Fixer-uppers selling for at least $1 million in San Francisco regularly make headlines. In a city where housing demand outweighs supply, the value of homes and land is sky-high, meaning even dilapidated single-family homes throughout the city are worth a pretty penny. But the purchase of the property is only the first step in taking on a fixer-upper project — renovations typically mean shelling out millions more. Visit Business Insider's homepage for more stories.
The glamour of flipping a "fixer-upper" has in part been fetishized by home-renovation TV shows on channels like HGTV. One of the most recent and high-profile ones that come to mind is of course Chip and Joanna Gaines' "Fixer Upper," where homeowners paid on average $173,221 for their fixer upfront in the Texas town of Waco before the famous couple gave it their signature touch. It's common to not only watch on TV but read about how old, decaying structures are reborn into the homes of families' American dreams. In San Francisco, though, the concept of a piece in the city's tight housing market being a "fixer-upper" has a wholly different connotation. The city's limited housing stock and subsequent housing shortage and crisis translate to even these dilapidated houses selling for north of $1 million. As demand outweighs supply, the value of land and the homes sitting atop it — whether they're intact or otherwise deteriorating — rises, which Coldwell Banker listing agent Jeremy Rushton told Business Insider is what's so stupefying about seeing a property in disrepair with such a high price tag. "If prices doubled next week, all these homes would still look the same," Rushton said. "In the 90s, when they were a third of what they're worth now, they looked the same as they do now." That's why San Francisco fixer-uppers get so much attention, Sotheby's real-estate broker Herman Chan told Business Insider in an email. And on top of that, people love a good before-and-after project. "[It's a] rags to riches story," Chan said. "It's so American." Peruse any real-estate listing site, and you'll see a bunch of these fixer-uppers listed for sale in San Francisco. Some are bluntly categorized as a "fixer." Other spoiler alerts are a lack of interior photos in the listing or a disclaimer screaming "BUILD YOUR CUSTOM DREAM HOME" or "Bring your contractors and architects!" Listings don't usually attempt to sugarcoat it. "Properties really speak for themselves no matter what they are," Rushton said. But historically, that doesn't sway buyers — these homes are almost always snatched up after not sitting idly on the market for long. But buying the home is only the first step — then comes the millions more for renovations and the lengthy city approval process. Business Insider has reported on a portion of the city's "fixer-upper" homes in recent years, including a recent sale of one of the city's famed Painted Ladies purchased by a tech founder for $3.55 million (in cash, mind you.) Here's how San Francisco's fixer-uppers have fared on the market, why new owners can't simply demolish their new fixer-upper even if they want to, what their listing agents had to say about them, and what some of them are like inside.SEE ALSO: San Francisco's Sea Cliff neighborhood, where Twitter CEO Jack Dorsey owns $30 million worth of homes, is a parade of oceanside mansions. Here's what it's like inside. Rushton told Business Insider that he considers any given property a fixer-upper when it's in too rough of shape to justify investing in a paint job, new floors, or staging before it hits the market.
"Everybody has seen a rundown house, but to see a rundown house that's worth a million-plus, I think that's really what surprises people," Rushton said.
At press time, Zillow held four San Francisco listings tagged as fixer-uppers. Redfin had 14 real-estate listings categorized under "Fixer Upper in San Francisco." Nine of them are north of $1 million. One is a century-old home on a 3,000-square-foot lot in the city's Richmond District and is a "Great FIXER opportunity." Only one photo is included in the listing: one of its dark brown exterior; no interior shots. The last sentence in the listing reads "Bring your contractors & buyers looking for a blank canvas." It's asking $1.65 million and is listed as a "Hot Home" on Redfin, with a note detailing that it is expecting to sell faster than 97% of other homes in the area. Some are barely salvageable — it's possible to find real-estate listings blatantly quipping that it's dangerous to live in, like a listing in the city's Bayview Heights. It's an "Old Run Down Shack on Property Not Habitable. Contractor Special. Utilities believed to be at or on site. Build your custom dream home." The only photos are from the street, with said shack hidden beyond a rickety fence. Asking price is $500,000. Business Insider reported on a Victorian home in the Castro neighborhood whose interior was scathed by a fire and still sold in 2018 for $2 million, more than double its original asking price. And many others have been listed over the years, most priced more than $1 million. These homes are typically priced below-market-rate. So as startling as these prices may seem, the listings (before renovations) are actually somewhat of a bargain — the city's median home value is $1.4 million. And, in many cases, as the age-old real-estate adage goes, prospective home buyers on the prowl aren't seeking the homes in these listings — they want the land.
"There is an allure to a fixer-upper in a desirable location," Rushton told Business Insider.
The asking price is often only part of the investment. Construction costs are sky-high here — the Bay Area is the most expensive place in the world to build, with the costs sitting at $417 per square foot to do so.
Source: ABC7News Costs aside, a renovation is also time-intensive. Crafting designs and pushing them through the city's snail-like approval process means potentially not moving into your new home for years after it's purchased.
That ultimately results in a higher home value for the owners once the renovations are all said and done. People can, and do, flip homes just for the properties to return to the market for a higher price.
All of which is to say that the chance to acquire a fixer-upper and then carry out the needed renovations typically falls to San Francisco residents on the wealthier side, many of whom prospered or continue to prosper from the region's lucrative tech industry.
Rushton said fixer-uppers can be found across the city of San Francisco, though they're more common in the modest residential areas.
But mansions in the ritziest districts within city limits aren't impervious to falling into disrepair.
Source: Business Insider A seven-bedroom home in San Francisco's Sea Cliff, once owned by a now-imprisoned real-estate mogul and art scammer, is one of the area's only houses to be literally built into a sea cliff.
Source: Business Insider It's a coveted home within a coveted neighborhood of a coveted real-estate market. It's asking $13.7 million, and it still needs work.
Source: Business Insider There are no photos of the home's interior in the listing. The floors need to be redone, and there is evidence of leaks.
"Bring your contractors and architects to re-imagine the iconic view home of your dreams," reads the listing. Though it isn't dangerous to live in, it needs a lot of love. But the fixer could soon be another whose poor condition doesn't pose a problem for a buyer — it's currently "under contract" pending a sale.
Source: Sotheby's "This property is for someone who has the money to begin with to buy the property and then either wants to do minimal work to it and kind of clean it up and keep the same floor plan or really completely gut it," the home's listing agent, Anne Herrera, told Business Insider in a 2019 interview.
Source: Business Insider Rushton said the most common explanation for why a home in the city has fallen into disrepair is their long-time tenants were elderly residents, who may not have the time, strength, or money to maintain it.
Other reasons could be a home falling to an heir who lacked the financial means to keep it up, or perhaps the home was caught up in legal family issues that prevented it from being maintained, Chan said.
"I've sold homes where they were vacant for decades and when people come in and they ask how long they'd been vacant, and then I answered the question, there's always this jaw-drop," Rushton said.
But in San Francisco's crowded real-estate market, the fixer-uppers are still actually considered some of the city's crown jewels.
"My experience has been that fixer-uppers in desirable locations always have a lot of interest and a lot of buzz around them," Rushton said.
Run-down homes even have an advantage over homes that may be cleaner but have an outdated remodel, or they fall somewhere in between a fixer-upper and a livable property.
"Nobody wants to pay a premium for somebody else's 2002 remodel," Rushton said. "They just don't."
Rushton said the sales history for many homes show higher data for fixer-uppers than for listings that are a couple of decades behind in fashionable design. It's an all-or-nothing type of situation for prospective buyers.
"People will pay a premium in San Francisco if a property is remodeled in a way that is trendy and agreeable to most people," Rushton said. "But if it's not that, then they would often rather have it as a fixer-upper."
But, he said, it's actually usually cheaper to buy an older remodel and simply update the finishes instead of the infrastructure, like the electrical and plumbing systems. "It is more cost-effective to buy somebody else's kind of tired, remodeled [home,] but the market doesn't really see it that way," Rushton said. Perhaps there's something about the prospect of starting over, from scratch, that is appealing to residents looking for a home. Though starting completely over is usually out of the question. Getting a demolition permit is almost impossible, Rushton said — the city has stringent building regulations. Even properties that have been extensively remodeled and look brand new still have the original build dates, since the city's building department requires them to keep a certain amount of the property intact. Rushton said he's never sold a home that's been demolished. "I've seen places where that would be the economical thing to do," Rushton said. "If they were anywhere else, they would just be torn down. But that's just not a thing in this neck of the woods." Most fixer-upper sales come with a good skeleton to work with, like this pink 480-square-foot home in the city's Visitacion Valley.
Photos showed a patchy roof and a grimy and outdated interior. The listing, like the others, marketed the property as an "incredible opportunity for developers, contractors, or the handy owner." Most fixer-uppers in San Francisco ask at least $1 million, but sometimes there will be a stroke of luck — this one sold for $600,000 in December 2018, after just two months on the market. Approved plans came with the sale, meaning the new owners didn't have to go through the city approval process — which can take a while — if they didn't want to.
Source: Zillow And the home also only took up a third of the 2,500-square-foot lot, 75% of which had approval at the time to be built upon.
The home's listing agent, Linda Ngo, told Business Insider in a 2019 interview that she received "quite a few calls" from prospective buyers just within three days of the home landing on the market. Source: Business Insider Chan said each individual property is typically marketed according to how much work it needs.
For "light fixers," HGTV show enthusiasts are going to be included in the target demographic. For "heavier fixers," interested parties would likely include veteran flippers, investors, and institutional buyers with deep pockets. And for fixers that were once "ultra-lux," the people interested will be those seeking legacy and prestige in historic or trophy properties, Chan said. Once they've bought the place, most new owners of a fixer-upper will likely hire a contractor to do the remodel, according to Rushton.
That's certainly the case for Leah Culver, the new owner of none other than one of the city's seven iconic Painted Ladies.
Source: Business Insider A software developer, tech founder, and investor, Culver paid $3.55 million for the home in January, despite its evident need for repairs.
Source: Business Insider The fixer-upper needs a full-house renovation, with interior photos showing peeling paint, grimy walls, discolored tile flooring, and overall dingy rooms.
Source: Business Insider It comes with 2,588 square feet of living space and three stories.
Source: Business Insider Now, Culver is launching into a $3 million renovation process. But she luckily doesn't have to do too much of the work, since she's hired a local project manager to spearhead the project.
Source: Business Insider First comes hiring an architect, then settling on design plans, then submitting the plans to the city for approval. Construction may not actually start for another year.
Source: Business Insider "I'm not going to go knock down walls tomorrow," Culver told Business Insider in a prior interview.
Source: Business Insider The entire project takes lots of time and energy, so Culver said she's grateful for the help provided by her project manager.
Source: Business Insider "For me, it meant the world, because I just don't have time," she said.
Read more: A San Francisco software developer paid $3.55 million for one of the city's iconic Painted Ladies homes that's a 'fixer-upper.' Now she's embarking on an estimated $3 million renovation process.
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The San Francisco Bay Area is putting homeless people with COVID-19 in hotel rooms. Some are given alcohol to prevent withdrawal.
California counties are sheltering homeless residents who are infected with COVID-19, or at high risk of...California counties are sheltering homeless residents who are infected with COVID-19, or at high risk of getting infected, in hotels and motels. In the Bay Area, San Francisco and Contra Costa counties are offering alcohol to guests who might otherwise experience withdrawal. San Francisco is also allowing guests to purchase their own medical cannabis, while Contra Costa is purchasing tobacco for guests out of its own budget. The programs are part of a "harm reduction" strategy that aims to keep homeless residents from leaving the hotels to retrieve substances. Visit Business Insider's homepage for more stories. When the San Francisco Bay Area issued the US's first stay-at-home order on March 16, officials knew there was one subset of the population who couldn't follow it: the homeless. Those who sleep outdoors lack access to sanitation facilities, making it difficult to wash their hands or practice other forms of basic hygiene that lower the risk of getting and transmitting the coronavirus. Traditional homeless shelters, however, can create breeding grounds for outbreaks. Because of this, the Centers for Disease Control and Prevention recommends setting aside individual rooms for homeless people who have COVID-19, are awaiting test results, or have been exposed to the virus. So the state of California procured thousands of hotel and motel rooms for this purpose, through a program called "Project Roomkey." Three-quarters of the funding comes from the Federal Emergency Management Agency, while the remaining quarter — around $150 million — is financed by the state government. Gov. Gavin Newsom announced the program on April 3. Within a couple weeks, the program had secured more than 10,000 hotel and motel rooms across 42 counties. But one aspect of San Francisco's operation of the hotels has stirred controversy: The city's Department of Public Health is giving alcohol to guests struggling with addiction and facilitating the delivery of cannabis. "I just found out that homeless placed in hotels in SF are being delivered alcohol, weed, and methadone because they identified as an addict/alcoholic for FREE," Thomas Wolf, a drug counselor in San Francisco, tweeted on May 1. "You're supposed to be offering treatment. This is enabling and is wrong on many levels." According to San Francisco's health department, which staffs the hotels, funding for these substances in the hotels comes from private donations from individuals. But Contra Costa County, about an hour outside the city, has spent up to $1,000 in public funding so far on substances for vulnerable residents sheltering in hotels. Officials from both health departments say the practice of administering drugs and alcohol has prevented people from leaving the hotels to retrieve substances, thereby limiting the potential for the virus to spread. "This program was put in place in order to support isolation and quarantine practices for patients under investigation or those who were positive for COVID-19, so that they do not break their isolation and expose other members of the community," Dr. Ori Tzvieli, Contra Costa county's deputy health officer, told Business Insider. The concept of harm reduction The practice of offering drugs and alcohol to those who might otherwise experience life-threatening withdrawals — a strategy known as "harm reduction" — is seen as an exercise in compassion for people struggling with addiction. It's also a way to relieve the burden on hospitals by administering substances in a controlled environment. "Addiction doesn't stop because there's an infectious disease pandemic," the National Health Care for the Homeless Council wrote in an April memo. "Failure to accommodate substance use disorders will likely mean increases in fatal overdoses/dangerous withdrawals, higher rates of vulnerable people leaving isolation and quarantine against medical advice, and compromised individual and public health." So far, San Francisco's isolation and quarantine hotels have given alcohol to less than a dozen guests to prevent withdrawals, according to Jenna Lane, a spokeswoman for the city's public health department. Around 10% of guests are provided with tobacco at any given time, she added. The conservative nonprofit Turning Point USA suggested that funding for these substances came at taxpayers' expense, but Lane said that's not true in San Francisco. She estimated that alcohol and tobacco donations so far have totaled around $3,000. Some hotel guests can also purchase their own medical cannabis — Lane said five people have used that service so far. Contra Costa county, meanwhile, has set aside more than 300 hotel rooms with funding from Project Roomkey. Around 150 vulnerable residents have temporarily moved in so far, according to the county health department's website. Tzvieli said five of those people have used the drug and alcohol program. "We bought small individual (airplane style) vodka bottles and beer," Tzvieli said. "Patients with alcohol use disorder get a choice of one or the other." The Contra Costa health department has also purchased one brand of cigarettes for guests, he added. "It may sound odd for a health department to give people alcohol and cigarettes, but we do it in order to maintain isolation and quarantine and help protect the community from COVID," Tzvieli said. "It's a trade-off." The 'minimum possible quantity and quality' to prevent withdrawal Project Roomkey gives funding priority to counties like San Francisco with significant coronavirus outbreaks and large homeless populations. Mayor London Breed announced on April 29 that San Francisco had access to about 25% of the rooms available for occupancy under the statewide program. As of May 13, around 211 individuals without a safe place to shelter — people who either had COVID-19 or are vulnerable to catching it — were being temporarily housed in San Francisco hotels. More than half are homeless, Lane said. Guests entering hotels in San Francisco through Project Roomkey are "screened multiple times to determine what substances they would be uncomfortable without," the health department said in a statement to Business Insider. For guests who require alcohol or tobacco, the department's medical staff calculates the "minimum possible quantity and quality" to prevent withdrawals. It then administers these substances under the guidance of licensed physicians. Hotel guests are also given the option to receive support for reducing or stopping their drug and alcohol use. Those trying to quit have access to addiction specialists, who can prescribe medications like gabapentin to prevent withdrawal. "This period in our care has allowed some people to connect for the first time with addiction treatment and harm reduction therapy," the department said in a statement. The department also facilitates the delivery of methadone from local clinics for guests that already receive treatment for opioid addictions. Guests who use medical cannabis, meanwhile, can purchase it from a local dispensary, Lane said: "Patients order their own for delivery, and pay however they usually would." Contra Costa, too, provides medications like suboxone for opioid addicts. Tzvieli said alcohol and cigarettes are given to those who decline medical treatment. Infected homeless people don't seem to be leaving Bay Area hotels Critics of the Bay Area's harm-reduction strategy argue that it enables addicts and normalizes drug use. But there's evidence that the strategy promotes safer practices among alcohol users: A Seattle housing program that recruited homeless individuals with severe alcohol problems from November 2005 and March 2007 found reduced alcohol consumption among the residents, who were still permitted to drink in their rooms. "Harm reduction has been the policy of the San Francisco Department of Public Health for well over a decade and is ingrained in all of our work," Lane said. She added that she didn't have a way of quantifying how much the strategy costs as a line item in her department's budget, but said thus far, the program has at least prevented drug and alcohol users with COVID-19 from leaving the hotels. "Guests who have used the managed alcohol and tobacco and/or received prescription medications while in isolation and quarantine have told our medical staff that access to these things has influenced their decision to stay," Lane said. Tzvieli said Contra Costa has seen similar results: None of the hotel guests have broken their isolation or quarantine. Of the five guests who participated in the harm-reduction program, he added, "each received only a one-day supply until their test results came back negative." After that, they were discharged from the hotel.Join the conversation about this story » NOW WATCH: Why the Bronx has almost double the coronavirus cases as Manhattan
Salesforce shelled out $145 million for a San Francisco building on the same day that the Bay Area shelter-in-place order went into effect
Salesforce paid $145 million for a building in San Francisco in March. The century-old, five-story building...Salesforce paid $145 million for a building in San Francisco in March. The century-old, five-story building sits across Mission Street from the company's behemoth Salesforce Tower. The transaction closed on March 17, the same day that the Bay Area entered a shelter-in-place order to contain the coronavirus disease. As thousands adapt to remote-work culture, employers could use office space differently once shutdowns are lifted. Visit Business Insider's homepage for more stories. Salesforce scooped up a century-old building in San Francisco for $145 million in March, as reported by the San Francisco Chronicle. The five-story building at 450 Mission sits across the street from the software giant's goliath Salesforce Tower, whose tenants include WeWork as well as others. Salesforce also owns another high-rise nearby. The company now either owns or leases about 2 million square feet of office space in this part of town. The newly purchased building is zoned for a height of up to 550 feet, as the Chronicle reports, meaning Salesforce could build upon the site. A company spokesperson confirmed the transaction. The transaction closed on March 17, the same day that San Francisco and other Bay Area counties entered a shelter-in-place order to contain the coronavirus disease, known as COVID-19. Salesforce, as well as other tech companies, had already asked their employees to start working from home before the order was enforced and the real estate purchase was made. The city's center and its myriad offices are all but desolate. Since the coronavirus pandemic has hit the US, the country's white-collar employees have begun adapting to remote work as millions remain in their homes to curb the spread of the illness. Office culture as we know it may look very different once society re-emerges from the lockdown. Some real estate experts say the flexible office industry — including co-working space company WeWork — could experience a boom as employers opt for less committal office leases over traditional, long-term ones, as Business Insider's Meghan Morris and Alex Nicoll reports.SEE ALSO: Photos show how San Francisco emerged from a lockdown too soon during the 1918 Spanish flu pandemic, leading to an even deadlier second wave that rampaged through the city Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid