2011 Golden Gate Avenue
The sale of 2011 Golden Gate Avenue closed escrow on 10/15/09 with a reported contract price of $1,800,000 ($413 per square foot). Purchased for $1,350,000 in July of 2007 but then remodeled and expanded (adding legal bathrooms and square feet), 2011 Golden Gate returned to the market in October of 2008 asking $2,395,000.
2011 Golden Gate Avenue: Kitchen
It was subsequently reduced and relisted a number of times, most recently for $1,799,000 this past September. And while not exactly apples to apples on account of the remodeling, call it a likely six-figure loss on the investment when all is said and done.
In terms of industry statistics, however, the sale will be officially recorded and reported as “over asking” with less than 40 days on the market.
And while we generally eschew real estate industry clichés, it’s a good reminder of one which we don’t: “You make money when you buy, not when you sell.”
Not To Be Flip, But If It Wasn’t A “Flip” It Looks Like One Now [SocketSite]
Tis’ The Season (September) To Return: 2011 Golden Gate Ave Edition [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by sanfrantim

    Looks like the sellers made out pretty well, considering the dire predictions on this board (e.g., one prolific SS poster claimed it would not move unless price was dropped to “$1.4 m”), but I think the buyers did pretty well too. Undeniably lovely place, and the neighborhood will no doubt improve over time.

  2. Posted by EBGuy

    To re-emphasize Trip’s “highest and best use” comment from the previous thread, a favorite topic of mine, I’ll point out that across the street at 2072 two ~1600 sq.ft. condos sold at over $1million a piece (admittedly, at peak). I too think they could have done better financially by splitting this into two nice, big 2000+ sf flats instead of flipping a monstrous SFH. Spark-b or anyone else, comments? Permit morass? At least the flipper got a fenestration discount as he is a principal at a window company…

  3. Posted by Rincon Hill Billy

    Well done. Bravo!

  4. Posted by Michael

    Two years and over $100k lost and it “looks like the sellers made out pretty well”? The only people who made out pretty well on this one were the realtors who collected commissions.

  5. Posted by Frank C.

    These guys took a painful bath. Not only did they lose on nominal dollars, but they lost on taxes paid, insurance, plus (always forgotten) inflation. I’d say at least 150k total, possibly much more, depending on how stupid they were with finishes.

  6. Posted by "Dave"

    Haha! Yeah, they sure were dumb. They should have put all that money in the stock market in July of 2007. Oh, wait…
    [Editor’s Note: If your financial advisor’s only alternative to investing in real estate is going long the equities market, you really need to find a new advisor.]

  7. Posted by sparky-b

    EBGUY,
    I don’t think the victorian conversion works out too well for layout, or garage, or light. This was just a bad buy, a $1.3M fixer right there. A $1.3M fixer in Noe, or Ashbury, Portrero or anywhere but PH is a bad call, but this was a very bad call.

  8. Posted by Craig

    736-738 Lyon St. right around the corner used to be a SFH. It was split in 2, gutted to the studs, and is now on the market as 2 condos asking 1M and 1.1M bucks. Too high I think for the Lyon St. condos, but shows what might have been with this one had it been split up.

  9. Posted by sanfrantim

    Michael, please read more carefully. I said the sellers made out well compared to predictions on this site that they would have to drop their price another $400k. No one disputes they lost money.

  10. Posted by EBGuy

    @Craig, Thanks for the heads up on 736-38 Lyon. Hey sparky-b, now there’s a place with “light issues” and some creative shoehorning (I especially liked the “exclusive use” pens in the back yard). Not to start an argument, but 2011 GG has 10ft. ceilings on the first and second floor (except on the back addition part). I think light would be fantastic if it was divided into first and second floor flats (put the bathrooms near the center where you are light starved from either side). I’d like to think I could make it work for $1.3million, but you’re probably right…

  11. Posted by kid char

    now the editor, a lifelong renter who witnessed one of the greatest real estate appreciation runs in history from the sidelines is spouting silly old chestnuts. as if he would know about buying, fixing or selling.
    and sanfrantim- i dispute the conventional wisdom that is so sure they lost money.

  12. Posted by Milkdud

    Neighborhood A++, House A+++, cost relative to value in this city A+++. It’s a grand old house, totally fitted out with the latest and greatest on a cool block. The hidden premium is that it isn’t stuck in NV or Marina where the cost for a half-way comparable property would be insanely prohibitive and the neighbors would basically suck – we are considering ambiance yes? Chin-Chin baby. If you don’t know NoPa – you don’t know.

  13. Posted by sparky-b

    Neighborhood A++, Nope C+.
    House A+++, if you like it you like it.
    Cost relative value A++++, this place sold for $1.8, it would cost less in Valencia area, and lots of other places.

  14. Posted by sfrenegade

    kid char — there were at least two estimates by others on how much these guys lost selling at $1.8M:
    Yeah, for sure they will lose money, even if it goes for listing. At $1.8m, they have $450k to play with before accounting for any costs. But consider that carrying costs (assume 6% for up to 30 months) + transactions costs (assume 8% of $1.8m) add up to $350k alone! I’m not a contractor, but I’m pretty certain that more than $100k of work went into the place.
    Posted by: anonm at September 9, 2009 8:11 PM
    Even anonn agreed:
    I worked out that they stand to lose around 135K or so at this price, not counting deductions taken.
    Posted by: anonn at September 10, 2009 9:40 AM

  15. Posted by kid char

    sparky-b,
    you need to get out more if you really think nopa is a c+ nabe. not only is it located smack dab in the middle of the city, it is excellently served by public transit, corner shops, restaurants and bars PLUS you can ride your bike or walk to many other nabes. compare that accessability to the westside (where the car still reigns). nopa is real sf whereas west portal,forest hill, glen park, miraloma and all those far flung districts are merely suburb like urban lite hoods.

  16. Posted by kid char

    it is very likely that these chaps lost some $ but i believe all you armchair real estate pros rely (with great confidence, no less) on ‘retail’ assumptions. to wit, these guys could have been living in the house while working on it with some family members. they could have used left over building material inventory from previous projects. they could have bought and sold using their own real estate license. they could have offset gains on other parts of their real estate portfolio with “losses” here. there are many ways to skin a cat but this site only sees the one where schadenfreude is the foremost player…

  17. Posted by diemos

    Yeah and they could have struck oil while digging out the foundation and found a pirate’s treasure trove behind the rotting dry wall but they didn’t.

  18. Posted by OneEyedMan

    ^^ Exactly! This is why everyone demos to the studs. That way you’re sure to find all the money hidden in the walls.

  19. Posted by sfrenegade

    kid char — You seem to be interested in picking fights today, but we’re clearly talking about what the most typical scenario is. All of those suggestions are nice, but largely irrelevant to answer the questions people care about here — such as “how much would it cost me to take on a project like this?” or “how much should this house cost?” Obviously, if you’re sparky-b, you have a leg up on the rest of us.
    Furthermore, in this case, you can look at the permit record to figure out what went on and we could figure out if the owner had a real estate license, so some of the items that you’re suggesting aren’t hypotheticals that people didn’t consider — we know they are false.

  20. Posted by The Milkshake of Despair

    “…these guys could have been living in the house while working on it with some family members.”
    I think that you need to discount the value of living in a construction zone. It is just one step above living in a tent. So if you’re living in a house that would rent for $3500 when complete, you can’t account for $3500 in living expense recovery. How much would you pay to live in a dusty ever changing building ? I’d pay maybe $800/mo tops.
    “..they could have used left over building material inventory from previous projects.”
    Now here you’re really dreaming. Unless they’re totally incompetent builders, there won’t be enough leftovers to account for any significant future savings. I’m not a professional builder and completed a project that required about $8000 of materials. I do have leftovers due partially to my inexperience but mostly due to mid-project design changes. I’d value those leftovers at about $150. I’m sure a pro would create even less waste.
    The only way I can see a builder accumulating significant scraps and leftovers would be to defraud one of their other clients by over ordering materials.

  21. Posted by anonn

    “Even anonn agreed:”
    Sure. I call it like I see it. Not with a slant that I need to impose upon every single thing encountered on this website. Unless they did the whole thing for 300K or less, they lost money. The 1.3M buy is the beginning, middle, and end of it.

  22. Posted by sparky-b

    kid char,
    Lived on that exact corner. My oldest was born there. My wife lived on that block for a decade. Moved away because we just didn’t feel safe. I have done work in the hood since and dealt with break-ins, theft, etc. through-out the job. Also, we kicked junkies off the front every day.
    All that said, I was just playing with the C+, if you like it great. I liked the mission and lower haight more when I didn’t have kids, but to each his own.

  23. Posted by "Dave"

    [Editor’s Note: If your financial advisor’s only alternative to investing in real estate is going long the equities market, you really need to find a new advisor.]
    Oh, do pray tell your financial advisor’s amazing insight circa July of 2007. I’m sure he told you to stash gold bars under your bed… And I guess you know from your plugged-in-ness, that these people weren’t hedged, right? Please let us know.
    As long as you want to keep playing armchair quarterback with other people’s money, you might take a shot and try to predict something that can actually inform people. Like, say, the future. All you seem capable of doing is looking in the rearview mirror and having a good go at other people’s misfortune. Not exactly insightful analsysis.

  24. Posted by EBGuy

    Oh, do pray tell your financial advisor’s amazing insight circa July of 2007.
    Fat Man and Little Boy (as LMRIM called the hedge funds) had already imploded at Bear Stearns. If I noticed this, I’d like to think a competent financial adviser would be on top of things.
    FWIW, this project took on around 5 additional investors on 05-FEB-09, so losses, if any, may have been distributed (depending on the arrangement). Taxes were paid through an impound account, so I’m sure they put a lot down (that’s sarcasm, BTW). The primary lender was First Magnus. And again, they saved big on the windows…

  25. Posted by Main Mgt.

    “Oh, do pray tell your financial advisor’s amazing insight circa July of 2007.”
    Dave – For what its worth our firm is a long only money manager who use just ETFs and call writing to manage money. We recently compared all of out strategies to their benchmarks and the S&P 500 from 9/30/07 through 9/30/09. The S&P 500 was down -27% during that stretch and needs a +38% return going forward to get back to even. We run a buy write strategy, employing monthly calling writing on a diverse group of ETFs, and this returned -9% over the aforementioned period. Our global balanced strategy returned -12% over the same time frame.
    Please apply all the standard disclaimers about past performance not being indicative of future results to this gratuitous plug. However, the point is not everyone in the equity markets got slaughtered over the past two years, although not too many avoided losing money altogether. However, it’s a valid point that this feat was much harder (although perhaps not impossible) to accomplish buying S.F. real estate over the same time frame.

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