A TIC Joins My Real Estate Microcosm

My little rundown block in San Francisco is becoming quite the real estate market microcosm. So a new unit just came onto the market. That’s it to the right there–the lower left window in the blue building beside the rather putrid green apartment complex that I will neither confirm nor deny is the site of Casa Savvy. Ahem.

Cleanly smoothing out the trio of units for sale/rent recently on my block, this unit is a Tenancy in Common (TIC). TICs are a fancy arrangement San Franciscans have devised to buy multi-unit buildings in San Francisco without calling them condos, since the city limits the number of condos that can come into being each year.

You can read the scoop on TICs, so I won’t bore you with the details here. Instead, let’s jump into some numbers. In a recent post, I ran through the monthly cost of buying a condo on my block, compared to the cost of renting a similar place.

This TIC is comparable to the condo and rental apartment–it has an extra bedroom and bathroom as well as parking, but it’s on a low floor, gets little light, and is small as all getout.

This unit is priced at $525,000. Great for a 2 bdrm / 2 bath in central San Francisco, right? Well, maybe.

The financing arrangement calls for 25% down, and the best possible interest rate offered is 6%. The HOA is a reasonable $175/month. What sayeth thee, mortgage calculator? (Click to enlarge)

Looks like we’re talking about a monthly payment of $3,212 with the HOA figured in. Compared with the condo’s monthly cost of $3,328, this definitely seems to be more bang for the buck on a cash flow basis. But don’t forget you’d have to put a huge chunk of cash down upfront, rather than the meager 5% in the case of the condo. To compare “apples to apples,” had you put 25% down on the $499,000 condo, your monthly costs would go down to $2,720.

And lest we forget, renting a similar apartment on the same block costs only $1,900.

The decision really is one of priorities. Do you want to:

• Reduce monthly costs? Then rent.
• Preserve cash? Then rent or go for the condo.
• Buy something you’ll live in for a long time and eventually sell? Consider the condo.
• Buy something you can live in for a loooong time, and you have lots of cash up front? Then the TIC might work for you.

For us, the low monthly cost and flexibility of renting is the priority. But I definitely see a major upside potential in buying a TIC if you’re going to stay put for a long time. The possible lottery win is an exciting component of this style of ownership, but for my blood it’s too risky to count on it.

Super Tall Firehouse Explodes onto San Francisco Market

Discerning readers may recall that we gushed over a stunning firehouse-turned-real house last April. Well, there’s another fire a-blazin’ and this time it’s my burning desire for the latest real estate listing to hit the San Francisco market.

All these firehouses for sale begs the question, what happens if there’s a fire? Are there any firehouses left? But no matter…

Former Engine #40, a firehouse sitting above Cole Valley, was chopped in half–lengthwise–and now its front half is on the market for $1.9 million. While most duplexes in San Francisco sit atop one another, for some reason the architect decided that these houses needed to be 5 levels. That’s right: 5 levels. On the bright side, you can always just use the fire pole!

The listing describes 3 bdrms / 3.5 bathrooms, original details, views, and (naturally) a fireplace. [View on Redfin]

No firemen in these photos, sadly, but I’ve got plenty of eye candy nonetheless:

SF Saga: Finding Our Home (part 6)

This is the final chapter of a six-part series on my San Francisco Real Estate Saga, a months-long period involving countless house tours, sleepless nights, gut-wrenching decisions, and a total of three separate moves. The goal is to give people a sense of what’s involved with buying real estate, no matter the location or price. In case you’ve missed them, be sure to check out the previous installments to get yourself caught up:

• Part 1: Mad Dash Real Estate Hunt
  
• Part 2: A Diamond in the Rough
• Part 3: Making an Aggressive Offer
• Part 4: Back in My Arms Again, But Do We Want It?
• Part 5: Perfection Discovered

Where we last left off, we’d found what seemed to be the perfect condo, yet our gut was telling us to hold off. We decided we just weren’t ready to buy in San Francisco, and with that settled we launched our rental apartment hunt.

Just to review what we would’ve paid had we proceeded with the “perfect” condo, here’s the rundown using our handy mortgage calculator (click to enlarge):

The asking price (and the price at which the place ultimately sold) was $499,000. We would have put down 5% with the 30 year FHA loan. With a down payment of less than 20%, we would owe PMI. Factoring in taxes and insurance, this brings our total monthly cost to $3,233–not including HOA, which would add another $95 to the monthly cost. Our fixed monthly living costs (not including utilities, TV, etc) would have been $3,328.

For two people used to paying much, much less than that, this was a scary number. We just weren’t sure we needed to own a home badly enough to justify tying up so much money. So we were happy to keep renting. And what do you know, our apartment hunt led us right back to this condo. Well, the same block.

A month after shutting down our real estate hunt, we came across a Craigslist posting for a “condo quality” apartment for rent just a few doors down from our rejected little nest. We immediately knew it was The One. The building was old, but the apartments had all been renovated with brand new bathrooms, kitchens, and floors. The landlord himself used to live in our unit, so it had nice extra touches like HDMI wiring and ceiling speakers in every room. 

It was similar in style and layout to the condo down the block, though the little details weren’t quite as nicely done. But who were we kidding, we were lucky to find this nice a place at this good a price: $1,895. Now that’s a number we’re much more comfortable seeing!

While it’s true we won’t be building equity with our monthly rental payments, we get to enjoy much more freedom in our everyday life. M can save a nice chunk of money each month, and I can have the freedom to start my own business. For us, the right choice was one of flexibility and agility over equity.

We spurned a condo that would have cost $3,328 each month, in favor of a nearly identical rental apartment going for $1,895.

By the way, all these photos are comparisons between the actual condo and our rental apartment (a few months post-move in).

So, readers, what do you think? Did we make the right choice? Were we right to keep our costs down and rent, or should we have taken the plunge and bought a place?

Subterranean Glass House in Big Sur

I couldn’t just sit back and let this house exist, un-drooled-over. I had to crack open the ol’ WordPress and let the gushing flow. The interior alone is enough to knock you over.

But then you realize that this house is literally built into a CLIFF.

The 1,900 sq ft home sits on 40 acres along California’s Big Sur coast. With 3 bdrms/2.5 baths, it’s not sprawling by any measure. And I wonder if the bedrooms feel like caves. But nonetheless, it’s an architectural gem. Dwell Magazine and the New York Times have both featured it. I came across it on Curbed’s new House of the Day feature, which is pure crack for someone like me. Originally on the market for $6 million, the price was recently reduced to $4,950,000. The house is cool, but I guess it’s not $6 million cool.

Maybe that’s because no one can find it?

“The idea was to let the terrain roll onto the structure so all one could see from the uphill side is the natural slope of the sod roof,” said principal architect Mary Ann Schicketanz of Carver & Schicketanz architects in Carmel (quoted on Curbed).

I like the idea of living under ground with a secret spectacular view. Nicely done, architects!

[view on Zillow]

Live/Work Loft in NYC

Why yes, yes I’d love to come live in this stunning TriBeCa loft. What? I have to WORK there as well? So be it.

In honor of my recent pro-renting rant, I thought I’d feature a rental for a change. No, it’s not exactly thrifty at $30,000/month, but hey, budgeting has to start somewhere.

The full listing at Sotheby’s says this place is perfect for an art collector or someone who loves entertaining. Seems to be the right stereotype for this space.

I also love that Sotheby’s lists for rent this little sidekick loft – also in TriBeCa, with a similar vibe, only much smaller. Sotheby’s can slum it when times are tough!

The price tag on this little punkin’ is a mere $4,500. Seems practically free compared to the $30,000 artist’s behemoth.

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One final note to my dear readers: I realize posting has been a tad slim of late. I assure you it’s for a good cause–I’m building a new business, one that I think you’ll all really dig. I’m spending my days scouting out exceptional vacation rental properties that I can recommend on my new site, Inhabit Vacations. So the next time you curse fate that there’s not a witty, insightful Real Savvy post before you, know that I’m out in the trenches, finding super cool houses that you–yes you!–can visit. Real Savvy Real Estate isn’t going anywhere, so don’t lose faith, but posts may slow down a little while I get Inhabit up and running.  I’ve got a ton of real estate stories and inside scoops in the pipeline, so stay tuned!

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