If you are looking for an investment property to buy in San Francisco, what do you look for? Obviously, a good real estate sales agent will be able to help you with the property details that you desire. But there are unique things to consider when you are buying an occupied apartment building or property in San Francisco. I am not a lawyer, and I cannot offer legal advice, but my 25 years of property management experience in San Francisco has given me some insights that might be helpful.
First, be sure to look at the lease agreements carefully once you start reviewing the paperwork on an apartment building that you buy in San Francisco. Find out who is living in the apartment, are they named on the lease agreement? You want to know who has tenant’s rights under the San Francisco Rent Ordinance. If there is no lease agreement at all, be cautious. It could be problematic for you once you own the apartment if there is no written agreement in place with the tenants living in any of the units. You could try and push the seller to get the tenants to sign a lease agreement, but chances are you will not get it.
Next, ignore fair market rents. Market rent means very little when you are buying an apartment building that is is occupied by tenants and subject to San Francisco’s Rent Control Ordinance. You should check and see if the tenants have had all the allowable rent increases over the years, and if not, you will be able to give them a banked rent increase. However, you cannot bring them up to market. Fair market rent is not a key factor in your buying decision.
You also need to take a look at the long term tenants who are living in the property. If you have tenants in the apartment building who have been there for 10 or 15 years, chances are they’re planning to be there for a long time. This means you will be stuck at that rent with only the allowable increases each year. If they are difficult tenants you may be stuck with them for a very long time.
Finally, get copies of all bills for the last two years, or get written permission from the seller to go directly to PG&E 
and the water and garbage companies to get those records. If you ever want to do a capital improvement pass through or an operating and maintenance pass through at the San Francisco Rent Board, you will need those records. So, be sure to gather them before you buy an apartment building.
If you have any questions on buying investment property in San Francisco, please give me a call at Gordon Property Management.
