All Forum Posts by: Diane G.

Just wanted to write down my experience of tenant buyout in San Francisco, in the hope of helping those trying to go down that road...

So I have a unit in a 5 unit building in Pacific Height...Building comes up for condo conversion this year but my tenant needs to move so that my unit can be vacant...

He was paying $3700 when market rent was around $4800...After 6 months of long and (very) painful negotiation, tenant and I agreed at $61K buyout....

Tenant has been there for 8+ years, been a super perfect tenant, very nice and friendly, never late on rent in all of 8 years...I was actually kind of sad to see him go...

That was my experience... if you want to share yours, please go ahead....

@Chris Mason

Thank you

During the previous down turn, I heard that if a condo building has more than 40% units renting, you can't get a loan, and all purchases needed to be cash purchase...

is that rule still in place?

@Amit M.

Closed escrow on 7/2... Came to find out the reason I got this good deal is because between the old owner, the listing agent and the PM, nobody knew that this condo is exempt from rent increase control!!!!!   None of them understood that rent control in SF has multiple layers, eviction control and rent increase control......

Can you believe that?  Lol.... the old owner is from OOS.....

@Jack Zhuang

Instead of waiting for the "right" timing, set a bench mark that you are OK buying and stick to it..... Unless you find a property that hits your bench mark, don't buy just because other people are buying... Some of those people will go busted in the next year or two...

I am looking for 4-plex too, and I have set a criteria that with 15% down, i need the property to be cash flow neutral from day 1.... Of course, that is not happening in today's market, so I am waiting....and looking every day...

This is a very dangerous time to buy, so stick to your criteria....

If you look at MFH currently listed in SF for under $3M, at least 5 of them are listed by people who bought back in 2017/2018 and who are trying to sell for what they paid for now... Not selling....

@Amit M. - on your comments on "easy to rent", I would on imagine that you have noticed that SF market is now FLOODED with rental listings.... everytime I log onto zillow, I see a sea of pupple.... Lol...

I think SF is quickly becoming a oversupply  market on rentals.... 

I know you and I bud heads on this in the past, you are (or maybe were) off the view that SF can never fall.... that SF RE has only 1 direction to go.... Lol

@Amit M.

550 SQ ft, currently studio, but some units in the building with smaller size have converted to 1/1, so i might consider that after the current tenant leaves...No parking////

@Amit M. - it is in Russian Hill on Green Street....Small condo... off market from OOS owner.... $560K... Lol... comes with a tenant whose rent is about $300 below market....

I was not even looking, it just fell on my lap sort of......

@Amit M. - that condo purchase is a funny story... The seller, who is OOS, bought it in 2012 and rented since...They recently decided to sell and apparently got some ill advise from some lawyer about tenant eviction in SF, and got scared... So they sold it to me for about 25% below comp.  They basically baked in all the buyout costs and legal costs... Apparently, no one told them they could just raise the rent and let the tenant leave on his own.......That is the only reason I bought... Otherwise, I wont buy in today's market....

What is CAP like in 08/09, do you know?

@Tim L. - I am the self-appointed negative cash-flow queen...Every single condo that I bought in San Francisco started with negative cash flow... That is just how the game is in hot markets like SF or SD...

What is concerning me are two things:

1. I bought knowing it would be cash negative... You probably did not do your homework to not realize that before the purchase... :-))

2. I was cash negative because I was taking out 8% interest (back in 2009)...Once I refinanced it, it was cash positive.... At 4% interest, if you still dont cash flow, you probably never will....

So you have got a decision to make there whether to keep it or sell it....

ps - I am now contract to buy a condo in SF now.... After 20% down, rent covers interest payment, tax, HOA, plus some portion of principal payment...I still have to pay about $300/month in principal payment....