Vultures, Commence Your Circling

 

Well, all, few and far between are homes we can look at and positively say: That’d be a good investment. Yet here is one, that frankly, given the size and location, has to be just that. The downside– yes, sorry, these days there simply has to be one- is that this could be a lonnnnng term investment indeed. It could also bring out the evil in a person that he or she didn’t even know existed; but the latter, I suspect, is often the result of becoming a landlord in this city.

Welcome to 1847 Stockton, 2/1 TIC on Telegraph Hill, listed at just $250K. At issue is the tenant currently occupying the property. This tenant is “protected,” and “is not moving.” Now, if we know our tenant/landlord laws in SF as well as we should, we know protected tenants are either:

  • Ill, too ill to move, or that moving may make them worse
  • Disabled: Again, the burden and expense of moving has been deemed unacceptable to these persons
  • Elderly: Same logic as above, given the large number of very fixed incomes allotted to those no longer working
  • Long term resident: 10 years or more in the residency= you cannot get rid of this person legally.

Andy Sirkin, oft credited as the pre-eminent font of knowledge on all things eviction and TIC related (which incidentally, this property is both) puts it this way:

Protected Tenants: Certain tenants are “protected” and cannot be evicted for owner-occupancy except in very limited circumstances. Protected tenants are those 60 or over or disabled who have occupied for 10 years, and those catastrophically ill who have occupied for 5 years. Also remember that no tenant with an unexpired lease can be evicted, and that tenants who occupy a unit during conversion to a condominium are entitled to remain for one year after conversion, or for life if they are over 62 or disabled.

We have no way of telling from this listing alone what group this tenant belongs too, but it could easily be any of the above, including the long term residency, since the current rent being collected on a 2 unit in North Beach several years beyond what this tenant pays: $795 a month. (Um, no wonder the tenant is “not moving!”)

So how then is this a good investment? Well, I already said: It’s a 2 bedroom TIC in a highly desirable area, also in a building that looks well cared for. We don’t know how the unit itself looks (no pics: bad sign), but we can find out by attending the open house on 11/22 or 12/6 from 9am to 10am. In fact, if anyone goes, email some details to The Frontsteps as I’d love to do a follow-up. And hey: if we find the tenant to be ill or elderly, maybe we can project that lifespan he or she has left and plan our investment accordingly. Or, perhaps if you know a good hit man? Ha, ha. Calm down, people! Of course, I’m kidding; but you can see how the tenancy laws might bring out the worst in landlords, or landlords to be.

In any case, this property does offer some potential if you can wait it out. The rent collected now won’t cover the mortgage, so it’s a good bet for someone who can pay cash for the whole shebang. And, kismet: The listing says “all cash sale.” That means then in 333 months (27 years) or so, you’d have your principal investment back and could commence profiting. Or, you get lucky, and the tenant would …disappear first.

6 thoughts on “Vultures, Commence Your Circling

  1. I still dont get it.
    if you are over 62, or really ill and cannot move out of your place, that means that you cannot spend one week at the hospital either???

    And if it’s about keeping all your stuff accumulated over 60years, the new owner would gladly pay THOUSANDS to have real pros (not starving students) move the tenant, including painting the new place with the same paint color, have flowery wallpaper, and rehug all the family pictures in the same way.

    This aside, this law makes me sick/sad for those tenants: they are forced to live in a unit not updated in 10+ years, with no new clean sanitized carpet/floor, with no accessible bathtub, toilet, sink, most certainly with nothing remotely accessible (steps to enter the building, deep dangerous victorian stairs inside, akward door placement [door to access the bathroom for example] terrible storage, windows.. hum, beyond comments etc.
    Why would ANYBODY want to be forced to stay put?

    I stated this before, and I’m stating this again. I think there should be a way that the city is starting to care for those people. It’s not about SELLING BOM units in big complexes (grandma has no intention of ever buying), it’s about creating a few safe units that the city would OWN and rent out at a ‘ad lib’ rate (most likely the same rent that they were paying before). Those units should NOT be in the same building (not the retirement home thing), but there should be a way to have street level units, one here, one there.
    Who would pay for it? the difference between old rent and new rent, and the remodeling etc would generate plenty of income. It could also be a type of one time fee “relocation of protected tenant” – to replace the 10K buyout that tenants use to buy a new flat tv anyway. TENANTS should not gain anything but a new reasonable same price place to live in.

    That type of idea is obviously way beyond some sups brain capacities.. it’s not political enough to actually get your hands dirty and DO something, instead of TALKING about stuff and letting others deal with the mess.

  2. one more comment on relocation.
    HomeOWNERS dont have their say when the city is buying the land for a big project. The city just decide that it wants the land, and for this, will destroy the houses.
    OWNERS have to suck it up and move…. OK, it doesnt happen very often, but it still happens.

  3. Hi Sophie,
    I’d not thought of the eminent domain thing before, but it does seem hypocritical that the city can use it, but the owner of a house cannot

  4. sophie- you’re making a major mistake: attempting to be rational in regards to SF rent ordinance.

    those of use who have been LL’s for some time have given up long ago. just witness the passage of the ‘tenant harassment’ measure last week. we just had a meeting with attorney andrew zacks, who attempted to explain this latest clusterf*ck of legislation. this city is crazy with socialist entitlements when it coems to renters, and then people wonder why available units are so expensive and LL’s are so tough to deal with.

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