October 6, 2009

A Pair Of Bank-Owned Penthouses Atop The Watermark (501 Beale)

501 Beale #PH1E: Living

A plugged-in reader reports:

For those of you in the market for a penthouse, Unit #PH1E at the Watermark (501 Beale) was taken back by the lender for $1,349,628 on Sept. 15. Talk about bad timing, the former owner bought for $1.523 million in January 2007. This three bedroom 1,362 sq.ft. foreclosure was brought to you courtesy of WaMu.

Call it a quick flip gone bad as the condo had returned to the market a month after closing asking $1,800,000. Last listed for $1,595,000 before being taken back by the bank.

At the same time, 501 Beale penthouse #2B is now asking $1,019,900. Purchased for $1,375,000 in December 2006, it failed to sell when listed for $1,099,900 in August of 2009 and was taken back by the bank as well. As we wrote in April:

Two months after its initial sale for $1,250,000 in October of 2006 Watermark (501 Beale) Penthouse #2B was flipped for $1,375,000. (Ah, the good old days.)
Keep in mind that the identical "penthouse" unit a floor below (#PH1B) sold for $1,300,000 in October of 2006 and was likley a supporting comp for the flip of #PH2B. And so on. And so forth.

No word on any assessor’s adjustment for #PH1B or anything everything below.

∙ Listing: 501 Beale #PH2B (2/2) 1,019 sqft - $1,019,900 [MLS]
From Flippy To Floppy For Watermark (501 Beale) Penthouse #2B [SocketSite]
Six Relatively Quick Flips At The Sold Out Watermark (501 Beale) [SocketSite]
A 25.7% Drop In Assessed Value For A Plugged-In Reader In 2009/10 [SocketSite]

First Published: October 6, 2009 1:45 PM

Comments from "Plugged In" Readers

wow, what a great reduction in price. too bad it's still a thanks but no thanks on that unit at that price with those hoa's.

is that really what i want to do with $1M? spend it on a shoebox in the worst (not from a crime standpoint, but a location standpoint) location in town?

Posted by: anon$random at October 6, 2009 2:38 PM

how much rent do you think you could get for PH2B? (of course, with HOA dues at $740, sure need a lot to make it almost cover your mortgage).

Posted by: DanRH at October 6, 2009 2:39 PM

I don't suppose you could buy both and punch through something (other than a neighbor's condo) to join them...

Posted by: BobN at October 6, 2009 2:53 PM

What does $738.96 in HOA cover anyway? A friend of a friend bought one of these overpriced loft-condos in another city, with a similar HOA price (+/- $50 maybe?), and his HOA apparently covered the gas and boiler maintenance (includes cooking gas and heat, but not sure what else), which came out to around $100/mo average.

I just can't think what else it covered that made it worth the other $600 or so in HOA. Are HOA fees just pure profit for the management company? Let's say his building had around 30 units, times $600 avg per unit (after subtracting out the gas bill) -- that's $216K/year. Maintenance/upkeep on these new buildings for roofs, common areas, etc. can't be that much, right?

Posted by: sfrenegade at October 6, 2009 3:00 PM

I just can't think what else it covered that made it worth the other $600 or so in HOA. Are HOA fees just pure profit for the management company?

That's exactly right. People pay these high HOAs so that the greedy management companies can get rich!

But seriously, the HOAs cover water, common area electricity and gas, maintenance, and reserves (this is a big chunk). These big buildings are expensive to run (generators, fire alarms systems, elevators, window washing, etc, etc etc).

Posted by: another anon at October 6, 2009 3:08 PM

@anon$random

How is this the worst location in town?

Also in my opinion this bldg, whatever u think of it, probably has one of the best views in SF...

Posted by: mac at October 6, 2009 3:12 PM

to me, this location is an outpost of San Francisco. save some money and move to daly city...or noe valley.

honestly, its just not for me. there's nothing there, no character, no neighborhood...it doesnt feel like san francisco at all.

Posted by: anon$random at October 6, 2009 3:25 PM

I think the location is fine except for the bridge noise...

Posted by: J at October 6, 2009 3:31 PM

another anon sez: But seriously, the HOAs cover water, common area electricity and gas, maintenance, and reserves (this is a big chunk). These big buildings are expensive to run (generators, fire alarms systems, elevators, window washing, etc, etc etc).

Also remember they may cover insurance and earthquake insurance. Those take a big bite.

Posted by: Oceangoer at October 6, 2009 3:32 PM

That kitchen seems tiny!

Posted by: Tweety at October 6, 2009 3:34 PM

"How is this the worst location in town?"

Because that's the only way some people can rationalize prices in "luxury boxes" have taken a big hit.

Not only some of the best bay views and easy access to the Embarcadero but walking distance to all the places pictured for that Jackson Square condo...

Posted by: Michael at October 6, 2009 4:12 PM

I'm not saying the HOA is justified but remember this place has an outdoor pool, whirpool, gym and doorman.

Posted by: Michael E at October 6, 2009 4:17 PM

Agreed the HOA is quite high and the neighborhood debate is a waste of time because it comes down to personal preference. Besides that I don't see how they are going to get $1000 PSF for these units. Those are peak prices. $750 to $800 psf if they are lucky.

Posted by: tony at October 6, 2009 4:22 PM

That's odd. Being close to the waterfront and the old pier buildings and having (from my unit at least) a great view of the bay bridge and Treasure Island seems very San Francisco to me. I will say it's still a little nitty gritty but I happen to like that. I've looked at comparable places for rent elsewhere but I discovered I really like this neighborhood and I don't want to move.

Posted by: Watermark Resident at October 6, 2009 4:35 PM

another anon is right - reserves should be a big chunk of HOA dues. Part of the HOA packet you receive should be a Reserve Study done by an independant firm that takes into account inflation and accurate lifetimes on key components of the building. I would much rather pay $600 a month and know that reserves are adequate than $400 and end up voting on special assessments every time the hallway carpet needed replacing. Everyone on this site seems to use the HOA $ / amenity formula which is not any indication of what your true long-term costs are going to be, either due to special assessments or depreciation due to excessive deferred maintenance. But I guess if you're buying with a $0 down option ARM it doesn't really matter.

Posted by: OneEyedMan at October 6, 2009 4:45 PM

Agreed with Watermark Res. - Nice building and I would say great location less than a block from the Embarcadero. Problem with this unit and all of those with a similar floorplan (1019 square feet) is that the second bedroom is a bit of joke. It's barely large enough for a study. Given that there are available units with $1200+ sf, perhaps even at similar prices at the Metropolitan, One Rincon and others, I agree that he/she will struggle to get his/her price, even for a 'penthouse' unit.

Posted by: huh? at October 6, 2009 4:49 PM

"But seriously, the HOAs cover water, common area electricity and gas, maintenance, and reserves (this is a big chunk). These big buildings are expensive to run (generators, fire alarms systems, elevators, window washing, etc, etc etc)."

For this building, at least 20 floors, and at least 8 units/floor on the non-Penthouse floors? Assuming an average of $700/mo HOA (even 12F, a below market rate unit has an HOA above $700: http://www.sfgov.org/site/moh_page.asp?id=110669), that's over $1.35M/year in HOA fees when you include the penthouses. Maybe I'll drop by as a prospective buyer of one of the units and ask for the HOA budget. :)

Posted by: sfrenegade at October 6, 2009 5:10 PM

I'm a fan of the Watermark. Yes, it's next to the bridge, but the bay-facing units rock.

Posted by: insidesfre at October 6, 2009 5:14 PM

The Watermark location is great. Possibly better than Infinity since it's closer to South Beach, but way better than most high rise condos including One Rincon and Metropolitan.

Only downside is they could have done a better job with the exterior of the building and the floorplans could have been a bit bigger.

It's hard to debate which location is better between Infinity, Watermark and The Brannan Towers.

Posted by: anoon at October 6, 2009 5:46 PM

More pictures of Washer / Dryers ..... Is this the new "chopped pillow"?

You cannot doa proper analysis of the appropriateness of the HOAs without examining the reserve study, proforma budget and other financials of the HOA.

Posted by: Paul Hwang at October 6, 2009 6:12 PM

That is a beautiful unit with a beautiful price drop. Seeing views and high ceilings in a Cupid's Bow adjacent location like that fills me with positivism about the future.

Not that long ago units several floors below were selling for well over a million, so the quote-owner-unquote probably felt they got a great deal until it wiped them out.

Regarding the HOA fees, elevators for buildings like this are amazingly expensive to operate because they use so much energy and require expensive upkeep.

Posted by: Mole Man at October 6, 2009 6:20 PM

I've never been in the building, so I don't know what the bridge noise level is like. The Watermark could've used a bit more (OK, maybe a lot more) architectural imagination, but the location is fantastic. The unit sizes . . . not so much. The pricing of the units -- way too high, even with great views, for their sizes.

Posted by: OMG at October 6, 2009 7:21 PM

That is one tiny-a$$ penthouse! That kitchen is puny...I say it goes for sub 1 mil.

If you want penthouse...come to my building =]

Posted by: Rincon Hill Billy at October 6, 2009 7:57 PM

I went to PH1E & PH2B on a lark some time back. The kitchen in PH1E is open to the living/dining area. Can't personally say the kitchen is large or small since its one whole space... PH2B is a whole different animal - feels like a layout for a lower level condo stuck on a "PH" floor. Seemed out of place...

Posted by: Can't think of cool name at October 6, 2009 8:44 PM

move to Daly City? you must be kidding. I guess if someone likes living in depressed weather all year round then its the perfect place. I hate even driving into Daly City, Sunset, Richmond, etc. So damn depressing.

as for the penthouse, what were they thinking? I expected more for a highrise penthouse.

Posted by: noname at October 6, 2009 10:20 PM

Here's my question...other than being on the top floor, how does this unit actually deserve the title penthouse. Call me a snob, but when I think of penthouse, I think of a nice (!!!) kitchen, big, walkout patio, not deck, and most of all, it should be unique from the rest of the units in the building. This unit exhibits none of those qualities in my mind. P.s. the whole 1000 $/sf is absolutely outrageous for this property, period point blank.

Posted by: Evan at October 7, 2009 8:54 AM

PH may be on the door, but there is only one legitimate penthouse in this building. The top floor unit facing the bridge and bay is a 3/3 and around 2,100 sq. feet.

Posted by: Dakota at October 7, 2009 9:58 AM

The fact that most HOA fees include water is a joke in drought-prone California. Sure, not installing individual meters saves the developer money and can therefore sell at cheaper prices, but users of HOA-funded water tend to not conserve. Nor would they voluntarily upgrade their fixtures to more water efficient ones.

Plus, I don't think it's fair for a single person living in a 2br condo to pay the same for water as a family of 4 living in the 2br condo next door. HOAs for a tiny 1br at Rincon or the Beacon is something like $700/mo.

And yes, HOA fees are way overpriced in SF. Especially when compared to neighboring cities.

Posted by: joh at October 7, 2009 11:20 AM

The fact that most HOA fees include water is a joke in drought-prone California. Sure, not installing individual meters saves the developer money and can therefore sell at cheaper prices, but users of HOA-funded water tend to not conserve. Nor would they voluntarily upgrade their fixtures to more water efficient ones.

Plus, I don't think it's fair for a single person living in a 2br condo to pay the same for water as a family of 4 living in the 2br condo next door.
And yes, HOA fees are way overpriced in SF. Especially when compared to neighboring cities. HOAs for a tiny 1br at Rincon or the Beacon is something like $700/mo.

Posted by: joh at October 7, 2009 11:20 AM

I put in a cash offer for $950k for PH2B and the bank didn't even take a look at it. Now they have the price reduced. We'll see where it sells.

Posted by: Kate at October 11, 2009 8:58 PM

Here's another one in this building bought for over $1000/sq.ft. Unit #6C (801 sq.ft.) was purchased for $806k in 2006 and got sold off at the courthouse for $776k on November 3. Buyers took a hit on their 10% downpayment. True patriots.

Posted by: EBGuy at November 23, 2009 5:06 PM

Sort of oddly, the 2008 tax base for #6C is $680K. I assume the prior owner tried to get their tax bill knocked down before they ultimately handed the keys over.

They had a 10% downpayment? So this mortgage picked up an additional $50K in penalties/fees (even assuming IO)? Or did they do a refi? They wouldn't be able to get a negative amortization loan that big, would they?

Posted by: sfrenegade at November 23, 2009 5:19 PM

They had a 10% downpayment?
I'm going to take that back. Looks like the original owners of #6C (10% down) flipped the property immediately (2 months) to current owner who defaulted (her mortgage was with First Magnus, can't find any other details). sfrenegade, nice catch on the tax bill info; looks like she knew the ship was going down.

Posted by: EBGuy at November 23, 2009 7:29 PM

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