Home Buying in San Francisco>Question Details

jenniferchen…, Home Buyer in 94105

I'm interested in two-unit buildings.

Asked by jenniferchen716, 94105 Tue Oct 23, 2012

I heard they can condo convert easier. What other things do I have to look out for when buying a 2-unit buildings that are specific and don't have issues with when buying a SFR for example? Also do two-unit buildings sell for the same price (generally) as two individual condos because they can convert easier?

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Hi Jennifer,

Yes as others have stated, they can convert easier if they have a clean history. Remember if you do this it is not justed based on the equivelant condo price and take a little off. You must consider also the costs of completing the conversion and what the city may require you to do to rectify any items they feel are unsafe or dont meet code or items that may have been done without permits.

This can be a great way to get into the market but you should talk to someone face to face to go over all the comlex things that can make something that looks a good deal into a nightmare.

Good luck
0 votes Thank Flag Link Thu Oct 25, 2012
Yes, typically 2-unit buildings, with a clean eviction histories, that are delivered vacant sell just a bit less than two individual condos largely because they are on so many buyers' radars. And as stated below, you and a partner (with a 25% or greater interest) each need to live in your respective units for one full year to be eligible. Conversion after that can go quite quickly if you've got the right team and are diligent.

The building also needs to pass specific inspections to convert, so if you buy one with most of the required work already done will save you some money, time and headaches later on.

Since you would be buying with a partner the other consideration that is different is how you split up the building and expenses. For example, do you share the yard, roof rights, the garage, storage, etc? Just making those decisions can test a partnership.

How you finance the property now, and how you finance it once it is converted to condos also needs to be discussed. Overall, the partnership you would be entering, and your entry and exit strategies may be what is most different from condos or homes, and probably the most important too.
0 votes Thank Flag Link Tue Oct 23, 2012
Jennifer,

'Two unit properties in San Francisco are special in San Francisco because
if they have a clean eviction history they can be condo converted after 1 yr of
owner occupancy of both units.

But it can be complicated so you need someone who knows this type of
property. Also, keep in mind that it can take 1-2 years to convert, and that there is
additional money required to get up to code as a condo. Yes, the sellers
of these properties usually anticipate the buyers plans to convert and
price it accordingly, but they should be cheaper than if condos else why
bother.

My broker and I have had a lot of experience buying and selling two units, both
for ourselves and clients. Contact info below for a no-strings expert consultation.

Regards,
Jon
jon@fixedrateproperties.com
415-531-5266
0 votes Thank Flag Link Tue Oct 23, 2012
The specific reason why two unit properties are easier to convert into condos is that if both units are owner occupied for at least one year then the owners do not have to enter into the lottery to convert their units into condos.

Owners of two unit buildings in which one unit is tenant occupied and all three and four unit buildings must enter the lottery. Only 200 units per year at this time are allowed to convert into condos and there are thousands of entries to win this lottery. It's for this reason that vacant two unit buildings will have a much higher market value than similar sized vacant units in a three unit building.

A partner and I were lucky enough to win the lottery and convert a 3 unit building in SOMA. I have over twenty years of experience in helping buyers and sellers in San Francisco. My goal is to provide information and work diligently on behalf of my clients to help them achieve their goals. Please contact me for more information on how I can help you with your interest in owning San Francisco Real Estate.

David Klein
http://www.DavidKleinSF.com
0 votes Thank Flag Link Tue Oct 23, 2012
Hi Jennifer-The biggest consideration is whether the units have tenants. There are strict laws involving tenants in San Francisco. Single family homes are generally easier to "owner-occupy" in most circumstances. If they are vacant, two-unit buildings do often sell for a price that could be comparable to two individual units. In many cases, there is work that needs to be done on the units, making comparison to current sales of condominiums more difficult. Remodeling costs and potential have to be factored in at that point.

These and many other important factors are excellent reasons why a knowledgeable agent can help you find the right property. Feel free to contact me if you'd like to know more. Best of luck-

Matt Ciganek
http://www.SFpropertyreport.com
0 votes Thank Flag Link Tue Oct 23, 2012
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