If I buy a BMR unit will I be able to buy a house later?

Asked by Vince, San Francisco, CA Tue Aug 5, 2008

How does it work when I sell?

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Jed Lane, Agent, Petaluma, CA
Tue Aug 5, 2008
In San Francisco most units that are priced below market have a price based on a percentage of area income. They also stipulate that when you sell you will sell to someone that fits the same percentage of area iincome.
The appreciation will occur only if wages increase.
While there are advantages to being able to own a unit that is affordable the ownewrship will not create an asset like a property that is part of the "normal" market. The, I don't know what else to call it, normal market price is based on supply and demand.
Web Reference:  http://www.FogCityGuide.com
0 votes
Sally Rosenm…, Agent, San Francisco, CA
Tue Aug 5, 2008
Dear Vince,

The best place to look is http://www.sfgov.org/moh as that is the website for the Mayor's Office of Housing. You can buy a home later on but there are restrictions on quite a bit about BMR units. Go to the Ownership Program Overview 2008 to learn all about it. You can also access the Mayor's website by going to Resources on my website.

You can own other property after you buy your BMR unit. You can rent them out as well but you need to live in it a certain amount of time and you cannot have owned any part of any property for 3 years before you purchase a BMR unit.

Good luck,
Web Reference:  http://www.sallyrosenman.com
1 vote
Rent out? No, current BMR contracts strictly state the property MUST be owner occupied, and are forbidden from renting any part, (even a portion) of the property.

BMR contracts also limit how you can refinance the property. The refinance process may only be done to reduce/renegotiate the mortgage, you may not pull money or roll other debts into your BMR home encumbered mortgage.
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Peter Century…, Agent, San Francisco, CA
Tue Jul 27, 2010
Yes. Are you planning to keep your BMR unit or are you planning to sell it and use some of the sale proceeds to buy your house?

Peter Century 21 at Geary and 22nd Ave.
0 votes
Limitedequity, , Ithaca, NY
Fri Jul 16, 2010
BMR units usually have restrictions on their resale prices so that they are not inflated by the sleazy real-estate speculation process that artificially inflates the price of "market rate" housing and creates disastrous boom and bust cycles, bubbles, etc. The resale restriction also ensures that the subsidy money put into the unit (to enable it to be sold below market rate) keeps it affordable not just for the first buyer, but for generations of buyers that come later.

As a buyer that means you get a good price (if the market value was $300,000 and $80,000 of subsidy were used, you get to live in a $300,000 house for $220,000), and you get to act as a steward of an important community resource (affordable housing).

When you are ready to sell, if you are in a rising market you don't get to take out value that you didn't put in (unlike like most homeowners around you), if your market is falling however, it's less likely that your price will fall because it was less likely to be artificially inflated by speculation in the first place.

One of the biggest problems in the recent housing crash was that people bought houses for say $250,000 and then when the market price rose, due to speculation, they refinanced and took out loans against the new value of say $500,000. When the market started coming to its senses the bubble burst, home values started to reset to more reasonable levels based on supply and true demand (rather than speculation) and lots of people ended up owing more than their houses were worth. Resale restrictions, when done right, should prevent you from taking out equity that you have not put in and will help you avoid this problem in the next crash.

Research on resale restricted low-income and middle-income housing has shown that it gives people the stability to create a good credit history, build savings and equity and it holds its value in bad times. It is a safe place to put your money, and will probably provide a higher quality home than similarly priced units that are not resale restricted (because they have not been subsidized) but like all truly safe places to put your money you won't make a big profit.

If you get to the point where you have the income to afford a market rate house you will be able to take out the equity that you put in to the BMR unit and pass the affordability on to the next person who needs it (and I don't see that pool shrinking any time soon).

If, in the future, you have reasonable credit, have saved enough for a down payment and have sufficient income to afford a market rate mortgage you will be able to buy a market rate house. Living in a BMR unit can help with the first 2 of those, the rest is up to you.
0 votes
Julia Murtagh, Agent, Pleasanton, CA
Tue Aug 5, 2008
Hi Vince,
BMR units are great opportunity's for a certain part of the population. You will not get real property appriciation . Every city has their own stipulations RE: BMR Buyer's. Because of this , when you go to sell, you are very limited on your Buying population.
I had a BMR unit listed in Dublin this last year. My Seller, could not sell this unit. She was way under water,because property prices dropped on the Full market value condo's in her unit. She could not get Buyer's interested in her unit. This is just one case, but something you need to know before you purchase a BMR.
Once you do sell a BMR, you should be free and clear to buy what ever you would like. Feel free to contact me if you would like my help, or need a few more questions asked.

Julia Murtagh
Alain Pinel Realtors
www. Juiamurtagh.com
Web Reference:  http://www.Juliamurtagh.com
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