All Forum Posts by: Lawrence Leung

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@Jeffrey Zhou What you are describing is that DBI receives an anonymous complaint and sends an inspector who subsequently issues you a Notice of Violation (NOV) requiring you to abate work done without the benefit of permits.

So in that situation, if the work to legalize your unit is significant enough to create a habitability issue you may need to perform a just cause eviction (temporary only) that allows you to displace the renter in order to perform the capital improvement work.  You can find more information on this here.  Keep in mind that you do have to pay relocation payment and also allow them to move in back after the work is complete.  This is something we had to do in order to comply with the soft story earthquake retrofit work that required the displacement of a renter to make structural improvements.

Regarding @Amit M. comment.  He's right that there is always an option to effectuate a cash for keys (aka buyout negotiation).  Given the complexity of San Francisco and the eviction control measures that exist you do NOT want to do this on your own and need to make work with a landlord attorney to accomplish this.  The last thing you want to do is not have the correct agreement in place and then they come back and sue you for wrongful eviction!!

With respect to how much it costs for a buyout, the City of San Francisco required the collection of this data starting almost 10 years ago back in 2015.  You can find this information at sfgov.org here and you can filter it based on neighborhood or slice and dice that data as is helpful for you.

I've seen a lot of buyouts and its been quite some time since I saw one go 6 figures, but it is possible.

@Ron Singh You are on the right track because @Nathan Gesner hit the nail on the head and called out the rent control that exists in San Francisco.  He calls it crazy haha and I call it job security.  All joking aside, the best thing you can do is to negotiate a buyout using an experienced landlord attorney familiar with this process. Don't try to go it alone as there are reporting requirements with the SF Rent Board who tracks buyout data across the City AND you don't want to be at a disadvantage as most Renters will lawyer up.@Nathan Gesner

Even if you were to pursue a buyout, STR would not be possible due to the constraints that San Francisco imposes on short term vacation rentals. You could certainly submit an application with the office of short term rentals and be able to list on Airbnb, VRBO and equivalent sites, but only up until they deny your application because it is not an owner occupied unit.

The alternative is you could try for an ILO (Intermediate Length Occupancy defined as more than 30 days but less than a year), but that also comes with strict restrictions as the City has all but made this illegal for most property types/classes starting in 2020.

What you can certainly do is take advantage of what the SF Rent Board does allow so you don't leave any money on the table.  These include the allowable annual rent increases, bond measure  passthroughs, water revenue passthroughs, capital improvement passthroughs, rent board fees, banked rent, etc.

The other thought is that if you inherited this property in the most "vanilla" situation, you may want to consider selling it because 1) your NOI is going to see a big impact once the assessed value is reset after Prop 19 and 2) you have little to no capital gains as the property's cost basis should have jumped up to current market value.

Just my two cents...

You can confirm with SF Planning, but it sounds like you need submit a pink application with a cost valuation of $1 and request for non-conforming use change from Class M to Class A

@Annie T. I don't think a former tenancy should disqualify you from the CA rent relief program.  Perhaps this might be another option for you to collect past rent? https://housing.ca.gov/covid_r...

@Alex Goncharov I think much has changed since a year ago. The market has already began to shift since a couple months back and there is an increasing demand in the SF marketplace.  Rents have started to plateau and in some property types and classes you can see incremental increases. With vaccinations in full swing and most of the Adult populous in San Francisco already vaccinated, I think you will see less apprehension of a move out inspection.  Good luck with your upcoming turnkey!

@Brian Garlington I agree 110% that it is an investor's choice to make whatever decision they want.  With that said, I firmly believe that to be successful in any type of investing, you must be learned and knowledgeable. Uninformed decisions or decisions made with the wrong information or out of ignorance are poor decisions at best.

@Scott Trench and @Mindy Jensen You guys bring up a great conservation topic as always, but unfortunately the basis and context for this one is wrong as the scenario you suggest should never happen. Any informed or educated investor in San Francisco would never let a condo sit vacant because a condo (in most cases) is not subject to rent control as @Yonathan Randolph correctly pointed out.

The guidance we have shared with many of our clients during Covid-19 is to be aggressive with the pricing of their condos because of the one two punch of both anemic demand and high inventory in this property type. Expect to take a loss in the near term, but be patient because when the market bounces back to the new "normal" we can raise the rent back to a higher market rate.

@Dennis Constanza San Francisco is a great place to try House Hacking, but the high price point is the biggest barrier of entry. @Michael C Williams is correct in that many places in San Francisco convert the ground level garage and storage areas into legal dwelling spaces (ADUs), but IMHO these are not the best properties to hold long term as it changes the classification of a property from a SFH to a multi unit. The great value of a SFH is its exemption from rent control. With so much demand in the city you can live in one room and not have too much trouble renting out the remaining rooms in a co-living space arrangement. Certainly look for properties with space to expand on the ground floor to create additional bedrooms and living space to rent out, but not necessarily to create an ADU.

@Benjamin Pessah I think the recommendation for @Michelle Kotler and @Scott Wolf is great advice in the near term as it takes into account your inability to qualify financially for any lending due to your employment status and also the likelihood you have young credit.  In the long term, you can look into building up your credit and then look into house hacking which I believe you were eluding to in reference to wanting to move out. Once you have a steady income, speak to some lenders and see what you can get pre-approved for and then you will have a budget to work with when looking for your first property.