Check the Cityâ€™s website on requirements for how 2-unit buildings* can bypass the lottery www.sfgov.org/site/sfdpw_page.asp?id=32430
To summarize their information:
- Each unit must be occupied by separate (unmarried) individuals for one year
- Each owner must have a minimum 25% ownership (during the entire occupancy period)
- Building must have a clean eviction history and no evictions of elderly (over 60) tenants who resided in the building for 10 years, or disabled or catastrophically ill tenants if evicted after November 16, 2004
*Lottery bypass also applies to mixed-use buildings with two residential units, each owner occupied.
I have not heard of any condo conversion restrictions that relate to financing except the ownership provision (you each need at least 25% ownership). Check with your lender about loan qualification - it is possible to take title together on a regular loan â€“ the usual way for unmarried persons is as tenants-in-common where you designate you each occupy separate units. Individual (aka fractional) loans are also available, but with larger downpayments and higher interest rates. Be sure you ask your lender if you can keep the loan after conversion since the type of loan you get could determine ownership post conversion - my understanding is with a single loan, if you both own 50% before conversion, you would both own 50% of each condo after conversion.
How you hold title can have both legal and tax implications, so be sure to check with your attorney and tax advisor before entering into a contract.
This ownership model has been used for years by people who want to build wealth through real estate. I have met a number of successful real estate investors who started out in college buying a duplex and taking on roommates to virtually offset their housing expense.
You will find the Cityâ€™s condo application at: www.SFDPW.org