Sell a Fire Damaged Building in the Mission, San Francisco: Rents & Value

The Gap Is the Valuation

A rent-controlled tenant displaced by fire has a right to be offered the unit back within 30 days of repairs completing, at the rent they were paying before, adjusted only by allowable Rent Board increases. Where a tenancy has run for 20 or 30 years, that rent can sit far below what the restored unit would let for on the open market.

In most Mission buildings that gap is the largest single figure in the file, larger than the fire damage and larger than the construction cost. A buyer restoring the building is buying the existing tenancies back, not a market-rate income stream. The rules layer is on our page covering units, tenants and demolition control.

Why Is My Building Worth Less Than the Restored Rents Suggest?

Because the restored rents are unlikely to be the rents you receive. Displaced rent-controlled tenants return at their prior rent adjusted only by allowable increases, so the income a buyer underwrites is the existing rent roll rather than what comparable market units achieve. On long tenancies that difference is substantial.

Which Cuts Both Ways

Most of the Mission housing stock dates from the 1900s through the 1920s. Planning Code Section 317 requires Conditional Use authorisation for any permit resulting in the loss of a residential unit, and Building Code Section 103A.3 imposes a 5 year restriction on construction permits following an unlawful residential demolition. The right to return runs on a 30 day offer and a 30 day response.

That sounds like bad news and it is only half bad. The same arithmetic that reduces what a buyer will pay also means an owner who restores the building keeps an asset a buyer would have acquired at exactly that discount.

In other words, on a Mission building with deep rent gaps, restoring and holding frequently beats selling by a wider margin than in any market we work in. The tenancies come back either way. The only question is who owns the building when they do.

Should I Restore Rather Than Sell?

More often here than anywhere else, if you can fund it. The discount a buyer applies for the returning tenancies is a discount you avoid entirely by keeping the building. Where the repair cost is manageable against the restored value, holding usually wins, and our written figure says so when it does.

We publish no rent figures or building values for the Mission. Rent rolls vary enormously between buildings of the same size and age depending on tenancy length, and a neighbourhood average would be actively misleading here.

Document Each Tenancy Before Any Offer

This matters more in the Mission than anywhere. Each unit, each household, each rent, and where each displaced tenant now stands: offered a return, declined in writing, or simply gone quiet.

A buyer without that information assumes the position worst for them, which is the position worst for you. A buyer with it prices what is actually there.

The Mission in Context

The other dense multi-unit area where tenancy density dominates the file is covered on our page about the downtown apartment and hotel stock. Where buildings are smaller and unit counts lower, see our page for smaller buildings with two or three units.

Mission Questions

My Tenants Have Been There Thirty Years.

Then the rent gap is probably the dominant figure in your file. It reduces what a buyer will pay and correspondingly increases what restoring and holding is worth to you.

One Tenant Said They Would Not Come Back.

Get it in writing, dated. A verbal statement in the weeks after a fire is not a reliable record and a buyer will not price it as one.

Will You Buy a Fully Tenanted Building?

Yes. The tenancies affect the figure because they affect the income, but they do not stop us buying and we will not pretend otherwise about the number.

Sell a Fire Damaged Building in The Mission