818 Van Ness: 8/11/08 (www.SocketSite.com)
As plugged-in people first knew to expect, unsold units at the Artani (818 Van Ness) have started rolling back on to the MLS as listed inventory.
One-bedrooms with parking are now listed from $489,000 (down 18% “from $599,000″ in 2008), one-bedrooms with two baths from $549,000 (down 21% “from $699,000″ in 2008) and two-bedrooms from $699,000 (down 12% “from $799,000″ in 2008).
No word on exactly how many of the 54-unit building’s rental residents exercised their first right of refusal to purchase, but we would be interested if you know (tips@socketsite.com).
UPDATE (3/25): A plugged-in resident tipster reports:

They are setting up a sales office on the ground floor in the permanently vacant (so far) retail space. I am still a tenant here and will not be exercising my first right of refusal as I believe the price and HOA fees are just too high.

They plan on selling floors 2-6 first. The cheapest units are at the front of the building on the 2nd floor (no side windows as it shares a wall with the sushi joint. Floors 7-8 are done to a higher spec. Seems a majority of the building is empty now. Most tenants moved in about a year ago and their leases ended. There has been a revolving door of moving trucks here in the last 3 months.

Also, they have a bunch of maintenance folks fixing up the units for sale after a tenant vacates. They will all be in near perfect condition. I’ve had a walk through some of the staged units and they look great.

Artani (818 Van Ness) Scoop Redux: Unsuspending Sales [SocketSite]
∙ Listing: 818 Van Ness #208 (1/2) 795 sqft – $549,000 [MLS]
∙ Listing: 818 Van Ness #305 (1/1) 645 sqft – $489,000 [MLS]
∙ Listing: 818 Van Ness #307 (2/2) 990 sqft – $699,000 [MLS]
The Artani (818 Van Ness) Opens And A Plugged-In Reader Reports [SocketSite 9/08]
A Plugged-In (Artani) Resident Tipster Reports On Round Two [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by grumpy

    At 699K for 990 square feet, it’s still pretty expensive. In 2004 that would have been under $500K. I bought my first place in 10/03 for $499 and it was 1160 square feet, brand new.

  2. Posted by Mr. Jones

    Who is going to pay $699 for 990 sqft? Especially in that part of town? You could get something nicer, in South Beach, for less. There are units available now at the Met, Bridgeview, 235 Berry, 246 2nd, 170 King, etc., that are much better.

  3. Posted by Daniel

    There’s a sucker born every minute.

  4. Posted by John

    The MLS links don’t work.
    [Editor's Note: Our links should work but unfortunately the MLS has been a bit spotty this afternoon.]

  5. Posted by Outsider

    The relatively low HOA compared to south beach properties brings the equivalent asking price of the units down may be $50k. Still no bargain – but that’s just asking price…

  6. Posted by bb

    How do these compare with 77 Van Ness?

  7. Posted by Agent415

    Went to the opening last night….
    Meh. Honestly, I think Paragon would have been better off representing this building in house, but for some old ball reason they had to bring in the shmucks from Pacific Marketing. Of all the new construction sales companies, they’ve got to be the most nauseating to deal with. Something about their sales training/company culture requires them to provide you with about 95% bullshit, 5% content in every conversation. The best is when you are in a deal with them, it is standard for them to return calls with an opening line of, “Sorry I was out, showing appointments here all day! Just such a popular building, people can’t wait to get in, you know? Barely have time to think. So what’s up?”… And then it takes the project 3 years to sell.
    Anyway – the building. I think they’ll still struggle, simply because the rental situation in there has created limited/wacky financing options. The finishes are fine, and nice to have fridge, washer/dryer included in the sale. And the neighborhood is what it is – which is crappy.

  8. Posted by Mr. Jones

    I walked by this place last night on the way to dinner. There seemed to be a reception in the lobby. With that being said, a very pedestrian unfriendly location.

  9. Posted by agent 415 too

    I also attended the opening party last night and thought the building looked good, the pricing was reasonable and the party was fun! It was a pretty cold outside but there was actually a band on the roof! The party was well attended with a crowd in the lobby, tons of people in the models and some on the roof.
    I spoke with the sales agent (from PMA, i think) and he was very straight forward and helpful. The financing options were not strange at all.
    I liked the one bedroom which has a large den and a 2nd full bathroom. i have a client who is coming back on Friday and i think they might buy one. they’ve been looking for a while and I think they’ll really like what this building offers. It seems like a nice, well built and finished boutique building. The buzz around my office is about the same.
    I actually ran into some of the current tenants who live in the penthouses and they seemed to LOVE the location and one of them said they wished they could buy their unit (can’t b/c not financially able). They are considering buying a unit on a lower floor. They had heard that 3 units have already been reserved.
    anyway, all in all, i think the building is sound and will be successful. Just my $.02.

  10. Posted by The Milkshake of Despair

    “…a very pedestrian unfriendly location.”
    heh, do very pedestrian unfriendly locations exist anywhere in the SF city limits ?
    Try an apartment building located on a sidewalk-free freeway frontage road in Houston as a comparison to get an idea of what a truly unfriendly location feels like. You get the choice of walking across the landscaping (and risking fire ant attacks) or walking in the narrow curbside traffic lane.
    And then you’re gonna walk a half mile to the next publicly accessible site.
    … and then walk 1/4 mile through a parking lot.
    SF is nirvana in comparison. Even Fremont looks good next to Houston or Dallas.

  11. Posted by SocketSite

    UPDATE: A plugged-in resident tipster reports:

    They are setting up a sales office on the ground floor in the permanently vacant (so far) retail space. I am still a tenant here and will not be exercising my first right of refusal as I believe the price and HOA fees are just too high.

    They plan on selling floors 2-6 first. The cheapest units are at the front of the building on the 2nd floor (no side windows as it shares a wall with the sushi joint. Floors 7-8 are done to a higher spec. Seems a majority of the building is empty now. Most tenants moved in about a year ago and their leases ended. There has been a revolving door of moving trucks here in the last 3 months.

    Also, they have a bunch of maintenance folks fixing up the units for sale after a tenant vacates. They will all be in near perfect condition. I’ve had a walk through some of the staged units and they look great.

  12. Posted by R

    How come Paul’s comments keep getting deleted?
    [Editor’s Note: Most likely in an attempt to keep the discussion(s) on-topic.]

  13. Posted by Agent415

    Oh man, got to love the PMA agents writing in… LOL, dying here. Yeah guys, believable.

  14. Posted by lol

    Wow, “agent 415 too”‘s take is very refreshing.
    – Will sell fast (Ahem. 3 years already.)
    – Renters cannot buy because they are not financially able (hint: fence-sitting renters are deadbeats. Don’t be one.)
    – a one bedroom has a large den (hint, hint: almost a 2nd bedroom) and a 2nd full bathroom almost a 2/2, you see
    – a nice, well built and finished boutique building (When you cannot decently say “luxury”, say something French instead)
    – They had heard that 3 units have already been reserved. (Objection! Hearsay!)

  15. Posted by agent 415 too

    @ agent 415– i am not a PMA agent. FAR FROM IT.
    @ lol–you make some good points
    will sell fast—lets see! There isn’t a lot of inventory at the moment.
    yes, the tenant thing is hear say and i was just passing it on. they seemed nice and genuine, though.
    the one +Den is a good 2 bedroom compromise/ alternative if you cannot afford a 2 bedroom but is definitely not quite a 2 bedroom. you could put a pull out couch in there and it could make a good crash pad once in a while. I didn’t like their available two bedrooms for two reasons: awkward kitchen layout and they are a bit small.
    boutique–it isn’t luxury but it is boutique.

  16. Posted by mwsf

    I have friends who were tenants in a one bedroom there and lost their place last month. They were upset for about two days until they realized they wouldn’t have to put up with the screaming from the alley in the middle of the night and the feces constantly appearing outside. There was even a trail of blood leading around the corner one time! It was irritating dealing with the “characters” around there and down right sketchy at night.
    Almost $800/sq ft for a place in the loin is a joke..They must be hoping there are a lot of suckers in the market…

  17. Posted by RSVP

    I showed a client Artani two years ago. They had a door person at that time.
    I haven’t check the agent’s mls yet, but in the links attached to this site, the public mls doesn’t mention a door person included in the HOA monthly dues coverage.
    Has this been eliminated?
    Also, for those who have spoke to the agents since the second opening, how are they handling the disclosures on the units that were tenant occupied? Are they being sold as re-sale or new?
    If I was representing a buyer on one of the “slighly used” units, I’d be negotiating a hefty discount on the asking price. For me, there is a huge psychological difference between brand new and slightly used (though it looks like new) homes.

  18. Posted by curmudgeon

    ^ RSVP, re “used” homes. Really? I don’t get that at all. A “psychological” difference between new and used housing? I realize there’s a discount on housing when it is worn or has outdated design or appliances. But I’ve never heard that newness alone (as in people have never lived here newness) has any substantial value in the marketplace. Do others find that to be true?

  19. Posted by RSVP

    curmudgeon – As I stated “For me,…” in the last line because it is my personal perception of this kind of sale. First Artani was on the market as new, but then it was taken off of the market because of lack of sales and economy tanking. Then they put in tenants to bring in something income until the market recovered. Now its back on again as “new”. Anyone who is aware of this project (and others like it such as 81 Frank Norris) would question how something that has been lived in by tenants or owners can be considered as new.
    Because of my perception, I am a strong negotiator when representing a buyer on a property like this.
    I’m sure that there will be many differences of opinions on this topic. I look forward to reading them all.

  20. Posted by Po Hill Jeff

    This is a perfect opportunity for some apples-to-apples rent vs. buy analysis, isn’t it? So a 2/2 starts at $700K. Can anyone say what it currently rents for? Let’s run the numbers!

  21. Posted by Po Hill Jeff

    OK, I found a Google cached reference from March 2009 listing a 2/2, 1308 sq ft, for $3000 per month at 818 Van Ness.
    Using Missionite’s spreadsheet, assuming $500 HOA, a 5 year hold, a 5% mortgage (or alternatively your 20% down payment invested in a 5-year 2.86% CD) the cost of ownership is about $800 per month higher than the cost of renting, or roughly 27% more.
    Now consider the magic of leverage. The above numbers assume 0% appreciation and 0% rent increases over that period. If both numbers are +2%, owning swings to about $470 per month better. On the other hand, if real estate depreciates further, say by the same 2% annually, the advantage of renting becomes $1850 per month (I am assuming rents do not decline in this scenario).

  22. Posted by ex SF-er

    OK, I found a Google cached reference from March 2009 listing a 2/2, 1308 sq ft, for $3000 per month at 818 Van Ness.
    was that the listing rent, or the rent actually achieved?
    it makes a big deal to your R v B calculations.

  23. Posted by RSVP

    I don’t think that this rent vs. buy scenario applies to Artani.
    As I understand it, all of the buyers who were in contract at the time when the developer made the decision to go rental got their deposits returned. Some buyers were pretty upset, and rightly so.
    It looks like the developer was the only landlord for any of these condos. I looked at the assessor’s records and their are only two companies on title for 818 Van Ness. One is Van-Eddy, Inc. apartments and the other is Willow Van Ness, Inc. condominium offices. There are no specific units owned by buyers – yet.
    I do think that they could easily get $3000 a month for a brand new condo, even in that location.

  24. Posted by Po Hill Jeff

    ex SF-er: no idea if they actually got that $3000. I agree it could be on the high side. On the other hand, it might be on the low side too – if they had to discount given their intention to resume selling in a year (and if they disclosed it!).
    RSVP: If $3K is a realistic rent for a new condo there, why isn’t this a valid scenario? I don’t understand why there only being one landlord (as opposed to, say, renting from an owner) makes a difference.

  25. Posted by SFRE

    @RSVP: Why wouldn’t this apply to Artani? Its simple add up all of the condo expenses (Mortgage, HOA, etc.), then see if equals the rental price. It applies to everything, and can be used for other things like car leases.
    As for whether it actually rented for $3000 assume it did, the calculations are still negative, showing the Artani prices are over-inflated.

  26. Posted by Po Hill Jeff

    ex-SFer, sorry, forget what I just said, the $3K they are asking is clearly the upper limit. Haven’t had my coffee yet.
    Rent’s not the only thing that has a significant impact on the results. An interest rate increase of only 1% eliminates most of the benefit of owning in the +2% annual appreciation scenario. It’s easy to make the results look however you want. I remember a time when 4% annual appreciation was considered to be a conservative assumption. In that case owning looks like a sure thing…

  27. Posted by RSVP

    Po Hill Jeff & SFRE – I am disagreeing with both of you for a couple of reasons based on your statements, assumptions and conclusions.
    For your equation, you can’t make the assumption that the Artani construction mortgage is at the same rate as a residential buyer’s rate of 5%.
    The Artani developer isn’t paying $500 monthly HOA dues because they own the building as an apartment complex (not a condo compex) managed by the apartment company I mentioned above who is on title.
    The property taxes that factor in the monthly expenses are based on the purchase price. What the developer initially paid divided by the amount of units in the building would factor (hopefully) higher than the taxes of a sold condo since taxes are assessed on the purchase price.
    There also may be a business or write off tax benefit to the developer that isn’t available to a buyer.
    I think that your spreadsheet only works correctly on individually owned condos.
    Disclaimer: I don’t claim to be a CPA or a real estate attorney, I am just a lowly Realtor.

  28. Posted by RSVP

    Correction –
    I wrote: What the developer initially paid divided by the amount of units in the building would factor (hopefully) higher than the taxes of a sold condo since taxes are assessed on the purchase price.
    I should read: What the developer initially paid for the entire building divided by the amount of units in the building would factor (hopefully) LOWER than the taxes of a sold condo since taxes are assessed on the purchase price.

  29. Posted by SFRE

    @RSVP: Aren’t we talking about the Buy vs Rent analysis for someone who may buy this condo? If so, I don’t understand your comment on the “spreadsheet only works correctly on individually owned condos”.
    5% is a good mortgage rate for someone buying this condo.
    If someone buys the condo, you can assume property taxes of 1.2% of the purchase price.
    The person buying the condo would be responsible for the $500 HOA fee.
    I don’t understand your post if it is a buy v rent analysis for a normal buyer. In either case, this one is wildly negative to own given the solid assumptions that were used.

  30. Posted by RSVP

    SFRE –
    This R vs B discussion began with Po Hill Jeff’s posts:
    This is a perfect opportunity for some apples-to-apples rent vs. buy analysis, isn’t it? So a 2/2 starts at $700K. Can anyone say what it currently rents for? Let’s run the numbers!
    Posted by: Po Hill Jeff at March 25, 2010 9:22 PM
    OK, I found a Google cached reference from March 2009 listing a 2/2, 1308 sq ft, for $3000 per month at 818 Van Ness.
    Using Missionite’s spreadsheet, assuming $500 HOA, a 5 year hold, a 5% mortgage (or alternatively your 20% down payment invested in a 5-year 2.86% CD) the cost of ownership is about $800 per month higher than the cost of renting, or roughly 27% more.
    Now consider the magic of leverage. The above numbers assume 0% appreciation and 0% rent increases over that period. If both numbers are +2%, owning swings to about $470 per month better. On the other hand, if real estate depreciates further, say by the same 2% annually, the advantage of renting becomes $1850 per month (I am assuming rents do not decline in this scenario).
    Posted by: Po Hill Jeff at March 25, 2010 11:04 PM
    My rebuttal is based on the words “currently rents for” and in this case no one can argue that the Artani condos have only been rented by the developer.
    For his comparison, Po Hill Jeff used the assumption of an asking price of $700,ooo that has yet to be realized, on a 5% interest rate that may or may not be accurate (and we know it’s not the developer’s rate) today according to the buyer’s credit, and a craigslist rental ad asking rent, not realized rent, from a year ago.
    I just don’t see how you can do the R vs. B math for the Artani based just assumptions. There is no public concrete evidence to support it.
    I’m not looking for an argument, I’m looking to clear up the difference between what a 2/2 last year rented for from the developer vs. what a 2/2 bought by a buyer with Po Hill Jeff’s factors in today’s market, interest rate, HOA fees, property taxes etc.
    I don’t see how it can accurately be done.

  31. Posted by Po Hill Jeff

    RSVP: I agree with much of what you’re saying, actually – there are a lot of variables to consider, as well as unknowns of both types (thanks Sec. Rumsfeld). But rent vs. buy is a crucial decision and a key factor in the value of a property as an investment. We have to make the best of the information we do have for this purpose and understand that it may be off a bit in one direction or another. For me, $3000 asking rent from a year ago might be a bit high for realized rent today, but after all, they did fill the building up… I also think it’s right to consider this from the buyer/renter’s perspective if I’m comparing the costs to me in the two scenarios.
    If that’s not persuasive, can you suggest a scenario which would be a more valid comparison? Identical units in an owner-occupied building, I guess?

  32. Posted by RSVP

    Po Hill Jeff – Yes, the last line in your post is what I’m talking about. In that scenario, a buyer could make a much better decision for themselves whether it was better to rent or buy.
    The “history” of both the purchase prices and rents rates for same floor plan in the same building are the determining factors (as is the current economic status the real estate market is in at the time of purchase or lease) used in determining whether or not one is more cost effective than the other. Without a real starting point, in my opinion, it’s pure speculation.
    Hope that makes sense as to where I’m coming from.

  33. Posted by hangemhi

    no chance in hell a $699k 2/2 in this building rents for $3,000 per month. $699k is for the worst 2/2 unit in the building – $2,500 would be pushing it, so closer to $2200 would be my guess.
    good luck making the Artani pencil out… especially since we’re a bit above 5% interest rates now too.
    then again, the rent vs buy argument should be REALLY obvious for anyone looking for a new place. you look at rentals, you look at for-sale, and still many people are choosing to buy. i think they can do the math – lender tells them what their monthly payment will be, and they can easily compare to renting. so why do they buy? it ain’t us Realtors talking them into it… 100% of my buyer clients come to me with their minds already made up about buying. there have been times when they simply can’t afford what they want and won’t compromise and i explain that they can probably get close to what they want if they rent…. that usually gets me a sideways look like i’ve lost my mind.
    i also can’t talk people into selling – i’ve tried on occassion when i thought it was in their financial interest. again, they don’t hear my arguments. so as much as i think there are some real simpleton Realtors on SS spewing idiotic statements about SF RE, those on the Rent vs Buy bandwagon need to put their pencils down for about 2 seconds to consider that emotion and ingrained belief are equally as important and aren’t going away any time soon

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