Being Swallowed Alive: The Collapse of San Francisco

[Jc M.]

I was born and raised in San Francisco and as we all know, this city is changing big time. My wife and I felt fortunate that we were able to buy a home here in 2016 despite the astronomical cost. Our children know nothing else but being able to walk just a few feet from our door to buy dim sum, a burrito or an ice cream. The diversity and difference among residence is a strength and something we value greatly. However, the techie exodus is breaking our business plan and we don't know what to do. I'm trying to learn OOS investing in Ohio - Cleveland and Columbus, but I also need to solve the crisis forming from the roof over our heads.

We bought a house needing remodel and once all was said and done sunk $1.14M into it. We borrowed from the bank and from family for the down payment so our debt service is high. Fortunately, although our property is a SFH on paper, the downstairs has a discrete entrance and we've been renting it like an inlaw. That income has allowed us to live at modest cost and at less than what comparable rent would be for the space we occupy upstairs. Until now... Rents across the city are falling. We think once our tenants lease is up in summer,, they'll want to move on to a larger space, in a better neighborhood for less money or out of SF entirely. At the same time, vagrants suffering from drug and alcohol abuse are for the first time pitching tents on our street.

We feel trapped between falling rents and falling home prices, rent control, and bad city policies on crime and homelessness. We aren't political people, we just want to live in peace without loosing our shirt financially.

We've thought about lowering the rent downstairs to keep the tenants but rent control would prevent us from raising it later. We are after all in the most tenant-friendly city in America. We thought about renting the entire home if they move out, but think we'd still be underwater $1.5k-$2k each month (rents are down +30% YTD across the city). SF only allows 60 days of airbnb per year unless you stay in the property. Or, if we sell, we'd likely lose our portion of the down-payment and possibly some that we borrowed from family.

Covid 19, the techie exodus and bad City governance has completely broken our business model for house-hacking San Francisco. We are being swallowed alive and can't seem to devise a clear path forward without going underwater every month or taking a six figure loss on a sale. I keep telling my wife that we can't throw good money after bad, but I too don't want to sacrifice half a decade of home and savings to get out of the crisis taking over San Francisco. And for those that think this city is a sh*those, it is, but not because residence are too liberal or somehow deficit or foolish. People here are open-hearted and compassionate. But, we have poor leadership and there is too much money and power to be lost if the policies destroying the city are changed for the bettrr. Greed isn't the exclsuive eomain of our city. It's just more obvious because of how beautiful it once was just a few years ago.

If you guys have suggestions or opinions, I'm all ears and would love to hear them.