Bank of Marin to be first to offer individual TIC loans?

As I discussed earlier, SF Gate is reporting this morning that the Bank of Marin is scheduled to begin offering individual TIC loans within three to four weeks. This will not cause a landslide of new TIC sales, for one simple reason: "Under its new program, it will make a limited number of fractional- interest loans to individuals who buy units from developers who got their acquisition/renovation financing from Bank of Marin." If a developer/building owner doesn't get its financing from Bank of Marin, they don't get the individual loan packages.

To me, that appears to rule out the opportunity for current landlords of buildings to jump into the TIC game to take advantage of this new plan. Since TIC loans are an almost exclusively San Francisco thing, there will be no national market for these loans, and therefore Bank of Marin will have to hold these loans for the duration, and will not have a secondary market in which to sell them. Additionally, "Its initial $20 million loan commitment includes acquisition/renovation loans as well as the new fractional-interest loans. All of the new loans already have been spoken for."

Based on some basic math, if they have $20M to loan and they're doing loans around $400k, that's only 50 units. This won't change the real estate market by itself.

And that's pretty much it. There are a few buildings out there right now that are either on the market or are slated to be sold, and those buildings will be the guinea pigs. Unfortunately, this will not give current or many future TIC owners a shot at an indivudual loan. At least not yet...

And lucky for us we get to hear from Ted Gullickson again today! "We are opposed to TICs because TICs are unregulated," says Ted Gullickson, office manager of the San Francisco Tenants Union. "This would make them even more numerous." Well, Ted, just because you don't have your hand in someone else's business, doesn't mean it 'needs' to be regulated. Could you believe that anywhere else in the USA, it's possible to form a TIC or convert a condo without having to deal with your desired 'regulations'? Somehow, people manage to get by. This includes tenants, too...

My next concern? That the Board of Supervisors will finally find a way to somehow restrict TICs, evictions, or condo conversions. Unfortunately, and few understand this concept, a tenancy in common is a form of holding title. It is NOT a property type. I could own a single family home as tenants in common with my brother if I wanted. People referring to properties as TICs is a bit misleading. A tenancy in common is a group of people and their agreement, not a particular type of property.

How will the 'Supes regulate that?

I will refer again to my post from the other day about Ellis Act evictions... If Bank of Marin, Circle Bank, Sterling Bank, or E-Loan (who are all slated to come online with their TIC loans very soon) create a viable way for TIC owners (present and future) to have individual loans, you will see tremendous pressure on buildings greater than 7 units. Since those are not currently condo-convertable under the standard lottery plan, they are more or less ignored by the TIC speculators. Individual loans will blow that one right out of the water, and many of San Francisco's most coveted larger buildings could hypothetically be cleared of their tenants (by either the seller or the group of buyers) and sold to individual buyers.

This is fantastic news for people who would love to stay in a desireable neighborhood like Russian Hill, but where there is little condo inventory. How much would the landscape change if a couple of 20 unit buildings were made available near Polk Street? How much would that change prices of condos? How high will the prices of TICs go?

There are so many questions now, and we will likely see our 'Supes do their best to answer each and every one of them very soon...