Friday, February 23, 2007

Condo Lottery Results Released

Finally, the results are in.

Also, someone who attended the condo lottery wrote to tell me that I stand corrected. Tickets were drawn the old fashioned way. Paper tickets were taken by hand from a plexiglass container by a DPW employee.

This contradicts the information I was given by another DPW employee the day we bought our tickets. He told me the condo lottery was being computerized, which is why I was given a printout instead of the usual paper tickets. Apologies to my readers for the confusion, and for giving any mistaken impressions. I like this blog to be as fact-driven as possible. I am not a conspiracy theorist...

In any case, I am glad someone at DPW came to their senses and brought out the old plexiglass bowl.

Congratulation to all of those who are on the winners list.

For all of you who are fellow losers, celebrate being a property owner in San Francisco, which is in itself an accomplishment.

Saturday, February 17, 2007

Marketing on MySpace

I guess it had to happen - San Francisco real estate videos on MySpace.

KB and I were on our way to a hike near Land's End so we checked out this 4-unit TIC at 206 12th Avenue. The units all have parking, fractional loans, working fireplaces, nice light, a little shared garden deck, storage space and a good location - if you like the Presidio. The layouts are wonderful; the upper units in particular, which have two spacious bedrooms each with a full bath. (Apparently the upper unit away from California Street has already been sold.) The renovation, which is still in progress, looks thorough and thoughtful - historic details like the hand-nailed wooden floors and crown moldings have been left intact.

I give the realtor credit for frankly stating in the Craig's List ad - "if you don't have an agent, we'll pass along the savings to you." I may get blackballed for saying so, but a diligent and experienced buyer who knows enough about the neighborhood, the current state of the market, the vicissitudes of older San Francisco buildings, transactional negotiations and the potential downsides of buying into TICs can, I believe, manage without an agent. Of course not many TIC buyers fall into this category, in which case, I would say defer and let a reputable agent represent you. Either way, if you are in the market this property is worth a viewing.

Friday, February 16, 2007

Very Large, Beautifully Remodelled, Bonus Bulletproof Vest

Is the spate of daylight murders in the lower Haight putting a damper on real estate values? Um, I would think so. The lower Haight has gone from super lefty alternative minded bar carousing grunge to gangsta doper, drug dealing, dark days of Gotham dangerous. Too bad we don't live in a City where the Police Chief, the District Attorney, the Mayor and the Supervisors can stop stumping long enough to formulate an effective crime reduction policy, even if (inevitably) some aspects of it would be unpopular.

TIC, Tenant Included

Here is the latest example in a trend I am noticing - owners who are selling their multi-unit properties as TICs, even though there are tenants still living in the building. I can fully understand why landlords want to get out of the business in a town where lease holders have more rights than property owners, and rent control is leaving them with a cash flow that is not enough to maintain their older buildings. In previous posts I have outlined the many benefits of selling off a building instead of holding onto it. If you could cash out for a few million and pass on the expense and worries about broken pipes and repainting and crumbling foundations to eager new owners, wouldn't you do it?

But in my view owners who also want to pass on their tenant hassles are crossing a threshold. In cases like these not only does the seller want to unload the property, they also want to unload the hassle of evicting their tenants. I realize it can be a huge drama dumping tenants, especially those who are "protected" or otherwise dug in and ready to fight. But honestly, I think that clearing out a building is the owner's responsibility, and not the buyer's. The seller should bear the burden of that risk. If I were in the market for a TIC, I would not contract into a building where one of the residents was a legacy tenant, especially if I was expected to finance my own owner-move-in eviction in order to take possession. I might perhaps maybe consider such a scenario if it was a magnificent property at a ridiculously low price and the seller was willing to compensate me for all my legal fees and the cost of an alternate residence for as long as it took my lawyer to get the tenants out - which, depending on the situation, could be a long, long time. These type of sellers are either hoping for a legal eagle buyer, or preying on the gullible.


Last night I happened to watch the Woody Allen film Matchpoint. A knockout reverse "will he get away with it" whodunit, it is based on the premise that luck has more to do with success than most of us hardworking people would like to imagine.

If you have never been a TIC owner you cannot understand the fervent desire that accompanies the anticipation of each year's condo lottery drawing. But in the end, as with all lotteries, the only relevant factor is - luck. It doesn't matter if you have been a neighborly partner, or paid your dues on time, or swept the common hallway more often then you signed on for - it's a simple random equation.

One of my TIC partners called this afternoon to tell me that somehow, through a friend, he had found out that our building did not win.

This did not surprise me. The number of entrants keeps rising, and the number of slots remains - 200 units. It will be interesting to count up the exact figure on entries, to see if the numerous ordinances regarding evictions passed by a Board of Supervisors inordinately influenced by the tenants' lobby has had the slightest impact on reducing building eligibility. My guess is not by much.

Thursday, February 15, 2007

Condo Lottery Results Delayed

If you are a TIC owner the time between when you pay your condo lottery entry fee and when results are announced by the Bureau of Street Use and Land Mapping is a period filled with hopes and prayers. The results are usually posted on the Bureau's website seven days after the drawing.

But this year - ten days have past since the drawing, and the vigil continues.

According to a Bureau employee the results are still being certified, and will not be known until "next week." Could this have something to do with the fact that this is the first year the Bureau is using a computer to randomly generate the winning numbers?

As one of my partners put it, "with all the concerns about fraud and voting machines why would anyone think a computerized condo lottery is a good idea?" Legal challenge, anyone?

According to this Wikipedia article, "Computer-based systems for random number generation are widely used, but often fall short of this goal, though they may meet some statistical tests for randomness intended to ensure that they do not have any easily discernible patterns."

Nothing like delving into floating points, uniform distributions, post-processing and statistical checks to take one's mind off whether or not after seven years we are going to be able to finally have a shot at condo conversion.

Friday, February 09, 2007

The Trouble With Pets

Meet Buddy, my building partner's new dog, recently rescued from the ASPCA. KB and I love animals, but due to our hectic work schedules we don't have a pet. So we are happy to dog sit and cat sit whenever anyone in the building needs some respite from the responsibilities of pet ownership.

But even as a veteran TIC owner and animal lover living in a building full of animal owners, I am here to warn you that there is no single issue more likely to cause strife among your group's members than squabbles about pets. The one and only significant altercation I have experienced amongst my building's members since buying into this building seven years ago had to do with a smelly, aggressive, under-exercised pedigree who terrorized the building's residents for two years before we had the gumption to request his removal. They say there are no bad dogs, only irresponsible owners, and in this situation that appeared to be the case. But the cause becomes irrelevant when property has been damaged, people have been nipped and numerous attempts to enforce the rules have persistently gone unheeded.

Your TIC agreement is intended to protect the group from this kind of irresponsibility. TIC agreements have clauses about pet care and pet behavior, such as keeping animals on a leash in common areas, acceptable levels of pet noise, numbers of pets allowed per unit, size of pets, types of pets and requirements for cleanliness. There is also a nuisance clause, which allows the group to vote on removing a pet who is deemed to be a serious and chronic hazard.

If you are purchasing a TIC, you should read this section of your agreement carefully. If you want to incorporate more specifics regarding pet behavior, or perhaps add a clause that allows you to request a meeting with any new owner's pets before approving their application, don't be intimidated. Ask for that section of the agreement to be revised.

You should also have a frank conversation with your potential building partners about pet ownership and their attitudes towards animals. You might be eyeing up that patch of grass behind the building as a place to grow a garden and walk around in your bare feet. Your partners might think it would make a great dog run. It is better to discover and negotiate those differences before you finalize any deal.

What Happened to E-Loan?

In July, 2005 E-Loan announced that it had plans to "soon introduce a a mortgage to facilitate home buyers purchasing as tenants in common."

In October, 2006 one of my building partners received an email from E-Loan reassuring us that "we are still actively pursuing a TIC loan program."

So where are our TIC E-loans?

Thursday, February 08, 2007

Eminent Domain vs. TIC Lockdown

A fellow TIC owner recently shared this thought with me. "Why is it that the very same people who will storm the barricades when a northeastern city exercises eminent domain over a little pink house come out and applaud every time our supposedly progressive city government prescribes what we can do with our TIC property?"

Good question.

Condo Lottery Vigil

The winners for the 2007 condo lottery were selected yesterday. Somewhere on someone's desk at the Bureau of Street Use and Land Mapping is a list of the winning numbers.

This is our third year in the lottery. We had three numbers in the mix, but were still in the disadvantageous Pool B. (If you don't know what I mean when I talk about Pool A, Pool B and other condo lottery nomenclature, don't worry - if you are a new TIC owner you will be fretting over these kind of details soon enough.)

We now have to wait a week to find out if the candles and charms and prayers on our common hallway condo lottery altar have appeased the condo lottery gods.

3400 Market

This looks like a wonderful top floor upper Market TIC, with historic charm, 2-levels, view deck and garden. There is no garage, but street parking is less of an issue in this part of town.

This is the "owner's unit" - there are two rental flats below. So the potential buyer of this TIC will have to be comfortable living in what I will call a "partial TIC" situation. Upon purchase the seller will grant you a percentage of the building based on the relative value of the upstairs unit. He (or she) would retain his (or her) ownership of the downstairs units. In other words, he would move out, and become your TIC partner while continuing on as landlord to the lower level tenants.

In my view an all owner-occupied TIC is far preferable to this mix of original owner, new owner and legacy tenants. Owner partners all have a significant stake in caring for the building and maintaining cooperative, neighborly relationships with each other. In a typical TIC situation, owners go through an evaluation and approval process of all building partners. And most TIC agreements even give owners the right to approve tenants, should any partners decide to let their flats.

In this case, you would be ceding that control. Should difficulties arise with either of the tenants living beneath you, you would have no effective means to remedy the situation. You could implore the tenants to be better behaved, but since you are not the landlord you have no authority to wield any legal threat. You might beseech your absentee TIC partner to take action, but he might make light of your complaints in order to retain the revenue stream from the rent.

So lovely and well-priced as this property appears, I would have to say no.

Tuesday, February 06, 2007

188 Noe

Zephyr is now handling this fantastic TIC property, which has been on the market for many months and marketed by several different realtors. Per the MLS it looks like there are two units still available. I did a walk through last spring and I can testify that these units are incredibly spacious, airy, light, have wonderful historic detail and are gorgeously remodelled. I have heard that they are offering fractional financing at 7% fixed for five years, which is a great rate for a six-unit building. Alas, the sticking point is - no parking. You will have to pay for leased parking or make do with a Zipcar.

You should also be aware that when it comes to obtaining insurance and financing six-unit buildings are considered commercial properties. Due to no flaw in the buildings themselves but rather the (unconscionable) way the City and State regulates property all 6-unit TICs come with some potential negatives. Your rates for some basic real estate necessities will likely be higher than typical residential fees and you will have fewer providers and options to choose from. So this is a long buy. In other words, you will go for it because you simply love the place, and are willing to invest for the long term. Of course you can use this as a bargaining point with the seller.

2 Unit in Noe

On Dolores Street. Small. Pricey. Basic. Functional. Laundry in unit. Good area. Comes with parking and a patch of grass. But if you are living by the two unit or nothing TIC shopping rule, worth a look see and a bid below asking.

Street Use and Land Mapping on the Line

Three days ago the receptionist at my office rang my desk phone to let me know that someone from "Street Use and Land Mapping" was on the line. This sent a shudder down my spine. After a solid month of organizing grant deeds and trooping all my building partners off to notaries to get their numerous affidavits signed, I thought I had not missed any cross of the t or dot of the i on our condo lottery application.

"Is D. McDanial an owner of this property?" the nice but worried sounding woman on the other end of the phone asked.

"No," I replied, "D hasn't been an owner for about five years."

"Well, from the paperwork we have it looks like she is still an owner. You need to get the deed proving that she sold her interest."

Some mucky muck, her boss, gave me 48 hours to locate and hand in the deed for this owner who had sold her flat in 2002.

My first reaction was fear. My building mates are all darlings, but handling the condo lottery has been my responsibility as a partner. If I somehow messed this up, I could easily imagine being drawn and quartered to cheers in our common hallway. My second feeling was relief. At least I had been sitting at my desk when the call came in, and not out at some client meeting, or heaven forbid, on vacation. At least I work in downtown San Francisco, so in theory I might be able to accomplish this task during a long lunch hour. And finally, I was thankful that, due to my long history living in the building I knew who D. McDanial was and the buy/sell history of her unit. Plus after three years of handling the condo lottery applications I knew just where to go to quickly find a grant deed.

So I trooped off to the City Recorder's Office, paid my twelve dollars, and walked away with two copies of this mysterious document, which was not requested by the BSUALM in the first place but now seemed to be important enough that they were threatening to invalidate the three tickets I had purchased without a hitch five days earlier.

I brought the deed in question to the counter at 875 Stevenson Street, where it was quickly routed to the boss's office. Reassuringly, the man who ran it in seemed as concerned as I was.

When he emerged from behind the walls of cubicles and piles of files, he was smiling. "Yes, yes, everything OK."

He explained to me that our original grant deed, issued in 2000 when we first bought the building, had multiple owners listed, including D, because six partners had purchased the building in the original transaction. The McDanial unit had been sold twice since the original purchase and there was no link between D's sale and the current owner's purchase in the deeds that were part of our lottery application.

Apparently the week between when ticket sales close and the winners are selected the Bureau of Street Use and Land Mapping scrutinizes each and every application.

"So we are in the lottery, right?" I asked.

"Yes, yes, everything good now."

I felt like a running back who had caught a hallelujah pass and put his team back in game.

We made it. Now all we have to do is win.