Typically appreciation is estimated, conservatively, at about 4 -10% per year, a safe number to estimate your short term potential. Given that San Francisco has an inherent appeal â€“ internationally, anything you decide to buy will have that uniqueness about it, rendering it a one-of-a-kind proposition that will tend to increase more than the rest.
The article you refer to talks about a common phenomenon in the City, where long-term homeowners improve their basements or garages with added, â€œbonusâ€ mother-in-law units, and these without the required permit process the City wants. As such, the article doesnâ€™t address the facts of your contemplations â€“ a single family residence with a â€œbonusâ€ apartment is not the same as a single family residence AND a true â€œDuplexâ€ (or two residential units â€“ legitimate from inception), the latter, if it is proper, will cost you considerably more than a house!
For the sake of consideration, and all things being equal, youâ€™ll pay more for a duplex, at a similar appreciation, youâ€™ll get more.
With a multi-unit, for example, the income from the rental unit may be first subject to a residential depreciation deduction essentially limiting what gain is taxed. This can have a large impact over time. In addition, with multi-unit, when it comes time to sell you may leverage a 1031 exchange which will defer capital gains on the entire gain subject to limitations.
On the other hand, a single residence offer tax benefits such as the mortgage interest and property tax deductions during occupancy and ownership. The greater benefit comes upon sale where if certain conditions are met $250,000 of any gain is untaxed if single and $500,000 if married.
Your objectives and goals will ultimately dictate the better long-term investment. I'd welcome a confidential, no-obligation conversation should you like to discuss further.
This is not a simple question at all as the Marina is a big area and there are a lot of variables such as exact location, views, condition of units, outdoor space access, are there tenants in either or is it to be delivered vacant, is the building rent controlled, etc.
In general it sounds like you are looking for an investment property if you want to know which will command the higher price. When it comes to investment properties most investors make a decision based off the Net income coming in from the property and the expenses going out from the property and how much they will have to spend for the property.
If you are an investor definitely get the 2 unit building. If you buy a house to live in then you are paying money in property taxes, maintenance, etc. without receiving any income and are cash flow negative. While if you buy the multi-unit you get rental income to offset your costs and will usually be cash flow positive. Now if you are looking to rent out the house or the two unit and not live in either than the decision is more complicated. Also investment property typically allows you more write offs against the property for tax purposes.
Best of luck. Feel free to contact me if you have any questions or want specific advice.
GB and Associates
Cell (415) 640-4341
Fax (415) 946-3467
Below is a look at market performance for both types of properties over the past 6 months.
Single-Famiyl Home (2,400-2,600 square feet)
Average Sales Price: $2,356,356
2-Units (1,900+ square feet)
Average Sales Price: $2,525,000
Hopefully this give you some idea of the current market for both types of properties. I typically have a buyers strategy meeting to determine the actual goal you are trying to achieve. Having this conversation allows a professional like myself to give you better advice as to what might be the better route to take.
You can reach me via email firstname.lastname@example.org or phone 415.336.8191
Senior Sales Associate | Top Producer
Climb Real Estate Group
Location is going to be the most important consideration here, and condition of the two properties. Assuming they're both in the same condition and the same location, I would say the multi-unit because there are a lot of people out there looking to owner occupy one unit and rent out the other to take advantage of the great rental market here in the city. Investor buyers will also be looking for rental income rather than their next home as well so it will appeal to a broader audience. Do you have a building you're considering converting and selling? I'd love to hear a little more about why you ask and take a look at the property to give you a much better sense of value (feel free to contact me directly). Please let me know if there is anything else I can help you with as it would be my pleasure!
All the best and good luck with your home,
Realtor, Vanguard Properties
There are many factors to consider when posing this question. For one, condition and location of the two properties are of utmost importance. Second, when talking about a multi-unit building, will/are there going to be existing tenants in it already? If so, what are their lease terms and can you ultimately have current market rent in place? Finally, do both properties offer parking?
Please feel free to contact me with any further questions regarding this scenario.