This past weekend I checked out six homes and many of them were worth a writeup but I wanted to highlight 71 Curtis Street because it presents an interesting case study for the value of a single family home in a San Francisco neighborhood that hasn’t gentrified yet. 71 Curtis Street is listed at $995,000.
The first thing to talk about with this home is the neighborhood. A big reason I’m doing these home tours is because it gets me out to explore parts of the city that I wouldn’t normally go to otherwise. 71 Curtis Street is definitely below some sort of gentrification line, which after driving around for an afternoon I would roughly call everything south of 280 and includes Outer Mission, Excelsior, Visitacion Valley, and Crocker-Amazon. These are mostly residential neighborhoods and some of the less well-maintained homes have an older, faded look to them.
You can see this gentrification line in rent prices – the most recent Zumper rent score map has Outer Mission/Excelsior as the cheapest neighborhood in the city, with a shockingly steep price gradient to each of its four neighbors. 
These rent prices turn out to be particularly relevant because 71 Curtis has a permitted in-law unit downstairs, one that looks like a true 1 bedroom apartment! Which means that you can use 71 Curtis as a 3 bed 2 bath (2 kitchen) home, or you can use it as a 2 bed 1 bath home, with a rental income generating 1 bed 1 bath apartment that is completely separate and legal. If split up that way, the only downside I could see with this house is that there is only one bathroom on the main level.
Let’s take a look – (more photos here):
And a bonus! I tried my hand at recording a video walkthrough of both the main living area and the in-law level.
I debated whether to treat the in-law unit as regular square footage in one single family home (~1,200 upstairs, ~800 downstairs) or to reflect the most efficient use of the space where the downstairs is rented out. I’m curious what people think about this one. I finally decided to combine all the square footage and then add a 10% premium for the flexibility that you get to use the downstairs as either 1) an extension of the main house 2) a true in-law unit for multi-family living or 3) a rental property, offsetting a good chunk of the monthly mortgage.
The Zumper rent score map also provides an interesting way to estimate the neighborhood score for Crocker-Amazon. I’ve been treating Western Addition as my canonical 1.0 neighborhood and if we compare these rents we get $2,090 / $3,150 = 0.66, which I’m going to use as my neighborhood score. This is imperfect because the rent vs buy ratios might not track exactly for a variety of reasons but I don’t think it’s going to be awful and on the positive side, you get more datapoints from rentals which helps smooth out outliers you might otherwise get in a neighborhood analysis based on completed sales.
Estimated sale price = ($ / square foot) * region score * neighborhood score * square footage * usable square footage score * in-law unit premium Estimated sale price = ($1000 / square foot) * 1.0 * 0.66 * 2000 square feet * 1.0 * 1.1 Estimated sale price = $1,452,000
How would you value 71 Curtis Street? As with the last home tour, I would love to collect some sale estimates in the comments so that we can see what range the wisdom of the crowds suggests!
1.05…you forgot to mention proximity to the Crocker Amazon playground in your analysis. They have a 2-story slide that Murphy is still afraid to go down.
I think the possibility to rent out the one bedroom for ~$2k is pretty interesting. Zillow is showing that at a ~$1.05m sale price, with 20% down, mortgage prices would be $3.8k; this means you could get a two bedroom upstairs for $1.8k + capex, which is even cheaper than the one bedroom. Even if some families wouldn’t want to do it, I bet income oriented property owners will guarantee that the price is higher than $1.05.
At $1.3, mortgage payment becomes $4.8k, which seems about right to get ride of this arbitrage.
$1.2
You’ve also forgotten about Broken Record around the corner – a bar where you can get whiskey on tap. Fix the Mission buslines and you’ll have a real push of that gentrification line.
I think that neighborhood is at the beginning of the gentrification curve, and I suspect it’s at the phase where people start bidding up properties to get in to a “transitional neighborhood.” I suspect it’ll go a touch above asking, in the $1.1-1.15 range.
shit I posted before I read about the proximity to the whiskey-on-tap watering hole. that’s worth at least $150k premium.
Haha yes Sasank is the human Yelp for San Francisco
1.1 – not too educated a guess – i’m likely very biased by other listings i’ve seen.
I’m not that familiar with the SF areas, but assuming the in-law unit isn’t occupied (can rent for market right away) I’d wager 1.2 for a transitional place that has decent space.
The in-law unit being legal is nice, but I’m not sure how much of an impact it will actually have given illegal in-laws are common. Also since the in-law is legal I believe the place actually counts as a 2-unit building with rent control even if you rent them both out to one person (not true for an illegal in-law).
10% premium on the in-law square footage is backwards. SF’s laws geared at protecting housing stock act as a one-way ratchet: you can often add a unit (whether by sectioning off part of a unit’s existing livable space or by adding new square footage or finishing garage/basement space) but you can never remove one. So where you try to credit this property for its flexibility, it actually takes a hit in value because it’s less flexible.
The partial exception to this rule of thumb is that if the split between the two units is done perfectly, there’s an internal connection to the in-law unit that makes it feel like one combined space, but doesn’t run afoul of the laws that require them to be separate (kitchen, bathroom, primary/secondary egress, window facing open space, etc for each unit). But that’s a really tough needle to thread.
I don’t know this neighborhood, that far east of Balboa Park BART, super well, but I’ll throw out a guess of 1.25.
no familiarity with the neighborhood at all, and i have no idea what it means that redfin decided to label this a “hot home” but if that has any meaning from a competitive bidding process, I’d bet it sells for $1.25m
I would estimate about $1.2M. The remodel and size (~2000 sqft) are the biggest value-adds with this home. Comparable sales are in the 825-900 range but were not staged, marketed, or remodeled, and were considerably smaller. As with the comment above, I believe an in-law unit is a detractor from overall value because of the restricted use going forward. If it were a functioning 3/2 single-family home without an in-law, I would add another ~$50k to my estimation. This is near or at the top of the market for this neighborhood, and buyers will be conscious of that when considering the appraisal. For $1.3M you could buy in the Sunset, which is a lot closer to downtown, better schools, shops, and plenty more neighborhood amenities.
I wonder if 10% premium is too generous on top of the sq footage…i think it’s inflating your sales estimate too much. Even with the flexibiltiy, if I’m paying $1.4 I would demand more.
$1.150 is my guess.
$1,050,000 is my guess. It’s a good neighborhood but still far from Bart for my liking so don’t want to bid too high.