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How a SoMa renter paying $5,000/month bought a $730K loft

One real closing, told the way it actually happened.

A San Francisco renter looking at $5,000 a month for a one-bedroom in SoMa bought a one-bedroom loft condo with parking for $730,000 instead. With 25% down and a 6.5% rate, his all-in monthly payment came to $5,147. He lost the first condo he bid on to a higher offer, then bought a second loft that had sat on the market for 91 days.

Why did he decide to buy instead of keep renting?

He needed a new place, and the rent didn't make sense to him. The one-bedroom condo he found to rent in SoMa was $5,000 a month, and he didn't feel rents like that were worth the money.

His main requirement for buying was simple: owning couldn't cost much more per month than renting. With 25% down, it didn't. His all-in monthly payment came to $5,147, about $147 more than the rent he had been looking at.

What was he looking for in a home?

A one-bedroom under $1 million, with parking if possible. He also wanted to be close enough to South Beach for a shorter commute to work. We focused on the Mission, SoMa, Potrero Hill, Mission Bay, and Dogpatch.

Why did we lose the first condo?

Five competing offers came in, and ours finished second. We started at $725,000, then learned we were up against five other offers. We rewrote at $760,000 with no contingencies and an 18-day close. The seller accepted an offer at $775,000. The listing agent told me all five offers had started out about the same.

That loss taught us two things. In my read, SoMa was heating up because rents were climbing, and SoMa has a lot of homes under $1 million that fit a first-time buyer budget. Losing at that price also gave us a real number for what buyers were paying for a one-bedroom in this range.

How was the second loft different?

It had been on the market for about 91 days and had already dropped its price twice, from $785,000 to $770,000 to $745,000. The open houses after the last drop didn't draw much traffic. It was also a third-floor unit with no elevator, which I think kept buyers away.

On the plus side, the HOA reserves were about 60% funded, which I consider pretty good for San Francisco. It was a smaller building on a fairly quiet block for SoMa, with a very responsive HOA president.

What did we offer, and why did I talk him down from $750,000?

We offered $730,000, which was $15,000 under the $745,000 asking price, with a loan contingency and a 21-day close. My client wanted to offer $750,000. I recommended we start lower because of the price drops, the lack of interest, and the days on market.

That was a different approach than the first condo, where we waived contingencies, shortened the close, and still lost. The seller accepted $730,000 without a counter.

Why did deck inspection reports matter in this purchase?

Because they weren't in the disclosures, and a bad report can turn into higher HOA dues or a special assessment. Two rules deal with inspections of exterior decks, balconies, and stairs in California: San Francisco Housing Code Section 604 and a state law known as SB 326. Whether they apply depends on the building.

Since neither report was in the disclosure package, we put a contingency in place. If the reports had shown a lot of work, my client could have backed out. I had another deal earlier this year that nearly fell through over this same paperwork, and lenders are starting to ask about it. In my experience, a lot of agents and associations haven't heard of it yet.

I asked the HOA about it. The president looked into it, and the City said a Section 604 inspection was required. The HOA and a deck inspection company concluded the state balcony law didn't apply, because of how the decks are built into the structure. The HOA scheduled the Section 604 inspection for the middle of our escrow.

We also looked closely at the reserve study, which had money set aside for the decks. With that, my client felt confident waiving the contingency and moving forward. Before we closed, the inspector finished the decks and shared preliminary findings: structurally sound, with waterproof paint recommended in a few spots as preventive maintenance. The full written report was still on its way.

How did the loan and escrow go?

Smoothly. I worked with his lender through escrow and checked in with my client regularly so we could remove the loan contingency within 14 days. We did, on time, with no shaky moments. I also went through the disclosures with him in detail.

How did it end?

He closed on a one-bedroom, 1.5-bath loft condo with parking in SoMa for $730,000, with 25% down at a 6.5% rate. His all-in monthly payment is $5,147, close to the $5,000 he was looking at paying in rent.

The first condo sold for $775,000 and the second for $730,000, about $45,000 less. They were different units in different situations, so it's not a like-for-like comparison. It does show how much a listing's days on market and price history can change the offer you write.

What would I tell another San Francisco renter thinking about buying?

Start by getting pre-approved so you know what you can afford. Then look closely at the building, not just the unit:

If you're renting and wondering whether buying could work for you, I can walk you through the numbers as your buyer's agent.

Kevin Choy

San Francisco native · Buyer's agent, Vanguard Properties

I help San Francisco renters and growing families buy homes across the city, and I tour San Francisco listings weekly so I know what's on the market.

Curious about the neighborhood?

Read my honest guide to SoMa: who it's right for, what units are actually selling for, and what it's really like to live there.

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FAQ

Can buying a condo cost about the same as renting in San Francisco?
It did for this buyer, but it depends on the price, the down payment, and the rate. He put 25% down, which is $182,500 on a $730,000 price, at a 6.5% rate. His all-in monthly payment came to $5,147 against $5,000 in rent. A smaller down payment would change that number, so run your own math with a lender before comparing.
Should I offer under asking on a condo that has been listed a long time?
It depends on what the listing is telling you. This one had sat about 91 days, dropped its price twice, and had little open house traffic after the last drop. We offered $15,000 under asking and the seller accepted without a counter. A condo that draws five offers in two weeks is a different situation.
What are Section 604 and SB 326 reports, and does my condo building need one?
Both are inspection requirements for exterior elevated elements like decks, balconies, and stairs. Whether a building needs one depends on how it's built. In this purchase, the City said Section 604 applied, while the HOA and an inspection company concluded the state law didn't. If the reports aren't in your disclosures, ask the HOA early, ask for the answer in writing, and confirm the requirements for your building with a licensed professional.
What should I check in the HOA documents before buying?
Look at the reserves, any upcoming special assessments, and the ratio of owners to tenants. Also check whether you'd be able to rent the unit out later, and read the meeting minutes to see how the HOA operates. In this building, reserves were about 60% funded, and the HOA president was responsive when we had questions.
What should I do first if I'm renting and thinking about buying?
Contact me first. I can walk you through your options and connect you with local lenders I trust, so you know what you can actually afford before you start touring. In this case, that's what let us move quickly once we found the right loft.

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