May 27, 2008
Property Listing Line Of The Day (And An All Too Common Pet Peeve)
An excerpt from the listing for 1778 Page: “…for the discerning buyer who doesn't want to pay for the cheesy remodel done by someone else…”
∙ Listing: 1778 Page Street (4/1) - $695,000 (TIC) [MLS]
First Published: May 27, 2008 8:30 AM
Comments from "Plugged In" Readers
this building just closed a coupla months ago (listed $1.4m i think). it should be a good gauge of local sentiment. they must have paid less than $400k/unit even with the buyouts so they stand to make easy money if these units sell.
Posted by: paco at May 27, 2008 8:49 AM
Right up there with "mid-century" and "cozy" -- for the discerning buyer who wants to live in a small 1950's place.
Posted by: livinintheloin at May 27, 2008 9:20 AM
Sold on 4/11 for 1.46M by property managers. There are 4 units total in the building but if the square footage is correct, this one represents 40% of the total property surface.
It appears they bought wholesale and are selling retail.
Posted by: San FronziScheme at May 27, 2008 9:26 AM
Is that me or is there a big paint splotch on the wall???
Posted by: bigidea at May 27, 2008 9:26 AM
I think that's just your monitor ;)
Posted by: bdb at May 27, 2008 9:33 AM
As snarky as that comment sounds, I have to agree with the sentiment. My neighbors just completed a huge remodel that has tortured us for months, only to slap a for sale sign on their shoddy piece of bad design. All I can think of is how wasteful it will be when someone buys it and pulls up all that brand new tile and ditches it in the garbage in favor of something that actually looks nice.
Posted by: aquabun at May 27, 2008 9:52 AM
Property managers buying a building? Did they have it under management previously? If so, is this a conflict of interest? Or are property managers just a business with plain vanilla rules?
Posted by: San fronziScheme at May 27, 2008 10:16 AM
While I'm no fan of TIC's, this looks like a pretty nice place - plenty of space, top floor, with high ceilings in a pretty decent location (if the Haight is your thing). While this site features a lot of bare bones complete renovations, some people would do just partial updates (floors and minor kitchen/bath updates) to keep costs down. Anyone know how the fractional TIC loan programs are holding up with credit tightening up over the last 6 months?
Posted by: Miles at May 27, 2008 10:33 AM
Seems like a nice option for rental income, but who's going to sink a bunch of cash into a remodel for this TIC, with no parking and only one BA?
If it's true that this place represents 40% of the total interest, it's listed at about $100k over what they "paid," $584k. Not a bad profit, even considering selling commissions, taxes, and any other cost (if it sells).
Posted by: Foolio at May 27, 2008 10:42 AM
miles you asked
"Anyone know how the fractional TIC loan programs are holding up with credit tightening up over the last 6 months?"
i think they are doing well b/c the standards were tough to begin with and these types of loans are kept on the books of the banks making them ( as there is no securitization of 'em yet.)
in fact i would venture to say that the main players in this market are happy about this segment of their biz. i believe that the developers have the incentive to buy the rates down to keep moving their product.
has anyone heard differently? i'm sure brown and co would be able to answer this.
Posted by: paco at May 27, 2008 10:50 AM
I have also read that this segment of financing has done well for the lenders -- shows the (formerly old-fashioned) value of solid underwriting practices.
Posted by: Trip at May 27, 2008 10:52 AM
This would be a great property for a VRBO. Close to a touristy area and no parking.
Posted by: urban_angst at May 27, 2008 11:32 AM
I actually agree with the sentiment-- I'd rather not pay for a bad remodel.
But I have become cynical of realtor euphemisms and catch-phrases. I do think we could come up with a pretty funny dictionary:
-"Rarely available" (so many properties are rarely available . . .)
-"Coveted" (same as above)
-"Contractor's Special (tear-down)
-"period details" (contractor's special)
-Pacific Heights (lower Pacific Heights)
-Lower Pacific Heights (tenderloin)
Funny-- I looked at a property by a "major producer" at a top local firm that advertised "Views of the Palace of Fine Arts." The views were if you walked out into the middle of the street and looked up a few blocks. Outright lie, but I guess nothing matters in a self-regulated industry.
Posted by: anon11 at May 27, 2008 11:35 AM
"Close to a touristy area and no parking."
Agree on the no parking, but close to a touristy area? The Panhandle? The Haight? Hmmm...not sure I understand...
Also, is it typical for a VRBO to have only 1 bathroom for all to share? Sounds like a real hassle...
Posted by: Foolio at May 27, 2008 11:43 AM
not like many hotel rooms have more than one bathroom
Posted by: paco at May 27, 2008 11:55 AM
If this unit is really 40% of the building's square footage then the bldg total is 4160 sqft and the sale price a few months ago was $350/sq ft. Sounds like someone got a steal.
Obviously a quick flip based on the timing and the agent. Anyone know if this was ever on the market or a "pocket deal"??
Posted by: resp at May 27, 2008 1:12 PM
it was on the market and open several times
Posted by: paco at May 27, 2008 1:18 PM
The whole building is reported as 3992sf total. Which makes this 1664sf unit about 41% of the total.
The last sale being at 1.46M, this gives you 365/sf. This unit at asking price is 417/sf. The sellers are expecting a 15% increase in price.
Posted by: San Fronzischeme at May 27, 2008 1:29 PM
Perhaps I'm misunderstanding your comment, but I'd certainly expect a 4-bedroom "hotel" to have more than one bathroom.
Posted by: Foolio at May 27, 2008 1:37 PM
does anyone believe that tax records for older buildings are accurate vis a vis sq.footage? anyone?
this building has three flats and aside from the stairwell they are very close to being the same size.
Posted by: paco at May 27, 2008 1:44 PM
i think the earlier poster was saying this would be a good vrbo candidate which i think means renting out the entire flat as a vacation rental as opposed to by the room rental. so this would be a four bedroom suite, not a four bedroom hotel.
Posted by: paco at May 27, 2008 1:49 PM
I just went through the TIC loan process myself. We had 10% down, 46% debt/income, with additional liquid assets available (I'm not sure what the asset requirement is, but it's not insignificant). I believe you can reduce the additional assets with 15% down. It's still full doc, including requiring 2 months' pay stubs and a certified letter from my employer verifying my job security and income.
On top of that, the bank has to have the ability to OMI/Ellis without permission of the other tenants upon foreclosure, while preventing you from evicting without notifying the bank.
However, they are happy to write loans, though, if you are willing to run through the hassle.
On the topic of this TIC: it has a few details that are a little irritating, like the tacky track lighting, or the lack of shades on the ceiling fixtures.
Posted by: Ryan at May 27, 2008 2:22 PM
I would insist on at least 2 bathrooms (and probably more like 2.5 or 3) for a four-bedroom suite, but perhaps I'm just "throwing my money away."
I am a renter, after all. ;-)
Posted by: Foolio at May 27, 2008 2:30 PM
i have never needed such a large suite so i'm not well versed.
have you ever rented a 2.5-3 bathroom hotel suite/vacation rental? i can picture that when you rent a house in hawaii or cabo but not so much for an apartment in an urban area.
anyway it was not my suggestion that this would be a good vrbo candidate.
Posted by: paco at May 27, 2008 2:43 PM
That place is lovely. The bathroom looks pretty much original, the kitchen looks like a rental (which it undoubtedly was for decades). The rest of the space is gorgeous. Honestly, all of the kitchens/bathrooms in redone TICs do look cheesy. All done up in whatever is perceived as trendy and 'high end' this year. Insta-datedness. when i see them, all i see is the 70s-80s equivalents. hex tile and a clawfoot tub (even a little beat) is a million times better than the sink bowl on slate or granite slab and whatever other interior elements are better suited to a McMansion.
Posted by: hugh at May 27, 2008 4:27 PM
um... in terms of 80s equivalent... most TICs look like circa-2008 Beetlejuice-style renovation.
Posted by: hugh at May 27, 2008 4:31 PM
I agree, this place doesn't seem like a good vacation option to me because of (among other things) the location and the 1 bathroom, but I don't have much experience in that arena, so I didn't know.
I do think, at a bit less, it could be a good deal for someone looking for good rental income.
Posted by: Foolio at May 27, 2008 4:43 PM
i don't think the numbers work for straight rental(don't forget hoa's expense). vacation rentals garner alot more in rent but are WAY too work intensive and tourism sensitive for my taste.
if you had purchased the whole building, with 50%down you're looking at around $9,000/month to own it (counting opportunity cost of $2800/mo on your $700k down @4%).
this does not seem so bad but i believe the units were not vacant when this sold which implies lower rents or adding the buyouts to your costs. i looked at it when it came to market but the lack of garage was the deal breaker for me.
i think these owners are right to try to flip.tic.it (my word) and i am watching eagerly. its risky and bold! good luck to them.
this will be a good proxy for the market.
Posted by: paco at May 27, 2008 5:41 PM
#1 sign SF real estate is still a bubble (at least mentality-wise): Discussion of VRBO... the last gasp for hopes of high return on something too high to rent without 10 years of projected loss. No mention of the fact that as a large, beautiful top floor flat, this seems to be listed at about $100k less than smaller basement units in the same neighborhood of the past few months (or is that what a european stove and a few slabs of granite adds?). Personally, I find this encouraging, as someone who sees homes as, well... homes, and my primary motivation to buy being protection from speculative inflation.
Posted by: hugh at May 27, 2008 6:24 PM
i agree on the vrbo call. and the desire to be protected from the speculative inflation. maybe not so much on the basement units selling for $795k in the past (at least not w/out parking ;)). any link?
Posted by: paco at May 27, 2008 6:44 PM
ok... maybe i'm wrong. and fell for the the $695 being in the $600 range trick. i looked at a couple listed at $725 or so... looking on redfin for recent sales, it looks like there are lots in the $800-900 range in the past year, but they are all listed as condos.
Posted by: hugh at May 27, 2008 7:14 PM
and not smaller basement units either, and move in ready as well (for the not-so-handy-no-time-anyway crowd), but i do get your point and i agree.
thats why i think these guys are on the right track in spitting them out quick even tho they are not remodelled.
Posted by: paco at May 27, 2008 7:24 PM
paco- i wonder what the owners paid for the buyouts? (dealing w/a pack of haight roomies could be a challenge...probably all read the bay guardian for their tenant rights!)
that being said, the few months of holding and the sales comm (let's assume seller is not a realtor, for objectivity) will take a serious bite out of the profits.
this will only work if there are eager tic buyers that want to deal w/a (pretty major) remodel. i think most tic buyers are like condo buyers- they want a decent, renovated unit.
if they sell quickly, they could make north of $200k, making it a good deal. but personally, i prefer to add value w/a good renovation/reuse of space, like adding a badly needed 2nd bath, and transforming the back porch from crapola to a nice sun room area. this property would hve been dope if there was a reasonable way to add parking.
as it stands, this could stalefish on the market, forcing a 50k (per unit) price reduction, wiping out most of that opportunistic profit. these guys do have some balls though!
Posted by: AMinSF at May 28, 2008 11:17 PM
This unit should be priced in the mid $300 psf to justify the risks involved.
The seller is trying to sell the unit as a 'future' TIC, I don't think it's even legal to do that.
The seller has to buy out the remaining tenants who may or may not agree, if they go for an Ellis Act eviction you can kiss any future appreciation goodbye.
Has anyone spoken to the listing agent? They are getting at least 5 calls everyday for this 'popular' listing.
Posted by: frances conroy at June 2, 2008 1:30 PM
It looks like there's been an offer. It's now marked "Act. Cont. ". That didn't take too long!
Posted by: Mike at June 10, 2008 5:45 PM
"The seller has to buy out the remaining tenants who may or may not agree, if they go for an Ellis Act eviction you can kiss any future appreciation goodbye."
i'm wondering why you think this is true? any link?
personally, i've seen the opposite.
Posted by: paco at June 10, 2008 7:52 PM
It looks like there's been an offer. It's now marked "Act. Cont. ". That didn't take too long!
Out of contract and once again available (which is one of the reasons we typically don't mention it when a listing simply goes into escrow).
Posted by: SocketSite at August 20, 2008 2:10 PM
The listing on this unit went from 695K to 689K apparently in the past month according to RedFin.
Posted by: San FronziScheme at October 26, 2008 1:44 AM
and now the whole building is on the market for $2m and listed as vacant.
Posted by: paco at November 13, 2008 7:44 AM