I’m being contacted regularly by buyers in the $400,000-$500,000 price range, who are exploring real estate purchase possibilities. Many such individuals have been renting for a while, and are starting to feel that owning their first home is within reach.
Though condo prices are declining, the bulk of the units in this range currently on the market are tenancy-in-common (TIC) units in 3+ unit buildings. (This is an ownership scenario wherein you own an interest in a building, not the unit itself.
TIC units in this price range will typically involve “fractional” financing—all owners obtain individual loans. (This is in contrast to the traditional TIC loan of the past, wherein all owners were on one group loan.)
The TIC interests themselves are priced within first-time home buyer range, but how many buyers can actually qualify for these fractional loans?
A quick check with Henry Jeanes over at Sterling Bank reveals that TIC buyers for fractional loans will have to meet the following requirements:
- Minimum of 20% down (rates are at 7.25% with 20% down; they get lower as your down payment increases)
- Credit score of 700 (for W2 employees)
- Proof of at least six months of reserves on hand, post closing.
Of course, sellers are working within the confines of these requirements, and it is possible for buyers to negotiate rate buydowns and other financial incentives in order to complete a sale. And some sellers are able to offer slightly lower interest rates on renovated buildings in which a lender like Sterling is already providing the underlying commercial financing. (This is the case at 450 Vallejo at Kearny, a five-unit TIC offering.)
But it’s good to for first-time home buyers to know the initial cost of ownership for these types of purchases.
My broker tour brought me to Third Avenue between Balboa and Cabrillo this week, to check out two TICs and one condo all listed in a similar price range. 673 3rd (above) is a 2+BR/2BA Edwardian TIC, listed at $895,000. This top-floor unit has been recently renovated, and is about 1725 square feet. Though it has one-car parking and storage, there’s no outdoor space. That’s because the other, first-floor unit—soon to be on the market after its own renovations are complete—spans two levels, and has a deeded garden. (The master suite is on the garage level, so a shared yard would obliterate any sense of privacy.) Stay tuned for this lower unit: It’s about 2,000+ square feet, has two-car parking, and is expected to be priced at about $100,000 more than the top floor. 
Next up was 673 3rd, a 3BR/2BA first-floor TIC unit priced at $819,000. This unit is also remodeled, and has a solid floorplan. The landscaped garden is shared, and the owner of the whole two-unit building will stay on in the top unit to complete a condo conversion. 
692 3rd enjoys the best curb appeal of the three. It’s a 3BR/1BA, top-floor unit with a large, deeded undeveloped attic space. This will close as a condo, and the unit’s listed at $835,000. It seems the owners of the building will stay on and live in the lower unit. 
First up is 350 Hearst (above), a pint-sized cottage that features one bedroom off the kitchen, a living area, kitchen and a large yard with a workshop. At $478,000, this could be a nice abode for a single, first-time home buyer.
Over at 142 Hearst, you’ll find what’s being billed as a “fixer upper.” In reality, it’s a teardown best suited to a contractor who’ll renovate the property and resell it as a new single-family home. List price is $312,000, so all you contractors out there can make your bids and see who ends up in court. (Jury’s out on whether the car and the truck are included.) This is a probate sale, meaning the best offer will be chosen, a court date will be set, and a first overbid will be established. Those who are willing to bid above the court price can duke it out and win the right to renovate.
Reportedly attracting 200 visitors at last Sunday’s open house, 76 Montcalm on Bernal Heights’ east slope has spent the past few days charming the masses with its modern-yet-quirky layout, views, and, most importantly, $750,000 list price. 
Listed most recently in January for $2,750,000, 650 2nd Street #502 closed escrow last week for $2,450,000 in an all-cash transaction.