San Francisco Pocket Listing w/Rent Control: Deal or No-Deal

[Kris Lai]

hello BP friends ... been MIA for a while and looking to get back in the RE groove of things, hoping to seek some advice on an off-market deal that was presented to me. It's a 3 unit bldg in the hot area of Bernal Heights, each 2BA/1BA, roughly 850 sq ft. Each unit has its own garage space and storage. Asking price is $1.6M. 

One unit is going to be vacant in the next two weeks, another is rented at around $2500, but the last seems to be protected at $1200. 

An RE mentor of mine suggests moving on this deal fast, securing it by any means before the seller decides to list it. The goal is to have it seller-financed as I have no cash left. But a trusted and respectable agent I spoke with suggests this isn't a bargain. He says if I decided to sell, it would be difficult to condo convert, thus selling as TIC only, but finding buyers would be difficult due to the protected tenant.

Based on Craigslist ads, the lowest 2/1 unit in Bernal is going for $3300, but with the two units under market rent I would be at a negative cash flow. 

Would love some perspectives here :)