When considering the purchase of a TIC (Tenancy in Common), many homebuyers may not be aware that the number of units in the building can affect the overall value. Generally speaking, condominium units tend to be more desirable and thus, worth more. However in San Francisco, some buildings have a better chance of being converted into condominium units, and some can’t be at all. Here’s How.
San Francisco has something called the Condominium Lottery. This is the process in which the city chooses what buildings are allowed to be converted into condominiums. Buildings with 2 units can bypass this lottery and be converted automatically. Buildings with 3-6 units enter the lottery by accumulating “lottery tickets”, which increases their chances of winning the more they have. And finally, buildings with 7 or more units simply are not eligible to be converted. When a building is successfully converted in condominiums, the value of their home can definitely increase. But remember, this applies simply to the number of units in the building. Other restrictions do apply such as owner occupancy, length of occupancy and protected tenants. Be sure to consult with your realtor and do your research when considering the purchase of TIC’s.
Sources: (content) Sirkin and Associates; (picture) SF Gate