Original Art Deco on the outside (and lobby), but now more contemporary within, 2200 Beach Street has been completely “restored, modernized and reconstructed” and has hit the market as twelve TICs starting at $849,950 (and around 880 square feet).
No evictions (think theoretical income not conversion), one parking space per unit, and a rather spectacular roof deck (forget the housewarming, invite us over for the Blue Angels).
“Neighborhood Preview” this evening from four to six (don’t forget to report). And yes, pushing the envelope with regard to pricing, but we’ll let the market speak for itself.
∙ Listing: 2200 Beach Street #103 (1/1) 883sqft – $849,950 (TIC) [Virtual Tour] [MLS]
Looks like the remodel was done tastefully.
Beautiful remodel – very nicely done.
Very well done. Great use of space, nice design, and all the modern conveniences (parking, w/d). I’m a little surprised they opted to stick with all 1 BRs (especially the top floor, can you imagine how cool a 1600+sf 2BR would be up there!), but I really like these.
The price seems too high for a 1BR TIC, but if you’re gonna blow $850k on a 1BR TIC, this is the one to buy.
12 unit TIC? You’d better elect a TIC board, and they better be fairly hard-nosed. All it takes is one goofball to rent and then attempt an OMI.
The posting comment on future theoretical income. I think that would be a headache, given that you’re double constricted by both SF statues and TIC regulations. Plus, most fractionalized loans won’t let you rent anyway…
Excellent comment Ryan. Can just imagine, one of your neighbors screws up the whole condo conversion process for you…for years beyond what it will already take.
[Editor’s Note: Based on current regulations, the building is too large (over six units) to ever condo convert.]
That’s a little pricey for a TIC building.
One of the issues I have with these TICs is that you have to cross your fingers banks will still do fractional financing when you want to sell. If they don’t, then you’ll be out of luck. If you don’t need the equity, you can rent, and good luck on that with this Prop G nonsense. Or you can sell within a non-favorable financing environment.
In any case, the risk associated with TICs should be priced in, and for this building, it is not. You’re paying too close to condo price.
$849k for a 1-bedroom TIC? No thanks!
Isn’t 12 units too many to condo convert anyway? What’s the ceiling?
[Editor’s Note: Yes (and six).]
Wasn’t there an even larger TIC conversion in the Marina on Francisco? As I recall those units sold nicely. Granted, the market is softer now but this is a fine building in a desirable neighborhood. I wouldn’t be surprised if these sell quite well.
I don’t know about the Francisco building, but this almost certainly can never convert – it’s over 6 units and it’s extremely unlikely that this will change anytime in the near future to include 12 unit buildings. There might have been some bizzare extenuating circumstances regarding the Francisco property, but the City is very strict on this.
All you need for these units to move is enough people with little experience of the long-term consequences the current regulatory environment have on TICs.
First time buyers with decent incomes. There’s no shortage of these in this tech boomtown.
Great example of the trashing of facades in SF by wrong window treatment. The one-pane windows are wholly incongruous and ugly. It looks like a prettily painted storage facility in Boca Raton.
The windows need to be altogether replaced & brought back to the fine deco work here.
Don’t let the uberness of the interior overshadow the marred- & now tacky facade.
As long as there was fractional financing, the TIC deal would be reasonable.
That and I belive SFGOV are now working to split propery taxes based on purchase price.
So aside from that it’s like living in a 12 unit condo.
@zzzzzz
Yeah, wasn’t there one up closer to the presidio near Union? Those were nice TICs as well, but definitely more than 6. Anyone know how those are doing?
Here’s my armchair “hack” analysis based on recent SS TIC buyers’ testimony and Satchel’s buy vs. rent analysis on the epic Case/Shiller thread.
Current TIC buyers are willing to pay around a $100k premium for the “personal utility” of owning, rather than renting (and that’s for lottery eligible buildings). Going from Stachel’s numbers (and this is a hack because NewBuyer had a large downpayment), I estimate these units are “overpriced” (conservatively) by $150k. My crstal ball says we’ll see them priced around $700k in the future.
THe insanity continues…. can there really be anyone in the city who is willing to buy this? i can’t see any advantages over renting, but can see a ton of disadvantages. I need to find these people and see them some magic beans
@ San FronziScheme – and just think, not only will you stand to put an extra 7K in your pocket over 741 Natoma, but you’ll feel safer in doing so…
this is nice but way over priced at $960 psf for a TIC that cannot be converted to a condo! Fractional loans are at a premium, and if you can’t convert, you should be paying 20% less for a TIC that will remain a TIC.
There are no CC&R’s to speak of, only private agreements which can be broken, etc.. This is a real trap for anyone just on the fact that it cannot be converted, not to mention the price.
But everything sells.
Wasn’t there an even larger TIC conversion in the Marina on Francisco?
That would be The Francisco Palms (1229 Francisco) which “converted” from rentals to TICs (but not to condos).
Yeah, wasn’t there one up closer to the presidio near Union?
And that would be The Eight Semi-Solar TICs Of 2828 Greenwich (for which we don’t yet have an update).
And now about that “search” box up above…
BDB – I’m not aware of SFGOV dividing up property taxes as you suggest. As of now I believe they only “reassess” after the building goes condo and a unit sells. This is how they did it with my building – when I bought into a pre-existing TIC the building did not get reassessed, I just had to pay a greater share, per our agreement, based on my portion of the overall building loan. If SFGOV is proceeding as you indicate, that will actually increase the overall cost of ownership and could discourage TIC’s.
All of the nervousness about fractional loans being available is yesterday’s news. All of the momentum is in the direction of greater acceptance of fractional loans. More lenders all of the time, easier terms, rate differential with condos is compressing. The whole real estate environment is getting used to big TICs and fractional loans. I predict this is going to continue and that these buyers are going to have *nothing* to worry about. And the reason? TIC loans have a *spotless* record. The banks are making a bundle off of them. That will inevitably draw more lenders in, and the trend will continue.
sparky,
I agree I’d feel way safer walking around on Beach street with them. But I still prefer the hills because thugs can’t outrun me on my turf 😉
It appears the Realtor has done his job on the pictures, not like 741 Natoma. Maybe the Natoma realtor didn’t believe enough in his product to spend more sweat in the pics. And maybe he lowered his cut which would explain the lack of attention to “details”.
Re: the above post, it just occured to me, I wonder if this is a benefit of stock cooperatives – that they never really get reassessed the same way other residential properties do at sale and that the building valuation stays absurdly low due to Prop 13? I looked up a couple of the big co-ops on Broadway and the fancy pink building on Washington and it seems this is the case. Anyone know for sure?
Bob,
Someone posted on SS a few months ago that TIC fractional loans were funded by the bank using deposits. Am I right?
If that’s the case, and knowing that SF is a rich city, then I suppose this is definitely a “niche” product pretty insulated from the insanity of bundling/over-leveraging/hemorraging that is crippling many banks today.
The best business for banks today is going back to basics. Spotless borrowers, good location, sizable downpayment. Maybe SF is a good turf for them.
“You’d better elect a TIC board, and they better be fairly hard-nosed. All it takes is one goofball to rent and then attempt an OMI.”
Can someone explain the risk of doing that? Does it really matter if the units can never ever be converted to condos anyway (because of the 6-unit cap)? Thanks.
Jake..
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/01/BUEG10EF9N.DTL
To simplify record keeping, San Francisco Assessor Phil Ting is planning to prepare – for TIC owners who request it – separate assessments for individual units. Separate assessments will not change the fact that each owner is still responsible for the whole building’s property tax.
“It makes it more customer friendly. It doesn’t change the legal liability,” Ting says.
Radhi Ahern, a realtor with the TIC Group, says separate assessments will “help make TICs more like condos.”
Ting plans to start getting the word out soon through Realtors and TIC associations.
In July, when his office sends all property owners in the city a notice of assessed value for 2008-09, “we will send, to every TIC owner we know of,” a letter explaining separate assessments and how to request one, he says.
WarrenSF,
An interesting piece (dating from 2005) that explains pretty clearly many things about TICs, fractional financing and OMIs.
http://www.sdma.com/Publications/detail.aspx?pub=4722
Search for “OMI”.
They have RUINED this facade! The windows are a crime. Invented is correct. The buiding next door to me pulled out the beautiful old windows with individual glass panes and interesting metal details and replaced them with aluminum. Why?
“To simplify record keeping, San Francisco Assessor Phil Ting is planning to prepare – for TIC owners who request it – separate assessments for individual units. Separate assessments will not change the fact that each owner is still responsible for the whole building’s property tax.”
BDB, I still don’t see how this makes a TIC, particularly one larger than 6 units, “like living in a 12 unit condo.” All the owners are still responsible for the overall bill so if one party doesn’t pay, the others are on the hook, just as they are today. It basically makes paperwork for the TIC easier, (which is saying something to be sure), but you still can’t really tap any equity you might have in a TIC like you can in a condo/SFH can you? Are the TIC fractional lenders willing to make TIC equity loans? If so, this does indeed make TIC’s a lot more like condo’s.
Did I just read “equity loan”?
I had this term surgically removed from my memory in June 2006, along with Alt-A and Option-ARM.
Oh Wise SocketSite, riddle me this. What’s the difference between this situation and a co-op?
I’d think this is the perfect pied a terre, and if I were really rich, I’d buy two and combine the units, like they do in NYC without a blink.
So are there co-ops in SF?
Regarding Bob’s post above (the future of bank financing for TICs): I think the future is bright, and the reason is as follows.
Banks face asymmetric information and principal-agent problems when deciding whether to make a loan on a property. The buyer knows more about his credit worthiness (future income, etc.) and the value of the property that secures the loan than the bank. And the bank’s agent (or mortgage broker) has the usual incentives to shirk rather than to investigate these things to the best of his or her ability. These problems are more serious for a bank that is lending on a SFH or condo than on a TIC. This is so because in a TIC, the risks of “bad behavior” by a prospective buyer are shared by the other TIC partners. (Even if the principal bank loan is fractional, such that liability for repayment is not shared by the other co-owners, other forms of liability–e.g., mechanics and tax liens–remain shared.) So the TIC partners have very strong incentives to screen prospective buyers, and any mainstream TIC agreement gives non-selling owners the right to veto prospective purchasers. The screening done by TIC partners partially offsets the asymmetric information and principal-agent problems faced by the bank. The bank can piggyback on the existing owners’ assessment of a prospective purchaser. Because of this, and, relatedly, because of the large down payment typically required pursuant to the TIC agreement (and/or owner screening), lending on TICs is a pretty safe bet.
It seems that a deadbeat owner of a TIC could only hurt the group if he/she becomes truly underwater – i.e. mortgage greater than property value (adjusted for future cost of selling the unit). doesn’t seem likely given today’s “new” lending standards. If the owner decides to default, the other owners can easily walk downstairs, take his keys and resell the unit (way easier than a bank foreclosure). Of course there are legal procedures but you get my point. Is this incorrect?
I used to be vehemently opposed to the risks of TICs but if this is true, and given their mortgage payment record I think they work fine. The discount of TIC’s to equivalent condo’s in district 7 is pretty minimal these days and until one TIC owner defaults I can’t see that changing.
And no, I do not think these units are fairly priced.
Regarding pricing, does anyone have good condo comps (same neighborhood, same quality of finishes, recent sales) for these units?
How come homeowners don’t built roof decks like this? Seems like it’d be ideal.
Prop 13 entitlement rant to follow…
It’s a TIC people; an undivided interest in the entire property. IF your TIC neighbor sells then your property taxes should go up (or, conversely, down when the market tanks) — boo freakin’ hoo… Keep your your TIC agreement simple and divide taxes, expenses, etc. based on percentage ownership. No, wait, Sirkin will create a wonderful document that makes your TIC unit act like a condo (yipeee, Prop. 13 type protections and more lawyers fees). Guess what, it’s NOT a condo. The SF Assessor shouldn’t be encouraging that perception.
— rant off —
Speaking from personal experience, living in a TIC is not like living in a condo, even with property taxes hypothetically being split. You do not hold title to your unit- you hold title in common with everyone, period.
That means that, you, as owner, can easily become party to a liability suit even if whatever you’re being sued for took place elsewhere in the building, outside of your control. Evictions come to mind.
Also, you are legally responsible for the entire building and maintenance, etc. It doesn’t fall upon an HOA that collects dues- you are directly responsible.
Additionally, note that if a co-owner dies intestate (without a will), the ENTIRE building can end up in probate, which could theoretically prevent any party from selling his/her share until it comes back out of probate or the judge allows the sale.
It’s like a condo in that you own what you live in and occupy part of a building shared with others. Mortgages are similar, but not really. For example, mortgage lenders demand specific rights in TIC agreements, while denying them to you. On ours, our lender can Ellis our building, if necessary, to regain possession of a rented unit without warning us, but we are not allowed to begin an eviction without bank consent. (We aren’t allowed to rent anyway, so it’s unlikely to be an issue, but it’s still a bit unnerving)
In terms of co-ops versus TICs: as far as I can tell, a co-op holds title to the building, and you hold shares in the co-op, much like a corporation. This makes taxes very different, as AFAIK, you cannot take the mortgage interest deduction, but the corporation can take depreciation and save federal taxes, etc. It also means liability belongs to the co-op, so if someone sues for something, your personal assets aren’t available.
I have no idea how inheritance and co-op shares works.
anon94123 – your neighbors windows sound like they were installed w/o a permit (i.e. illegal). The Planning Department requires that new windows in older buildings generally match the original windows/style. You can call code enforcement at the Planning Department at 575-6863 and they can check it out.
robin – yes there are a few coops in SF that tend to be very, very, fancy (666 Post is the only one I know of that, although a nice building, isn’t one of the super fancy ones); in a co-op a corporation owns the building and the residents own “shares” in that corporation with the right to occupy a given unit; so technically speaking, as a resident you do not own your unit.
Sanfronzischeme – I knew someone was going to say something about equity in this market lol. But seriously, let’s just assume someone puts several hundred thousand down as a downpayment and then, for whatever reason, wants to access a portion of that “equity”; I know that in regular common TIC financing you cannot access that “equity” w/o the signoff the other TIC members (and that it might involve refinancing the whole building for one person). Moreover, I don’t think fractionalized financing allows you to do access this “equity” either, but I could be wrong. This is a major disadvanatage of TIC’s versus condos.
Regarding the windows, the permit says they were to be replaced “in-kind”; images from mapjack indicate some window detailing that clearly was not carried over. I believe they are in violation of their permit as a result. And oh, by the way, I agree that these windows are HIDEOUS and destroy the look of the building.
Do those windows even open? I looks like they’ve sealed off the front of the building. claustrophobic, not to mention impractical. and freakishly out of place in an otherwise classy renovation
Those windows are strange. Traditional double hung is the best, especially in the Bay Area where breezes tend toward balmy albeit with occasional life sucking fog. Even the big window in the kitchen does not seem to open. The kitchens look nice, but horizontal cabinets like that don’t work for me at all and they are becoming popular.
The roof deck is really nice. The main reason most structures don’t have those is they cost money and often come with difficulties. The first step is with a structural engineer and they can be expensive and tend to recommend work to foundation and structure to hold the roof deck. Roof decks need nearly as much structure as another story while most roofs are quite light and minimal and not even designed to hold groups of people tromping about. They can introduce noise and leaks to the spaces underneath unless done properly, which usually means a lot of money in engineering, materials, and labor.
bedroom windows have to open and looks like most of the windows have hardware. muntins are missing but otherwise not much different:
http://www.mapjack.com/?sEFnWrfvbFPG
new palms and brick path are a nice addition.
cse raises an interesting point. Given the record of TIC loans, could TICs end up looking more like “gold standard” coops during a market meltdown while condo HOAs drown in red ink and foreclosures from delinquent speculators… Ah well, its Ess Eff, ain’t no meltdown here.
I am one of the few unbiased SFers that loves LA (I’ve had my fair share of hate too) And this building screams everything I love about LA- art deco and palm trees! This is such an impressive building to tell people you live in because when they arrive they were probably expecting an old Vagtorian. Also the neighborhood has good, sunny weather and the beautiful, fit men and women being active all over the place is also very LA. The best thing about SF is the diversity, you really can’t be the other way around and find an SF feel in LA (but then again I have not been to every neighborhood of that massive land conglomerate).
The TIC lending market just tightened this week. The low cost TIC lender in this market, Sterling, just raised all TIC rates by 500bp this week and increased financial requirements for borrowers….that should make this a bit more interesting. Seems to me that prices will need to adjust lower by approximately 5-7% to reflect the higher costs of borrowing. That alone prices these closer to $800K, not accounting for the inability to condo convert, etc. that is mentioned above.
I hope this building is retrofitted, as hopefully everybody knows earthquake insurance is useless in the event of large scale destruction.
The list price for 2200 Beach Street #102 has been reduced from $919,950 to $899,000.