SF Mortgage Spot

I attended a seminar by attorney Andy Sirkin today in which he updated us on the latest and greatest in "TIC Country" as he called it.  The seminar was presented to the Zephyr Real Estate agents, and I believe I was the only mortgage broker in attendance.

Some highlights:

1.  The best financing right now is offered by group -- not fractional -- loans.  This is because fractional loans are offered by commercial lenders and right now the whole commercial lending world is in the tank.

2.  Andy defined for us the four areas where it will be impossible or nearly impossible to convert a building if a protected tenant has ever been evicted for other than just cause (i.e., the eviction was due to owner move in, gut rehab, etc. and NOT for non-payment of rent.)  In general, if a protected tenant has been evicted after May 2005, the building can never be converted.  Period.  If such an event happened after 2000, the process will be nearly impossible, and when Andy says something is nearly impossible, that means it really is impossible!

3.  He also updated us on how the lotteries have been going. Generally, if a group has been in the lottery for at least 7 years, they will end up in Pool A and have about a 90% chance of success the next time they enter.  If they end up in Pool B (which means everyone who has been in less than 7 lotteries), their annual chance is less than 2%, and that chance wil decrease each year, as the pool gets a little bigger each year.  TIC purchases were prolific in 2004-2007, and the City will be working through that group for years to come.

4.  We also received an update on the TIC conversion process overall.  The process now takes about 4 months, inspections can be started even while occupancy is being established, and costs are about $20,000 exclusive of the actual construction work that needs to be performed.