The Low-down on 14 Beaver and 221 Noe
Take a look below for some extended notes about two interesting properties I have seen in the Duboce Triangle area.
Remember the text below represents my opinions and commentary and should not be construed beyond that.
14 Beaver Street – Offer date Monday, November 5, list price $650,000 upper unit of a two unit building. Current configuration is a TIC.
A few people have asked me about the listing and opportunity at 14 Beaver St. near market and Noe streets. It is a two-unit building where the upper unit – # 14, which is 2-3 bedrooms, 1 bath around 1400 ft.² with opportunity to expand in the attic. It’s listed at $650,000.
Currently, the building is occupied by the seller and his aunt and uncle and their adult sons live in the lower unit. The aunt and uncle owe nothing on their portion of the house. They also own an income building up the street. That said, while they are asset rich, their liquidity is low and the agent said the consider themselves as low income. They’re also elderly and they don’t own a car. There Their three adult sons live with them and some may have mental health issues.
This is all relevant when it comes to considering this purchase.
First, the opportunity for condo conversion is pretty apparent. There would be two owner occupied units which would allow everyone to bypass the condo lottery system. However, upfront legal costs and certain building upgrades needed by the city total anywhere from $30,000-$50,000. Costs are typically shared between the two converting owners. But in this case, the other owners would have to extend a line of credit from their income property. The other option here is for a buyer to fund the conversion but in so doing purchase certain concessions such as a right of first refusal, getting a better parking space (2-3 tandem now) or having a portion of the back yard deeded to the upper unit – it is currently deeded exclusively to the lower unit. Just a note – it is unlikely the lower unit owners will sell anytime soon.
Second, The building is the perfect candidate for renovation. The upstairs attic space is underutilized and could be developed into a fantastic living area. Estimates for a Sarah renovation can go from $100,000-$200,000 on up.
Downstairs, there is already a garage in place but its current configuration only allows for tandem parking. Someone can upgrade the structural elements of the building by inserting a steel beam, for example, where you end up with three or four independent angled parking spaces. Note you also end up adding certain seismic improvement. the entire lower level probably be expanded to having three or four independent parking spaces. But whoever did this work will probably bear most if not all the costs themselves because the downstairs owners, once again, don’t own a car. Again, this would be an interesting area of negotiation where one party bears the cost of upgrades exclusively. Typically, these type of renovations could cost hundred thousand dollars – but that usually is for houses that do not have an existing garage space. Here, we do. a buyer should save a good amount of money and spare the need of everyone having to vacate the premises while the work is being done. Estimated cost $60,000
I’d imagine there would be some means of distributing those costs against extracting concessions from the nonpaying owners downstairs. This would certainly be a “project” purchase but the upside potential is quite large.
221 Noe Street, TIC unit, ground floor, 2 to 3 bedrooms, renovated in 2008
This is an interesting property too. It is actually part of a 12-unit building. There were Ellis Act evictions in some of the building when the entire building was remodeled in 2008. Because of this there may be certain rental restrictions in place. Also conversion to condominium is not a possibility under current law. The unit is on the ground floor, is quite large, has nice Edwardian features that have been updated, and has a prime location. Unit does not, however, have parking on site. The listing agent said that parking could be leased around the corner. Offers were or are due relatively soon. Because it’s in eligible TIC unit you can never have fixed a financing beyond seven years under current market conditions. Remember, TIC purchases require at least 20% down and interest rates are typically quarter point or more than a conventional loan. I like the property as its finishes are nice, the detailing makes it cozy, and the location can’t be beat. But, it is a TIC and there’s no parking.