No real story as far as we know, we just happen to like the façade of 289 Chestnut not to mention a few of its views.
And who hasn’t been looking for an excuse to drop neomodern, or rather “neo-moderne.”
∙ Listing: 289 Chestnut Street #1 (1/1) – $629,000 (TIC) [MLS]
My grandmother used to live there when I was three. Earliest memories involve that building. The walls had flax wallpaper — very sixties chic.
these units are nice but not $1k/ft. nice. No parking either.
Carnac says price drop in two weeks.
I’d never get myself involved in a TIC personally, but this unit is not a bad deal compared to other properties in the area. I doubt you can get better view at this price.
I can’t figure out why the unit listing shows two different beds in what is listed as a 1BD though.
“I can’t figure out why the unit listing shows two different beds in what is listed as a 1BD though.”
Good eyes, I missed that when I looked through the pictures. I like this place a lot, but only $500/sqft a lot.
@diemos:
The pics also appear to be from a higher floor. I’m assuming this unit is the bottom floor based on the number (#1) and the tree sitting outside the second bedroom in the picture. The tree in the front looks like it should come into view on the internal photos based on the front facing shots and the floor level. Kind of fishy…
“I’m assuming this unit is the bottom floor based on the number (#1)”
Yup, I said to myself, “That’s odd, you usually don’t number from the top down but those views have to be from the top floor unit.”
I take it back. You can see the lamp in the living room that’s by the window in the exterior photo on the first floor. But those are still definitely two different beds.
The lamp should be on the other side though, right?
I guess I’ll just have to go to the open house now. It must be some kind of sneaky realtor mind trick.
living room in pics 2 & 3 don’t match pic 8. Just like BR in pics 5 & 6 not matching pic 11. In fact, those are 2 different kitchens.
Sneaky listing.
The view is from another unit? Why are there no repercussions for that stuff?
and two different bathrooms, at least by the paintings on the wall.
Ok, if you compare the perspective of the house with the red tile roof that you can see from the living room with the view of the same house from the roof deck it’s clear that the view is from a top floor unit.
And with that, I am now going to go and get myself a life.
MLS says “units” not “unit” — so perhaps two different units are being listed.
It beats the Infinity 😉
This listing is like one of those Highlights magazines where you have to figure out what’s changed in the pictures.
The living room in this post matches the top right unit – you can see the lamp in the corner. There are two different kitchens and bedrooms in the MLS listing though, very sketchy.
@anon
The MLS listing states it is floor #1 in the post, unless I’m reading it incorrectly (even though it does appear to be the top right unit as you state). The listing agent deserves a good smack down from the local board misrepresentation.
Unbelievable…
correction: “for misrepresentation”
My understanding is this a total remodel of the building and a new TIC and all the units are for sale.
… like they are at Tower 2 of the Infinity.
Maybe it’s just me but in market where condo and SFH prices are clearly falling across the city any TIC not only needs to be something rather special but aggressively priced to even bother with.
TICs made a certain amount of sense in an up market where you could get a TIC, at a discount, and (hopefully) go condo in a few years and see a nice gain. Even if you didn’t win the condo lottery you could always resell the TIC.
But now that anyone could be laid off at any moment who would want there financial future tied to a large group of “co owners” anyone of which could drag you down at any moment. Also, without a significant discount between the effort and risk of buying a TIC and a similar Condo, what is the incentive here?
The incentive here is the views, clearly.
This is really weird. At first I thought that someone had flipped one of the images left-right (across the vertical axis). That would explain why that table lamp seems to flip the corner where it appears.
On closer inspection, I see that neither photo is flipped. You can barely read the title of the book on the coffee table : Van Gogh. So the interior shot wasn’t flipped. Nor is the facade photo flipped.
My guess is that the developer has moved the staging around from unit to unit for the photo shoot and the two photos were taken at different times. We’re seeing some sort of cubist mish mash of different units at different times.
Yes, something fishy is going on here.
Jorge – you made me laugh with the Highlights Magazine quip.
bdb,
” anyone could be laid off at any moment who would want there financial future tied to a large group of “co owners” anyone of which could drag you down at any moment.”
any basis for this? facts? links?
wild eyed speculation, ignorance and hearsay still ruling the waves @ ss socketsite.
paco, does the horrible job market really require a link? It would be very scary to go in on a TIC now, since any member of the group could be laid off and the others would be on the hook for the loan.
this isn’t speculation about any individual arrangement, it’s a general comment about tics. while uninformed speculation is too common here, that’s not an example of it.
tics are set up to anticipate this by mandating a six month tax and mortgage reserve fund. plus many tics are financed with individual loans.
anyone want to guess how many of the thousands of sf tics that have fallen to foreclosure?
a. zero
You can see the lamp on the top floor that matches with the one in the picture with a view. It’s just hard to see under the reflection. That view definitely seems to be from the top unit.
that should read “anyone want to guess how many of the thousands of existing sf tics have fallen into foreclosure?”
“anyone want to guess how many of the thousands of existing sf tics have fallen into foreclosure?”
Yup, the loan terms for TICs never got as crazy as for individual loans so there haven’t been any foreclosures … yet.
“tics are set up to anticipate this by mandating a six month tax and mortgage reserve fund. plus many tics are financed with individual loans.”
So since the bottom fell out of the financial system and widespread layoffs began around december we should expect the wave of foreclosures to begin in July. Right?
Um, Paco,
I hate to rain on your parade, but tics are a relatively new form of ownership of buildings other than among family members. During their period of use, real estate has seen unusual gains, rarely falling by much, and unemployment has been low, under 10%.
We are now moving into the first period in which prices of real estate are falling *significantly* and unemployment is skyrocketing. 500,000 jobs a month are being lost. And that looks to continue for awhile. Even if it drops down to 300,000 (when some idiot will call the bottom again) that’s a difficult, difficult time.
The vacancy rates in SF and Silicon Valley are skyrocketing. They skyrocketed before, but it was at a time that Greenspan started pumping up the housing market so people in trouble were saved. They are less likely to be saved this time around.
The game has changed and the fact that problems didn’t appear in flush times doesn’t mean we aren’t about to start seeing them in really, really down times.
I don’t understand the lack of understanding about TICs. People talk about them like there is some inherent risk in them, more than a condo. Modern TIC agreements with individual financing are not any more riskier than a condo. Whether a condo or a TIC, if all your neighbors go bankrupt and stop paying their HOA, then you are going to have some cashflow issues for maintenance. However, they aren’t going to take your house away because your neighbor forecloses.
I’m kinda confused about TIC. I thought the difference between TIC and Condo is that with TIC, you get one single mortgage that everyone pays into. With Condo, you get individual mortgage. The reason why TIC is cheaper is because if one person fails to pay, the other will have to chip in so the building doesn’t go into foreclosure. With condo, it’s more expensive because if you fail to pay your mortgage, only you will be foreclosed not the whole building. But I have a friend told me that nowadays, TIC is structured differently and that if one person fails to pay his/her share, the TIC will not go into foreclosure. Can someone explain how this works?
I understand michael’s point about HOA. However, unless there is a doorman involved, otherwise if a person failed to pay his/her HOA, usually trash+ general shared utility isn’t going to bankrupt a building right away. But if a person failed to pay his/her share of the mortgage, isn’t the bank going to put the whole building into foreclosure?
LOL at the notion of Tipster believing that the bulk of his purpose on here is NOT to rain on any parade that has even a qualified positive outlook. Hate to do it, eh? Suuuuure ya do. Come on pal. We all see your work ethic, and it can be called nothing less than the purest love for parade raining. But you didn’t refute a single thing Paco said there, tho. All you did was slip in some inappropriate pedantry: vacancies, Greenspan, meta job loss, “TICs are new.” No. It isn’t as if TICs are very new at all at this point in time. They’ve been going on for a decade in SF, and the lending for them has always been more conservative. Eight to 10 years is plenty of time to get into financial trouble.
“Eight to 10 years is plenty of time to get into financial trouble.”
Eight to 10 years is the upslope of the biggest bubble in history and this ownership structure has never been stress tested by a declining market.
Nothing had gone wrong with the subprime loans either. Right up to the point that they blew up.
The answer to the questions above about mortgages is that there is two kinds: in one, everyone pays into it. If your co-owners stop paying, you remain on the hook. For the whole building.
For the other, the bank takes over that risk and charges significantly higher interest. The bank, in essense, buys the building, and rents it to the owners, who have the right to appreciation but also pay all maintenance. If one owner doesn’t pay, the other owners need only step in and pay for the HOA. The owners put in reserves for this event, and the incoming owner buys the outgoing owner’s reserve, so the price you pay can be higher than your offer price, though you get it back when you leave, like a security deposit on a rented apartment. You can’t do a cash out refi if there is any appreciation.
Many require a balloon payment, so if the banks get cold feet, they can bail out of the arrangement that keeps the risk on them, forcing the owners to get a single loan they will all share, and of course they would have to qualify for that loan using the current qualification standards, though the standards would be applied to the group. So you can THINK you are protected from problems of the others in the group, but those problems can still come back to bite you.
As for flujannonn’s comments, he is correct, the lending has always been more conservative, and during the past ten years of nearly uninterrupted real estate appreciation, there have been no reported defaults. But that’s like saying you should buy dot com stocks in 2000 because during the dot com boom of 1996-2000, no dot com lost money for their investors.
We’ll see what happens in the first significant decline, and whether those conservative lending standards were enough to keep people paying on a loan for an asset that has a balance that is more than the asset is worth.
I checked with an agent (not the agent for this property) and was told that there are six units in this building and they are all for sale.
Can a six unit building be converted to condos or will this building always be TICs?
As of the open house last Sunday (2/1) there were 5 of 6 units for sale. (we dropped by expecting to see only one). The MLS is not deceptive, but didn’t state that there were multiple units available. There are two units “mirror image” units on each floor. All are the same size and floor plan with views ranging from good on the lower floor to spectacular on the top floor, west side. The shared roof deck has a “post card” quality, 3 bridge view. The units are small, with limited closet space but nicely designed. The killer is parking. We were lucky to find a spot on the street 2 blocks away and 200 feet down slope. The leased parking option is “5 minutes away” and you will need to be in great shape to make the climb. Our impression: spectacular pied-a-terre, and if the HOA permits it, you could pay the mortgage by renting to tourists for a few weeks every other month.
@trmccoy
Are all units priced at $629,000? If not, I’d definitely call it deceptive.
So much classic TIC information by so many real estate “know-it-all’s” (i.e. renters) in pure entertainment. No wonder TIC’s get such a bad rap, buyers don’t do their homework. Some take what the read on the internet as gospel.
A TIC w/its own loan is no more risky than a condo w/its own loan. Group loans are rarely seen in 4+ unit properties.
I’m off to strangle a north side real estate agent.
Every TIC is different, but most TICs have just one loan so if the guy in unit #3 gets laid off and moves away the other two owners have to pay his mortgage (and share of the property tax) or go in to foreclosure…
If a new buyer only wants to pay $100K less than the guy that walked away owes the other two owners have to suck up an extra $50K in debt each. Even on the TICs with individual loans you will be on the hook for the property taxes of the other owners (unlike a condo).
There are many reasons that very little real estate has been owned by TICs in the past 100 years and since most SF TICs were formed in the bubble years we will soon see why the TIC form of ownership is almost always a bad idea as job losses and declining values hurt a lot if uninformed TIC owners…
Eight to 10 years is the upslope of the biggest bubble in history and this ownership structure has never been stress tested by a declining market.
I disagree. The capital reversal and job loss that occurred locally seven years ago is tenfold what we’re currently seeing. Think TIC ownership was tested by a job loss or two, or a few thousand, post dot-com?
“Think TIC ownership was tested by a job loss or two, or a few thousand, post dot-com?”
Perhaps, but the year-on-year case-schiller showed a decline for only 6 months before appreciation resumed. Since there was no general surge in foreclosures I would not put great weight on that period as a stress test.
https://socketsite.com/archives/2009/01/november_spcaseshiller_san_francisco_msa_down_but_rate.html
I’m no go on the TIC factor, but I’m loving the views from the upper units. I’m in full agreement that the MLS listing is a bit deceptive…
”
Many require a balloon payment, so if the banks get cold feet, they can bail out of the arrangement …”
false. state dre mandates banks to offer 30 amortization. rates may change but banks are not allowed to jump in and out.
“The vacancy rates in SF and Silicon Valley are skyrocketing”
link please?
If each unit in a TIC is financed with a fractional loan, you will be protected if your neighbor stops paying the mortgage because his lender has agreed to foreclose only on his divided interest in that circumstance.
But that does not change the fact that legal title is held “in common” by all owners — i.e. there is only a single title.
So if your neighbor fails to pay his property taxes, or gets sued with a big judgment entered against him, or enters bankruptcy and the trustee takes over his assets, ALL co-owners are now at risk. Any of those situations can result in a lien being placed on the entire building and the lienholder can come after all owners to satisfy it or force a sale of the entire building to satisfy it. It won’t make one bit of difference if you cry “but I have a fractional loan!”
That is why TICs continue to be risky regardless of the financing structure.
“If a new buyer only wants to pay $100K less than the guy that walked away owes the other two owners have to suck up an extra $50K in debt each. Even on the TICs with individual loans you will be on the hook for the property taxes of the other owners (unlike a condo).”
Anyone still on a group loan has an alternative; tic loans. On 5+ units all owners put two mos. HOA & tax in acct to cover any deadbeats and force a sale of said deadbeats unit.
What if a condo owner does not pay HOAs? Same issue as TIC. The HOA is a lien holder.
From a three year SF performance perspective, there have been zero TIC loan defaults. ’07 had about $500M in volume.
Appreciation does not bail anybody out of unemploymnet, diemos. We had dot com crash + 9/11. It took a while.
“Appreciation does not bail anybody out of unemploymnet, diemos.”
Correct. But it can provide someone to take your TIC off your hands at a profit.
Well, I’d argue that it’s all much more fluid and not just one thing. Stringent cash reserves requirements, better vetting, lots of money down, condo conversions happening along the way. But I don’t really have to because nothing has happened along the lines of what you say. You need to have some evidence. Future calamity straw grabbing is so Socketsite spring 2008.
@Pritchard: Wow, my grandmother also lived there. I remember watching the Orange Bowl there in 1971. Good times.
January 1, 2012
😉
trip,
“So if your neighbor fails to pay his property taxes, or gets sued with a big judgment entered against him, or enters bankruptcy and the trustee takes over his assets, ALL co-owners are now at risk.”
i’m not sure this is correct as he owns only a percentage interest in the total building. i’ll defer to your professional opinion but i wonder if you have known ANY examples of these things happening (in sf tics or elsewhere)? i was under the impression that if it were possible to place a lien against the whole building b/c of one person’s behavior, that the banks would be unlikely to put themselves in this position.
All units look empty from the photos(no pics on the walls from the exterior article photo).
Top floor(view) interior was shown with the pricing from the bottom floor(no view.
anyone know what they are asking for the top floor with views?
This realtor should go to prison IMO
Oh, and TIC’s are a bad idea plain and simple although they are always the better quality units.
I just noticed an Ellis’d TIC in Marina that was amazing. I could afford it. The unit is perfect. The area is amazing.
I won’t buy it.
The other thing about TICs being foreclosure proof is the big down payment. In down markets people can take losses in sales, but still get cash out. Rarely are underwater. This is definitely sometimes a tall order depending on whether it’s a group loan and others in the group are delusional.
Five things I’ve learned about financial matters:
1. When the best anyone can do is to argue that “This type of investment has never gone south” that usually means that the investors are taking a large risk for which they are not being compensated.
“No one ever lost any money investing with Bernie Madoff in 40 years!!! That’s all you need to know. Now give me your life’s savings so I can get my commission!”
In my experience, the reason the investor is not compensated for their risk is that the compensation is going to the salesperson (in this case, the Realtor) or the promoter (in this case, the developer) and so there is no money left over to compensate the investor for their risk. Because there is no money left, the salesperson and the promoter have nothing left to argue except that “there is no risk”. That’s usually wrong, but if they succeed in convincing people, the compensation for the risk goes into their pockets instead of the investors’. I usually run the other way when I hear the argument “this type of investment has never gone south”.
To flujanonn’s credit he is making credible arguments, and not just sticking with “this type of investment has never gone south”
Which brings me to point #2:
2. Never take investment advice from anyone who will make money when people buy more of an investment. Or from people whose businesses are based on referrals from those people. In this case, you should spend $200 and talk to a lawyer. Bring the tic agreement and the mortgage loan docs to a lawyer who is different from the one your Realtor recommends, and different from the guys who write them. Anyone your realtor recommends has one goal: to get another recommendation from that realtor, and the best way to do that is to tell you that there are no real problems and you should stop asking questions and sign the papers, quickly.
3. Investments that have never gone south are some of the most dangerous, because lawyers learn from their mistakes and if they have never been tested by the courts, no one really knows what agreements will stand up or not. Boilerplate contracts are lengthy because so many court decisions have gone wrong without the language that got added. Here, these agreements have never been tested by the courts. Will they stand up? Who knows.
4. When a bank tells you they have shifted any risk from you to them via a contract the bank itself wrote, you are usually stuck holding that risk (i.e. the bank lied) unless a state or federal law supercedes the contract that was written by the bank.
5. If there is money involved, an opposing lawyer will figure out how to separate you from it. If there is a sympathetic party who needs that money, you are doubly screwed. That is to say, if you are holding an asset jointly with other parties, and one of those other parties gets sued, expect their lawyer to at least attempt to take the whole asset. You will be on the hook for many tens of thousands of dollars defending your rights. If you’re lucky, you’ll only be out the many tens of thousands of dollars. If there is a sympathetic party on the other side, and no other assets are reachable, the judge will be “nice” by handing away the asset to the sympathetic party, figuring either 1) you can just sue the co owner who got you into this mess or 2) you must have received some advantage for entering into that agreement with the co owner, so you probably came out even.
The problem with these rules is that so called investments violating these rules are not only easy to find, they are thrust in your face daily. You can’t miss them!
Investments that adhere to all of these rules are harder to find because there are fewer hangars-on to promote them and suck all of the money out of them, leaving you the investor uncompensated for your risk.
Finally, remember that a lot of Bernie Madoff investors made phenomenal returns and didn’t lose a dime. But they didn’t realize that there were not being adequately compensated for their risk and were therefore simply lucky. It turned out OK for them, but they were not adequately compensated for the risk they took, even though it turned out OK. The person who agrees to play Russian Roulette for a nickel is an idiot, even if the gun doesn’t go off. The promoters who charge other people to watch will, however, tell you that he got the nickel for nothing, but that person was not adequately compensated for their risk, even though it turned out OK.
I refuse to play Russian Roulette so that everyone but me makes a lot of money and I’m stuck holding the bag.
tipster, you have a very dark and possibly accurate view of contract law and TIC risk. So, what discount to condo price would you consider appropriate in today’s market for offering on TICs? (for the sake of simplicity let us ignore that condo and other SF real estate asking prices are mostly wishing prices)
Paco, the banks would not really be put at any additional risk if a lien were placed on the property because their recorded mortgage would be superior to any lien in the event of a creditor action or foreclosure. The risk is to the co-owners, whose equity is placed at risk as that would not be superior to a judgment lien.
This all gets very complicated, and as others have noted this does not appear to be very common in SF. Nevertheless, this risk is there, and that is why a TIC purchase with fractional loans is not “just like a condo.” Title to a condo is held only in the name of the individual owner and a creditor can only put a lien on that unit.
Let’s not forget that if I get a job in Seattle for a year I can rent my “condo” but in SF if I rent my (Ellised) “TIC” I need to offer it to the previous renters at a low rent…
See Tipsters’s earlier arguments. He went to them first. They were refuted. Then he went to the “paraphrase Bernie Madoff” routine. The guy simply likes to try to debunk every single thing in the San Francisco real estate market. It’s his hobby.
But TICs are not just like condos, I agree. For many reasons. How much would this view cost if it were a condo? Start there. Begin to assess risk. Question your realtor thoroughly.
Sounds like there is too much risk with TICs. Why buy a TIC when you can rent for a cheaper price? I guess in the past 10 years, the argument is real estate prices are going up so one can take the risk and be rewarded when one sells. What about now? What’s the reward? Prices are going down. TIC buyers are taking financial risk more than ever. What’s the upside?
Are you searching for someone to make the case to buy a TIC versus renting, on this website?
Not it.
“The MLS is not deceptive, but didn’t state that there were multiple units available.”
Since when can a single MLS listing describe multiple salable properties ? I thought that the rule was one MLS listing per potential sale.
It is deceptive to post photos for a superior unit on a listing for a lower priced inferior unit. This is worse than bait-and-switch.
In realtor parlance, its called “marketing”
I viewed these units today. 5 recently refurbished TIC units are available on 3 floors, thus explaining the variety of views in the listing. The views are nice (you can see little bits of the bay from the first floors). But all of the units are small (~500 sqft). No parking. And no oven! I asked about the oven, and they pointed to a microwave with a “convection oven” setting. Are you serious? The finishes are more “polish” than real quality, and it seems on first glance that they took lots of shortcuts here.
@ Milkshake
“Since when can a single MLS listing describe multiple salable properties ? I thought that the rule was one MLS listing per potential sale.”
The wording in the MLS actually does say “units” as in more than one.
The middle and top floor units were being offered at $649K. The two on the lowest floor were at $629K. I didn’t feel deceived at all. In fact I was pleasantly surprised to see that there were multiple units for sale at what I thought was a fair “view adjusted” price schedule. As for deception, having shopped the SF condo market for the last 12 months, I would have to say that this was one of the better property descriptions.
One potentially deceptive marketing practice used for this building and many others that I have visited in the last year are the street trees. The tree in front of this property had been recently topped and thinned. A similar “staging” effort was pretty obvious at another lower level condo on Russian Hill last week.
My question is: Who decides when it is time to prune the street trees? Is this an HOA decision or a city issue or at the discretion of the owner who’s view is being blocked? Anyone have any experience with this issue?
Good God……why don’t you anti-tic posters roll up your panties and go home for gods sake. The poster that noted the present default rate for fractional TIC loans was correct…..it is 0%. Banks that make TIC loans hold the paper and thus are conservative (or what used to be taken for normal) and hence someone at the bank actually has to understand asset liability mgmt etc.
Now all you tenants rights people……remember…….every single time a building is Ellis Acted…..and angel gets its wings.
Get a job
If they are truly 500 sqft, then we are talking about 1300/sqft for a TIC on the top floor and 1200/sqft for the lower ones. Seems a bit pricey for TIC. I don’t know. Infinity sounds a bit more enticing. At least you “own” it not “co-own” it. But then again, the views are really good on these ones. If the top unit is only 20k more than the lower ones, I’m not sure why anyone would buy the lower ones over the top units.
I pointed out just one of the reasons that it is a bad idea to buy an Ellised building in SF (Most TICs are in Ellised buildings) and all Glenn could say was “why don’t you anti-tic posters roll up your panties and go home for gods sake” and “every single time a building is Ellis Acted…..and angel gets its wings”. I have not read anything “anti” TIC (I an not anti-TIC and owned an apartment as TIC with my parent’s trust 10 years ago). If we were to point out that Van Ness has more traffic noise than the 2800 block of Broadway we are not anti-Van Ness we are just stating a fact just like when we point out that there are a lot more risks when you buy a TIC…
“Most TICs are in Ellised buildings”
link?
i think there are far,far more tics than ellised units.
anyway, since no one else seems to want to bring it up i will;
tics are priced at a significant discount to comparable units that are condos. sometimes the condo premium is too high and that gives tic developers an incentive.
Paco’s last point is the key. TICs are cheaper than condos. The risk-reward analysis very well may make this a better option than a condo. For example, if you are buying with a trusted friend or family member and both of you are sufficiently capitalized, and neither plans to sell any time soon, TICs can be an excellent deal relative to condos. There are other scenarios that either favor TICs or not.
TIC developers provide a great service in SF where there are lots of run-down tenant-occupied buildings very often neglected because of the artificial rent control inefficiencies. Getting rid of these tenants (by Ellis, buy-outs, threats, whatever) and rehabilitating these places for sale will be a profitable endeavor (assuming the developer does not overpay and/or prices do not crash far worse than anyone reasonably expects).
Does anyone know what the difference is between TICs and Co-ops? Nothing I have read so far makes complete sense.
Co-ops have been around for a long, long time, especially in New York and they do have single underlying mortgages. Everything about them is more conservative than condos, probably to compensate for the issues raised here. My guess is that the net result is that they end up about equal in terms of actual liability. TICs are probably similar.
I will also hazard a speculation that TICs are actually not all that much cheaper than condos – unless you are paying all cash. The dollar amount price may be lower than a comparable condo. But the more conservative financing of the TIC brings the total cost back up to be more in line with that of a condo.
Why do people buy TICs?
I’m curious. What do you get with a TIC that you don’t get with a condo or coop?
Out of curiousity, did you read any of the above comments, jessep?
What do you get with a TIC that you don’t get with a condo or coop?
A lottery ticket. And the threat of a partition sale if TSHTF.
At the risk of stating the obvious, some people buy TICs because it is the only way they can afford to own a home in SF. TIC are significantly less expensive than condos.
Gas stoves but no ovens? wow…
why buy when you can rent for substantially cheaper. Esp. there is rent control here in SF! Save those extra dough and put it in the bank for vacation, emergency funds, etc.
Now that I think about it, we last used our oven for the Thanksgiving turkey – but I still want one.
I believe in a Co-op you own stock in a corporation, you don’t own real property, and thus don’t get a mortgage interest deduction.
Andy Sirkin’s website explains this and everything about TIC’s quite well.
jessep wrote:Why do people buy TICs?
Like what bgelldawg said. It is sometimes the only way.
Yeah, I wouldn’t mind a fancy single family house in the heart of a vibrant SF neighborhood, but it just wasn’t in the cards. The SFHs I could afford when I bought were in Tracy. No offense, but no thanks.
When I was looking to buy, desperate to get out of my rent-controlled apartment, TICs appeared to have two significant things going for them:
1) Cheaper than condos
2) Most prevalent in existing neighborhoods (sorry, I am not a huge SoMa fan)
Every person’s situation is different, but I had 25% down but needed to work in a specific price range in order to achieve affordable monthly payments. I like central SF – District 8 mostly – and I wanted to remain there. Condos were simply unattainable and TICs weren’t.
I don’t like the semi-crappy financing – extra 0.5-1.0 percentage point on the loan, no HELOC – but yes I did prefer paying that price to get a place I want to live in.
Like any large financial commitment, there are risks and benefits. You have to accept some risk in any and all transactions. You should always do your due diligence. I know people who have bought condos only to find out a big assessment was coming and I have know people who bought SFHs who later regretted it.
Rubicon, you may be correct about the mortgage interest deduction in Co-ops, but I wanted to clarify that in TICs you can certainly claim that deduction the same as you would for a condo.
Michael, why would you be so desperate to get out of your rent controlled rental? I thought people love to stay in those units for ever, just so you can pay $1.5 per month
My rent-controlled apartment served me well for the first 10 years, but I wanted change. I wanted a better place to live, with a lot of light and a decent kitchen. I wanted windows that closed.
My rent-controlled apartment served me well for the first 10 years, but I wanted change. I wanted a better place to live, with a lot of light and a decent kitchen. I wanted windows that closed.
OK – I didn’t read all of the comments, but I live down from the street from this thing and can tell you that it’s 6 units, not one. The top floor units have great (GREAT!) views, the bottom four not so much. The two first floor units each have a patio. No parking is available. No in-unit washer-dryer either.
TICs are, as the above chain will attest, extremely misunderstood. But the facts are that the number of reported defaults in the Bay Area TIC loans stood at ZERO as of the middle of last November (last time I checked). That’s right – ZERO. None.
This is because banks can’t securitize TIC loans, and must therefore keep such loans on their books. No big surprise that this leads to much higher underwriting standards. In fact, I would contend that the terms on a TIC loan have much to like vis a vis a standard condo loan. What you are sacrificing is short-term (not near-term) liquidity for better governance. I’ll take that any day of the week, particularly given the current environment. Regardless, the TIC is hardly what one should be worried about re: these units. It’s the price.
Ultimately, the lack of parking and in-unit washer/dryer makes all but the top two ($649,000) quite overpriced for my taste. Maybe for $529,000 the bottom four begin to become palatable, but in the face of an extremely long market downtrend, I want a deal on anything I’m buying. And these aren’t a deal. They’re nice. But that’s it.
BTW – Anyone telling you that real estate will right itself anytime in the next few years is selling you something.
Oh, and RogerRabbit, before you run off condemning the listing agents to prison, please have a look at the listing website: http://www.openhomesphotography.com/289Chestnut/.
In it you’ll find some very helpful information, such as how many units are available, what the listing prices are, what features are available, and a showing schedule.
Thank god people like you aren’t in charge of dispensing justice. My dog could do better research online.
At least four of the six TICs at 289 Chestnut remain available, and with the re-listing yesterday of 289 Chestnut #2 for $509,000 (originally asking $629,000) prices have been reduced up to 19%.