Chris Word

Hello J.

The next two to five years out will probably be static, or declining value times in the Bay Area. There are some indications that SF can withstand such value declines; but there is no promise that good appreciation will occur. I've thought of buying a home as a place to live, primarily, and secondarily as a type of investment. I know agents in the past have said that appreciation will happen NO MATTER WHAT; but you have to look at the time scale on this - among other variables. If you've already got another property, and your SF property is going to be a place to either visit, or use for the short term with the hope of gaining equity and cashing out in three years or so, I don't think you'd see too much of a return on investment. You might be better off renting for such a short term.

If you're thinking about keeping a place 5-7 years, there's enough time on that scale to make me feel comfortable to say "yes" that good appreciation would occur on your investment property.

These are all short answers based on your simple question; I'd bet that your situation is probably filled with variables that might work for investing in a short term time scale; we'd have to talk about that if possible. - Wed Nov 12 2008, 13:25

Soma Grand is a good property. If you're looking at it from the standpoint of an investment, right now that could be good. Most prices for condos south of Market street are competitive. My question to you, Isabel, is whether or not you are actually an "investor" or if you're looking to live in a home in San Francisco (which is different in how you view buying)? As an investor, you probably will want to put more than 20% down on your loan so that if you rent it out you have a better chance for cash flow, and you'll probably want to sell it in about 2-3 years at some sort of profit - hopefully the most profit possible. As a homebuyer, you'll probably have just about 20% down, and you'll think about living in the home for about 5-7 years - or until you need to move (for work, or building a family, or into something bigger etc.).

The next 2-3 years don't quite seem to have too much strength in being able to predict what will happen. No one can forsee what (and if) kind of profit you'd see in that short of time with this difficult economy. Appreciation on many properties right now is in question.

The next 5-7 years are equally as tough, but past experience shows that homeowners that live in their properties for this amount of time see some sort of good appreciation.

Soma Grand is in a neighborhood that is still developing. Trinity towers is being built right next door, and most of those units will be low income and market rental homes with shops and a mall on the main floor. The area is looking to improve over the next few years, but even then I feel it will lack a "walking" neighborhood feel. If you cross market street to Hayes Valley and the Civic Center area, there are other developments that have been built in well developed "walking" neighborhoods, which some think are safer.

Good luck out there, and remember to take your agent with you when you visit the new developments. - Mon Nov 10 2008, 08:32

Joseph, usually property taxes are not paid with the HOA fee.

HOA monthly fees are paid for upkeep on building insurance (although you have to insure contents of your unit separately), refuse, labor for sweeping, cleaning and upkeep of common areas, common area electrical, gas, water use, etc. In higher end buildings and communities, the fee pays for amenities like a door man, continuous security, upkeep of a roof deck, gardening, maintaining a pool, hot tub or gym area - also a club house or meeting room.

The property you have a question about seems to need a high HOA fee.

Hope this helps. - Wed Nov 5 2008, 08:38

Fred, first you should consider your options with a real estate attorney, and do NOTHING without the advice of said attorney. You should explore how to legally make offers to your tenants to buy a TIC interest in their unit, and you should explore what it would take to "buy-out" any tenants that would be willing to take such an offer to vacate their unit. Selling your property totally vacant, or with one or all units to buyers as a TIC would be the highest value of the property.

You CAN successfully get the building onto the TIC market, and even get your tenants to accept a rent buy-out; just don't do it on your own. You would never know the pitfalls that are out there if you decided to go on your own to offer a TIC ownership to your tenants or buy them out unless you had the help of an attorney. If you did make an innocent misstep, you could blow the whole concept of putting the building on the market out of the water.

I have worked with sellers of multi-unit buildings that successfully put their properties on the market as TICs. If you think you'd like to talk to me about the roadmap on how this is done, my contact info here on Trulia is accurate.

Best, - Sat Nov 1 2008, 13:49

Shanti, I think if you are determined to get a price for your home that is now not in harmony with what buyers are offering for homes of similar configuration and quality to yours, then you should remove it from the market. If you don't HAVE to sell, then essentially you are "testing" the market. The market cannot be tested according to your expectations because we are in the middle of a credit crunch, and the banks that are going to be giving your prospective buyer a loan are changing their guidelines everyday. This fast change is good only if you're able to set a good list price, look at buyers expectations and behaviors, and then adapt and change to those forces at large.

If your list price is not able to attract a buyer willing to pay what you want for the home, then take it off and wait the 18-24 months it will take to have the market come to a point where you can re-evaluate effectively. Your home is worth only what the buying public is willing to pay for it. The buying public is only willing to pay an amount they can afford. With banks no longer giving 0 down ARM loans, what a buyer is willing to pay after their 10% or 20% down is perhaps less than what you've expected.

Do a study of buyer's behaviors for your area an with a similar configuration of the type of home you live in. Your agent should be able to get the figures from the San Francisco MLS and help you with the study. If you have equity in your home, you may be able to offer a good price that a buyer will pay in this economic situation.

The home market should be a place where eager and willing sellers are able to sell their home at a profit, and where buyers are willing to pay the list prices or negotiate for the home they really want. If you are committed to leaving the home, and buying while other prices for other homes are now less also, then listen to your agent, make the price reduction in accordance with market trends or indicators, and move forward. If you are only testing the market, you will probably only find frustration.

2 cents. Good luck. - Thu Oct 30 2008, 17:03