the chuckle this morning. ;-)

  27. Posted by anon

    Also I’m skeptical of your claim about HOA. In new buildings they are usually artificially low, until the place is sold solid and a lot of “unforeseen” structural costs get added
    Any evidence for this happening in SF (aside from that conversion on Grant)? The new condo I lived in from 2000 to 2007 had pretty constant HOAs. The Met has had pretty consistent dues. If you’re buying from a reputable developer who has built a quality product, the HOAs DON’T drastically up. There are, as always exceptions.

  28. Posted by fluj

    The high rise luxury development illustrates the “bubble”? How is that possible when the “bubble” never contained the high rise luxury development during its ascendancy?
    There are lots of shiny new condos, folks. That’s the story.

  29. Posted by smarty

    I simply don’t get it… why did these people close on these units if they were just going to immediately put them up for sale??? Makes no sense to me… A) There is a no-flip clause on the building, and B) The market is MUCH worse than when they locked in a price, and the risk of it not selling is way too high. Why not just walk away like dozens of others have done??? Why God, why?

  30. Posted by sf renter

    The listing agent should clean up the block before open house. The entire site looks a tornado hit it, its a complete mess.
    Also I honestly can’t imagine why anyone would want to rent at One Rincon. The location is so bad and inconvenient and you really can’t walk anywhere without huffing and puffing back up the hill. I have a dog so where would I walk it? At the gas station?
    The views are nice, but if that’s all One Rincon has, I’d pass and rent at Infinity, Paramount, or Mission Bay.
    I can’t justify spending 2800 a month just for views. Not worth it at all.

  31. Posted by fluj

    Hmmm. Speaking as a former Inner Mission landlord here, 1 BRs for $1500 10 years ago in the Inner Mission? With lines out the door? I don’t know about that. We rented a newly remodelled 2BR with parking in the Inner Mission for $1800 10 years ago and we were very, very happy to get that. There was only one taker and the rent was astronomical at the time. This was ’97-’98. I would say more like 2000 is when the rental market took off, though I still question $1500 for 1BRs in the Mish. And if you go back a few years earlier to like ’96, 1BRS in the Mission could be had for $750 or so. Even crappy two units. That number doubled at some point and never came back, nor will it.

  32. Posted by RinconHill_Res

    “My Take: One Rincon Hill would be a very unattractive place to live – for now. There really is no “neighborhood” in the immediate area to speak of: living up on that hill is a lot like living on an island. The area is a construction zone, and will be for at least another year and a half.
    However, I can see how it might make sense to buy a unit there. You invest in the concept of Rincon Hill (which will eventually become, I think, a very nice neighborhood), while putting up with the “construction island” for 1.5 years +.
    Now, to rent a unit there makes NO SENSE AT ALL to me. For $4600, I know there are a lot of nice 2 br apartments within walking distance to downtown and/or with easy access to the freeway with views.”
    The above post from gmlight is probably the most objective and accurate statement regarding ORH because it points out the shortcomings of the project at present (which I fully acknowledge), but also recognizes its potential for the future for those that have more than a 2 second attention span, do not have some hidden agenda, or are just plain bitter about their current lot in life.

  33. Posted by kaya

    Bob,
    I’m not the first and won’t be the last to say high-rises aren’t “San Franciscan”. But if you like them, that’s super. I’m glad developers are adding to the mix of housing stock. As I said in my first post, I hope this place does well. I, however, need a place with a backyard so high-rises are out for me. But for people who would consider them, the 2 listings make ORH look to be kind of crap. Is that a slight on the realtors or the development? I guess I’ll have to go to an open house to know for sure.
    Perhaps I should’ve added “historically” to “un-San Franciscan” but I think you knew what I meant and just wanted to tsk tsk me. Try not to confuse taste with narrow-mindedness.

  34. Posted by MetLiver

    Re: badlydrawnbear “The Met has had pretty consistent dues.”
    Actually the Met dues increased by about 20% in 2007 over 2006, and are still increasing far more quickly than inflation due to the developer dumping the HOA with a woefully inadequate reserve plan.

  35. Posted by anon

    Sometimes I really wonder why we read these blogs with so many worthless opinions. Guess it makes for twisted entertainment. Obviously everyone can’t be right at the same time and that means that at least half the people are wrong.
    We’ll see who has the last laugh.

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