Yahoo Finance Bargain Priced San Francisco Home Shows Good Things Come To Those Who Wait ... For A Really Long Time
Russian Hill is one of San Francisco's most expensive neighborhoods, where homes routinely fetch seven-figure prices after fierce bidding wars between prospective buyers. Knowing this, most people would assume there's a catch when a 3-bedroom, 2-bathroom house on a Cul-de-sac in Russian Hill hits the market for $488,000, and they would be right. The buyer will receive a 66% discount on the property, but they can't move in until 2053.
According to details listed on Zillow, the delay is due to a tenant occupying the property. The tenant holds San Francisco's "protected tenant status," a provision of San Francisco law that prevents landlords from evicting tenants who meet certain criteria as long as the tenant is paying rent.
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San Francisco tenants can claim protected tenant status if they are elderly and/or disabled and have resided in the same place for more than 10 years. According to SFGate, the law granting special protection status was passed in 1998 during the dot-com boom when it became lucrative for landlords to evict existing tenants and raise rents dramatically.
The tenant of the heavily discounted property has additional protections in the form of a favorable lease they signed with the current owner. According to the listing, "The tenant's current lease appears to grant tenants strong long-term rent rate amount restrictions and an unconventional method of rental payment, with possible occupancy rights until 2053." They are currently paying $416.67 per month, which is thousands of dollars below market rent.
The exceptionally tenant-friendly terms of the current lease and the strength of San Francisco's tenant protection laws explain why the property is being sold at such a discount. According to the New York Post, the unique restrictions on the buyer's ownership rights are why Zillow has marked the property's value down from $1,500,000 last month to just above $520,000 in June.
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Incredibly, the property has been viewed over 40,000 times on Zillow and even has a pending deal after just a few weeks on the market. Other properties on the same Cul-de-sac are valued between $1,400,000 and $3,000,000.
As unorthodox as the arrangement may sound, it's not a first for Russian Hill. Last year, another home on Russian Hill with protected tenant status sold for $10,000,000, half its estimated net worth.
Speaking about the discounted property, Attorney Steven MacDonald told the New York Post, "It's for a very unique buyer who's willing to accept a substantial discount — maybe two-thirds. They might pay $1 million for a $3 million house and wait 20 to 30 years before they can move in." The Zillow listing describes the property as an "excellent investment opportunity for just the right buyer."
It's hard to argue against the potential upside of this property. It is listed for roughly a third of its actual value and could easily appreciate several times in value in the 30 years before the buyer moves in. However, the "right" buyer needs deep pockets and a sincere appreciation for the adage that "Good things come to those who wait."
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