A really good value is available in the Condominium market this weekend, and it may just be the Best Deal on the Market in 2016!

The reasoning can be seen when we look at the leverage that borrowing money at low mortgage rates provides.

The apartment is probably most attractive to a First Time Home Buyer, perhaps a couple making their first purchase in the city because the entry-level price point also matches the average amount of a conforming loan or FHA loan. This loan is probably easiest to obtain for a single-income family with good credit.

It is well located to public transportation (including tech shuttles), close to USF (students), and is situated right between NoPA & Haight Ashbury in the Center of the City – so you have all the city’s amenities close at hand – bars, restaurants, nightclubs, boutique shopping, and Golden Gate Park – plus, it is still convenient to get to downtown.

From an investment standpoint,  a condo that could return close to 1% cash flow is an ideal investment opportunity. A condo that returns positive cash flow in a market with scarcity, near a University is even more rare.

This is a large 1 bedroom apartment at 1040 sq/ft. per tax records. This pricing defy’s the city’s standard of $1000 per sq./ ft for the average condo in the city. So while it doesn’t come with parking, it does feature well-maintained period details (read = character), and being that it is on the top floor, nestled into the back of the building, you notice that the unit is quiet inside, and one could easily forget that you are near Fell Street.

The basis for my hypothesis is straightforward, and requires a few slides to exemplify the details.

Here is the idea:

  1. Borrow money putting roughly 20% down for the property.
  2. Own for a few years, let the equity appreciate
  3. If you decide to move, Rent at the market rate / cost of your mortgage or more.
  4. Pay the loan down quicker than 30 years (15 years)
  5. Leverage that investment by applying the equity to your next purchase.

The first slide indicates a 30 year straight loan on the OPES Advisors Mortgage calculator.

screen-shot-2016-10-28-at-2-42-08-pm

Mortgage Calculator provided by OPES Advisors

The next screen shows the appreciation level of condos in San Francisco over the past 3 years for District 5.

The average appreciation was 30% for the past 3 years! Whoa! If this appreciation continued, and you add this to any accelerated pay-down of your loan – your mortgage would could be paid down by 50% equity sooner than 15 years. This is the leverage of borrowing money at a low rate. (As the Jackson-Fuller modern condo team, statistics can be misleading; but for the sake of conversation…see link above)

 

sf-appreciation-by-district-09-2016

Zephyr Real Estate Chart derived from the Multiple Listing Service

When you calculate the competitive environment of the SF Market, I am likely NOT  the only one to have realized this. The condominium I am using for this equation is at:

2040 Fell St. #11 – Listed at $695,000.

This property has generated good interest…but exactly how much will a competitive offer look like? 6% over asking, like the last comparable sale in the building last year? or 13% over asking like the comparable properties in the neighborhood show?

Would you like to sit down and discuss how to write a winning offer?

I will be showing the property on Saturday and Sunday from 2-4pm, 10/29/16 & 10/30/16.

Call or email to chat about the Center of the City market and San Francisco Real Estate. I live here, I work here, and I’m here for you.

screen-shot-2016-10-28-at-2-57-56-pm

2040 Fell St #11 Living Room

 

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