More stressful than bigamy?

October 19, 2006 4:08 PM

Am I crazy to buy into a San Francisco TIC?

I'm looking at buying a place in San Francisco and TICs are a hell of a lot cheaper than equivilent condos. However I'm worried that they could be a big mistake. Almost all the TIC information I can find talks about condo conversion rules (no evicitions, small number of units, be prepared for it to take 10 years), but there is little about other risks/ headaches when it comes to TIC ownership.

Has anyone here bought a TIC? Do you have major regrets? Is there a good place to read about TIC woes? Am I just being paraniod?

Oh and slightly related, can anyone recommend a good real estate buyers agent for SF?

posted by aspo to home & garden (6 comments total)

Because I'm probably not the only one who didn't know what TIC means:
It's probably this?
posted by jozxyqk at 4:28 PM on October 19, 2006

Yes, TIC means Tenancy in Common.
posted by aspo at 4:36 PM on October 19, 2006

I just talked to an investment advisor the other day (IANAIA), he said the median income in San Francisco would have to go up by over $100,000 to support the median home cost right now, and implied that San Francisco was headed for a downward price correction that would last about two years.

Is this an investment decision or a decision about a residence? By which I mean are you going to live in this place? Are you currently doing a 1031 exchange, or otherwise selling a similar interest in residential real estate? Is there a reason you don't want to invest in commercial real estate, which is supposed to be in a different cycle?
posted by BrotherCaine at 5:12 PM on October 19, 2006

TIC's are cheaper, because they offer the owners somewhat fewer options with what they can do with their property, and they inherently intertwine the creditworthiness of all owners. If the owner of the other half of your TIC is broke, stops paying his portion of the (shared) mortgage and isn't willing to help pay for common area upkeep, you're much more screwed than you are in a condo situation. If, when you decide it's time to sell, the other owners don't like your buyer, they can veto the sale.

Want to move overseas for a year and rent out your unit, or use it as a rental property? That usually is quite a bit harder in a TIC.

It's also a lot harder to sell a TIC than a condo, and thus, the prices reflect that. And yes, it often takes a lot of time to convert TICs to condos, because there's a limited number of conversions allowed yearly (part of this is because of a contingent active in local politics that wants to keep housing prices down by whatever means are effective, and yet another one that wants to provide very strong renter protection -- which is why, if you or your TIC partners have evicted a renter, you won't be able to convert to condo.)

Now, if you've got someone who you trust not to be a deadbeat, who also plans to live in the unit long-term, and shares similar values to you as far as upkeep, then a TIC can been a good value. You've just got to keep asking yourself, "do I want to share ownership of property with this person", which is an entirely different question than "do I want to own the unit down the hall from this person".
posted by toxic at 6:13 PM on October 19, 2006

My family is looking at getting into a TIC in San Francisco.

Here's an article from the SF Chronicle about TICs.

Here is Andy Sirkin's website that has tons of information about TICs. We've been told that he is the foremost lawyer who deals with TICs in San Francisco and that his TIC contracts have been proven to hold up in court. (Though IANAL.)
posted by tdogboy at 8:31 PM on October 19, 2006

On your last question, I worked with these folks to get my condo in SF. They're great. Email me if you want to know any details.
posted by quadog at 12:10 AM on October 20, 2006