313 Duncan (www.SocketSite.com)
After two months on the market 313 Duncan remains available for purchase and seeking $2,850,000, but the developer is now testing the rental waters as well. Asking $15,000 per month (including that sweet little one-bedroom out back).
313 Duncan: Before, After, And All Its Insides Now “Online” [SocketSite]
$15000 / 5br – Stunning Modern Victorian Home with Guest House [Craigslist]
Coming Soon: Victorians Gone Modern! (313 Duncan) [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by Jake

    Oh puhleaze, for $15,000 a month I expect a mansion in Pac Heights, heck maybe several, not a Noe Dwell Mag. redo.

  2. Posted by G-man

    I have a dumb question, not related to this place, but related to this situation.
    If you rent a place that is still for sale (or that the owner puts up for sale during your lease), how easy is it for the owner to boot you out? Or will the new owner be obligated to honor the full duration of the lease?
    It seems like a lot of people are taking properties off the market to rent, and I’m just curious what kind of risk you are taking if you rent one of these places.
    Thanks!
    [Editor’s Note: A sale doesn’t negate the terms of your lease.]

  3. Posted by Mole Man

    That’s still just $3k per bedroom, so for a group of friends or an extended family it might not be too bad. Everyone wants to live in Noe Valley now in order to network with the net workers.
    This is the kind of situation that creates stickiness that slows property market corrections. If this were a stock then it would have been repriced by now.

  4. Posted by tipster

    The new owner has to honor the lease unless the lease states otherwise or the new owner is the bank.
    A renter should demand a discount for the possibility of showings, getting tossed after a year, etc.
    I wouldn’t pay more than about $6500 for this place.

  5. Posted by Auden

    tipster,
    Have you even been in this home? $6500 gets you a lot less in Noe. This should be an 8k rental at the very least, but a realistic price is around 10-11k…
    15k rental in Noe… that may be a record, and this isn’t the market to be setting (upward) records in…

  6. Posted by victor

    If the new owner will occupy the house they can evict the tenant and move in.

  7. Posted by Miles

    I’d think a buyer’s going to have to honor any original rental term (6 mos. or 1 year) and then you can do an OMI (owner move-in eviction).

  8. Posted by newbie

    Hey all –
    I’m sure this is an unbearably novice question (and obvious math) to most folks on this site; but would anyone mind walking a newbie through the comparative cashflow on renting vs. buying this one? I.e. if someone was actually willing to pay $15K/month in rent, and if someone else was willing to pay the asking price, make the normal downpayment, and then had normal tax benefits & obligations … who would be ahead, and by roughly how much? Assuming, for the sake of simplicity, that the buyer would be in the income tax bracket that would enable this sort of purchase…
    Thanks!
    PS –
    Renting is one thing I actually DO know; and no way this thing is going to get $15K IMHO. People who like the idea of living with a small platoon of friends are 0-4 years out of college. People who can afford “$3K/bedroom” are generally way over 4 years out of college. And for the lucky few who do get into that budget range at that early age, the odds of them having four other friends in the same boat who all coincidentally don’t feel like living like “real grownups” despite the fact that they can are low. Maybe in NYC in 2007 – not in SF today…
    [Editor’s Note: To Rent Or To Buy, That Is The Question (That Only You Can Answer)]

  9. Posted by dub dub

    @newbie : I think this ridiculous rental price was picked out of thin air so that the rent/buy wouldn’t look too bad, and I’m sure others will answer your question in detail shortly.

  10. Posted by fluj

    They probably picked the price to turn a bit of profit; slapped a few thousand on the monthly burn.

  11. Posted by ANON

    the god-awful apartment building next door kills the look of this great house. No one in a single family home wants an apartment building for a neighbor.

  12. Posted by Cal Housing Bear

    Personally, I think $8k is high and $6.5k is about right so good luck with that rental. At $15k a month, someone would need to clear an income of at least $500k to be able to afford this. Someone earning $500k a year wouldn’t want this place and it would put this in the top one half of one percent (or higher) of people in terms of income to be able to afford — so again get real Mr. Owner.
    I have heard in the Chronicle and other papers that the SF rental board has taken a very dim view on bank foreclosed evicitions of tennants — so I think the only way those people can evict tennants when they decide to stop being accidental landlords is to do so after the first lease expires and with proper notice. If the bank takes the home back, in SF the bank is being told they must honor the original lease terms. And I think it is only a matter of time before more sweeping laws state wide get enacted to protect tennants in such cases.

  13. Posted by Eric in SF

    This building was built before 1979, so any tenants have full SF rent control. Once it’s leased, whoever leases it is in for life. As mentioned above the only ways a new owner could live in the building is to do an OMI or Ellis Act the entire building. (Woe to the landlord who buys a building leased to a protected class.)

  14. Posted by fluj

    Someone who makes 500K a year wouldn’t want that place? Why not? Have you seen the property? I’ve viewed it, and I think it’s flawed in some ways. But it has a lot going for it too. I think the property would work for lots of folks who make that sort of income.
    The property has absolutely nothing to do with foreclosure, tho. Its developer could probably let it stand vacant for years if he was so inclined. My understanding is that he has resisted re-pricing the property and would rather hold it for a while. Hence the renting tactic. Again, 15K is likely profitable. Another property that you folks loved to bash that would have sold in a heartbeat a year ago just rented for a very large amount recently.

  15. Posted by Mark D.

    Re: “This building was built before 1979, so any tenants have full SF rent control. Once it’s leased, whoever leases it is in for life.”
    At $15k/mo, the landlord should be so lucky.

  16. Posted by TelHillrenter

    I have seen the ratio of 15:1 used commonly when trying to assess a fair rent. That is yearly rent should be around 1/15 of the property value. Let’s see: $2,850,000/15=$190,000 per year or $15,800 per month. $15,000 is a bargain!? just kidding.

  17. Posted by FSBO

    This will be another good data point. It would be great if we could get the actual lease price when/if it is leased. I can’t see it going for over $9K per month – but there may be a willing party or two out there. I’d rather rent it at even $15K per month than buy it now for $2.85M. Luckily my 30lb dog would disqualify me. Can you imagine stroking a check for $37,500 (1st month rent + security deposit) and then being told your dog was too heavy?
    fluj – can you share details of the high priced rental you mentioned?

  18. Posted by SFClueless

    Seriously, even people who make 500k a year are that keen on paying out $180k a year in rent.

  19. Posted by fluj

    “fluj – can you share details of the high priced rental you mentioned?”
    No, I’m sorry. I cannot. Too many boo birds will come out of the woodwork talking about how dumb the new renters are.

  20. Posted by noearch

    of course he can’t. he probably made it up. more realtor doublespeak.

  21. Posted by pennybags

    A true Dwell Victorian would have still had double-hungs out front, no?

  22. Posted by Miles

    “As mentioned above the only ways a new owner could live in the building is to do an OMI or Ellis Act the entire building. (Woe to the landlord who buys a building leased to a protected class.)”
    It’s going to take 5-10 years (5 years for handicapped tenants, 10 years for seniors if I remember correctly) for any tenant to achieve protected status here, so that might still fit in with a rent/sell later decision.

  23. Posted by mortgage analyst

    $15k/month – bwaaaa haaaaa haaaaa

  24. Posted by fluj

    “of course he can’t. he probably made it up. more realtor doublespeak.”
    Oh, there are quite a few people reading this who know what I’m talking about. If everyone on here was more like FSBO and less like you then this site would be more about sharing. But, because this site is full of [Removed by Editor] such as yourself, it is not.

  25. Posted by unearthly

    I’m paying around 26-1 on a place 1/2 as expensive which would put this place at $9k. Given the location next to an Apartment, no view, and the noisy J-Church nearby I doubt it will go for more than $7k.

  26. Posted by psusfca

    I am a frequent reader of this site, but seldom post. I think I have to agree with skeptics/critics of fluj. I am skeptical of the claim but it could be true. I have found fluj’s comments to be interesting at times, but they do lean toward self serving. Lots of denial that things had peaked and still a bit of denial. While this house looks quite nice, there is no way I would spend that kind of money for this location. And with layoffs on the rise, Wall Street bonuses evaporating, stock options underwater, prices for buying and renting will compress (quite a bit from here I would think).

  27. Posted by plan C-sparky

    So you are skeptical of fluj saying this rental # is based a making a few thousand dollars over cost? Or is it just that he responded to anything on here so he is immediately bashed?
    Self serving? How.

  28. Posted by Richard

    SFH do not have limits on rent increases. Is this considered a multi-unit because of the 1bdrm in the rear and thus subject to rent increase limits?

  29. Posted by fluj

    I can’t do it because it isn’t a decent thing to do. I know what will happen, unfortunately. Noearch leaps at any and all opportunities to slam realtors regardless of context on a daily basis. I don’t misrepresent anything on here. Many, many others do.
    psusfca, I’m not saying they’ll get 15K. I said someone who makes 500K could afford it.
    As far as the market, November saw that 45 of the 140 SFRs sold were in Oceanview, Ingleside and D-10. In November 2007 the numbers were 33 out of 264. The 2008 bottoming in those areas is happening together with a slowdown and fewer sales at the top end. Think that doesn’t affect values on charts? Median, with more weighted toward the bottom, and less at the top will fall left of center. Look it up if you don’t believe me.

  30. Posted by DataDude

    The sellers of 313 Duncan are obviously not serious about renting this property.
    They have fabricated a “market” rental rate of $15,000 per month to convince a would-be buyer that a purchase price of $2,850,000 is a good value and in line with rents (using the 15x multiple mentioned above). Points for creativity.
    And if the national P/E ratio for residential real estate is 3:1–a measure of affordability–then for somebody earning $500K per year, an appropriate purchase price would be $1,500,000.
    And let’s not forget about the $855,000 30% down payment many banks now require, because why else would they lend money on a home that will depreciate in value 20-50% over the coming years???

  31. Posted by DataDude

    And even if you do make $500K per year, and you manage not to get laid off over the coming years, the likelihood is you and your remaining coworkers will start to experience wage deflation:
    http://www.nytimes.com/2008/12/22/business/22layoffs.html?ref=business
    Bonuses will be cut. Vacation time will be unpaid. Maybe you’ll move to a 4-day work week and earn 10-20% less. But at least you’ll have a job. And a shrinking salary.

  32. Posted by rr

    Richard-
    I came in here to point out the same thing. I do not believe they would consider it a multi-unit, because they are neither advertising the guest house for rent separately, nor indicating they would be open to the leaseholder subleasing the guest house out.
    I was schooled last time I mentioned SFHs aren’t subject to rent control, though. Keep in mind you can’t raise the rent to whatever you want– it has to be market rate or the tenants can sue for eviction without cause. But, you can continuously raise the rent to market rate, free of rent board oversight.

  33. Posted by noearch

    see what happens flujie when you release another barrage of potty mouth comments.
    THEY GET DELETED.
    You may not agree with what others say at times. And at times they may not agree with you, but I seriously hope that 2009 finds you with a less defensive demeanor and a more pleasant choice of words. All the best in 2009.

  34. Posted by Foolio

    $15k? Are these guys out of their minds??

  35. Posted by DataDude

    @ noearch — I didn’t see the naughty-rowdy-potty mouth comments to which you refer, but here’s a quote about profanity:
    “When a man uses profanity to support an argument, it indicates that either the man or the argument is weak – probably both”

  36. Posted by fluj

    see what happens flujie when you release another barrage of potty mouth comments.
    THEY GET DELETED.
    You may not agree with what others say at times. And at times they may not agree with you, but I seriously hope that 2009 finds you with a less defensive demeanor and a more pleasant choice of words. All the best in 2009
    It isn’t about that, noearch. It isn’t about disagreement. It’s you. You offered no argument. Just a catty comment, as usual. In this case you pretty much called me a liar because I’m a realtor. Everyone sees you working. Every time the words “realtor” or “design” or “Victorian” pop up you have your agendas. The argument in question is almost always about something else. The potty mouth was no barrage, merely one word, and a fitting one.

  37. Posted by auden

    Why bash fluj? How many renters that have posted here have actively been looking in the 5000k+ rental market? I’m voting for close to zero. I don’t like disclosing non-public info, but fluj’s statement about a home that rented for a very large amount in the area is accurate.

  38. Posted by kathleen

    I know a lot about rentals. The high end rental is soft right now. I have had too many conversations with owners whose expectations are not in line with the marketplace.
    I wish these owners the very best of Luck!

  39. Posted by FSBO

    There are 42 listings on Craigslist for rentals with asking rents greater than $10K per month. I’m sure this rarefied segment is soft as kathleen pointed out – and I’m sure there is (and always has been) a lot of serious discounting from the Craigslist asking price. But there must be a number of properties that eventually get rented for over $10K. $15K is getting pretty high – only 9 listings are at that level – and they are all in Pac Hts and Sea Cliff (except for 313 Duncan). But there’s got to be a few people willing to pay crazy rent.
    As ridiculous as these prices sound ($120K to $200K per year for rent), it still may be far preferable to rent one of these homes for the full asking rent rather than buy one at whatever its purchase price would be today.

  40. Posted by auden

    kathleen, what would be your guess for what this will rent for?

  41. Posted by Fluj Is Right!

    Demand for rentals is pretty crazy right now in the higher valued segments. We’ve placed several temporary renters in higher end units at GRMs below 180. Rents are going up like I’ve never seen in over two decades. With wage inflation and dollar deflation, it’s not just a great time to rent, but also a very encouraging time to buy.
    Fluj makes some very pertinent comments only to have the blog causually dismiss his observations. I hate to say it, but “Fluj is Right!”.

  42. Posted by NoeValleyJim

    How many renters that have posted here have actively been looking in the 5000k+ rental market?
    What does this mean? Sorry, I am not trying to be argumentative, but what is the $5M+ rental market? Do you mean $5k/mo rents or rentals for people making $500k/yr or something else? Thanks.

  43. Posted by Fluj Is Right!

    @NVJ
    My reading is 5K/month, however I’ve noticed that most realtors don’t understand mathematical notation all that well.

  44. Posted by auden

    $5,000. the k was a typo.

  45. Posted by SF Anon Renter

    Look – my partner and I have a combined income that would qualify us for as renters for this place as currently priced. Obviously, I cannot speak for others in this situation. But we are delighted to spend about 4.5K a month for a lovely place in Telegraph Hill with sweeping views. We both work on the peninsula, before someone starts in on that. For us, Noe is the burbs, it might as well be San Mateo.
    Why on earth would someone pay 15K for this place? Yes, you would need to earn about 500K to qualify. And people with incomes at this level are certainly looking at other, better places.
    I just don’t understand this idea that people with high incomes will be tempted to throw money at what appears to be a small-time developer’s problem.
    IMHO, this is either priced for the owner’s delusion, or the owner is simply not serious about having it occupied.

  46. Posted by NoeValleyJim

    Okay, thanks for the clarification auden.
    We had a discussion about rental prices on a 4/3.5 in Noe here:
    http://www.socketsite.com/archives/2008/10/a_bit_of_classic_noe_elegance_at_least_on_the_surface.html
    And at least one women, who is actively seeking a rental,
    I have been looking for a place like this to rent in Noe, and a home of this quality/size goes for more.
    I wonder if she is reading this thread and would mind chiming in. $15k/mo seems high to me, but I really have no idea, not spending any time looking at rentals, especially in this range.

  47. Posted by wanker

    “With wage inflation and dollar deflation, it’s not just a great time to rent, but also a very encouraging time to buy.”
    Wage *inflation* and dollar *deflation*???
    I think the only thing inflating is the wishful thinking of the FrontSteppers.
    Seriously – have you been asleep since Sept. 15?

  48. Posted by plan C-sparky

    Editor,
    This is getting annoying.
    Fake “fluj is right” comments just to bash him on every thread, now followed by comments as if they are legit (and like fluj said them).
    Come on…

  49. Posted by fluj

    Well, I can divulge that the individual who is looking to rent the Duncan street property and the individual who rented the one I referred to know one another. Also, the person who remained nameless emailed me to say thanks for keeping the information from the SS haters. Who have gone on to prove me 100 percent correct in my judgment, by the way.
    “Wanker” “Fluj is right” “www.thefrontsteps.com” — get a life.

  50. Posted by sf

    The craigslist posting has expired.

  51. Posted by chuckie

    Down with ss
    haters
    doom and gloomers
    bubble heads
    grave dancers
    fence sitters
    loser (and bitter) renters
    and (most of all)
    ss gloaters.
    Viva (real) San Francisco.

  52. Posted by kathleen

    I did not place a rental valuation on 313 Duncan.
    I would never give a public valuation for a property that I had not toured at the request of the owner for that specific purpose of rental evaluation.
    Using craigslist as guide for rental valuations is problematic. It is a list of asking prices, not a list of closed rented prices.
    I wish the owners a the best of luck with a gorgeous building.
    There are always lots of people with cash floating around town, the building presents beautifully, and I am a big fan of the exterior design.
    My landlord clients are seeing a rise in vacancies rates, not a decline.
    Anyone paying over 5K a month has plenty of options.

  53. Posted by LMRiM

    $15K per month? ROFLMAO.
    I checked the tax records online (a favorite activity when dealing with flippers). According to the website, the developers missed their last payment due December 10, and now owe in excess of $5K.
    https://services.sfgov.org/ptx/intro.asp
    They have owned the place since 2004 I think, and didn’t miss any of last years’ payments, according to the website, so obviously something changed.
    Anyone actually thinking of renting this should take into account that these guys may be having cash flow problems. Of course, anyone thinking of buying this thing for almost $3M is insane IMHO.
    Happy New Year everyone! What a tremendously eventful and interesting 2008 it has been, and here’s to hoping that 2009 will bring more “interesting tmes” (in the Chinese proverb sort of way).

  54. Posted by fluj

    “I checked the tax records online (a favorite activity when dealing with flippers). According to the website, the developers missed their last payment due December 10, and now owe in excess of $5K. ”
    “They have owned the place since 2004 I think, and didn’t miss any of last years’ payments, according to the website, so obviously something changed.”
    Dude, get a life. The conclusion you draw here is so far from factual it isn’t even funny. You post — for all the world to see — a theory based upon a not completely up to date bureaucratic website. That is so not right. Not at all.
    This guy probably had a hectic December. Period.
    There’s opacity. There’s transparency. There’s being able to see everybody else’s bank statements. Would you like it if we could see yours? That’s the only way you should be saying what you just said.
    Two weeks later. Satchel, “Oh. I was totally wrong about that one guys. I shouldn’t have been posting opaque theories based off bureaucratic websites on the Internet for everyone to see. The guy made his payment, probably the day after I mentioned it”
    Yeah. That never happens.
    Nice hobby.
    Tool.

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