So, Why Buy a TIC? Ownership is Still Ownership
If various criteria are met that involve the building, its rental history, the ratio of owners to renters and number of units are satisfied then there’s a boost in equity and property value when a building ‘goes condo.’ Why? Unlike houses and condos, only two lenders loan on these purchases and those loans are not the conventional ones either. This means you have less willing, able and qualified buyers to compete for the property. Converting into a condominium can raise market values anywhere from 10-20% depending on the circumstances, location and finish level of a property.
- Owning beats renting. Remember that TICs will appreciate like other properties too, which means that there’s a fair chance that you should recover what you’ve paid into a property when you sell it down the line.
- An affordable way to enter the real estate market as many TICs are more affordable than their condominium equivalents — this is great for folks who want buy their first home but also know they want to upgrade that home within 5-7 years. Why is it more affordable? Because there are fewer lenders who lend on TICs the buyer pool is smaller with less competition
- A potentially great investment opportunity. Depending on the unit a TIC may be able to convert into a condominium unit that has its own title deed and is exempt from the rent control portions of San Francisco’s Rent Ordinance; and lest we forget, TICs straddle…
- The best of both worlds. TICs are located within older buildings in the more popular parts of the City (Noe Valley, Hayes Valley, Pacific Heights, Telegraph Hill, the Mission and so on) but will often contain units that have had the “This Old House,” treatment that combines modern amenity living with buildings with period details and character. Because it’s tough to demolish and rebuild historic buildings creative designers and developers have turned old-facade buildings into fully modern homes on the inside that most often can only be TIC units lest units get removed from rental inventory
- For TICs that can convert, a TIC is really a pre-condo with loads of value just waiting to be unlocked. (Note: the Rent Ordinance applies to original subdividers so you can effect any backdoor evictions
Remember this is all general background information and you should ask us or an attorney well-versed with TICs in San Francisco to learn more before proceeding with any purchase.