Buying a TIC in San Francisco: Step-by-Step from Pre-Approval to Close
Buying a TIC in San Francisco is more complex than buying a standard condo — but done right, it can get you into the city at a meaningful discount. Here is exactly how I walk my TIC buyer clients through the process.
To buy a TIC in San Francisco: (1) Get fractional loan pre-approval from a TIC-specialist lender before searching. (2) Work with an agent who has closed SF TIC transactions. (3) Have a real estate attorney review the TIC agreement before you offer. (4) Run enhanced due diligence — soft story compliance, rent control status, conversion eligibility, co-owner financial health. (5) Close with fractional financing and confirm your interest is properly recorded. Call (510) 277-4420 to start.
- SF TIC Market Snapshot 2026
- Why Buyers Choose TICs in SF
- Getting Fractional Loan Pre-Approval
- Finding the Right TIC
- TIC Agreement Review
- Due Diligence Checklist
- Making the Offer
- Closing the TIC Purchase
- After Close: Conversion and Exit
- Full Cost Breakdown
- Quick-Reference Cheatsheet
- Frequently Asked Questions
SF TIC Market Snapshot 2026
San Francisco's TIC market in 2026 continues to attract buyers who want ownership in the city without paying condo-premium prices. Here are the key numbers every TIC buyer should know before starting their search.
A 10% discount on a $1.19M SF condo median saves roughly $119,000 on the purchase price. At a 0.5% rate premium on a $900,000 fractional loan, the additional monthly carrying cost is approximately $270/month — or $97,200 over a 30-year mortgage. That math generally favors the TIC in the medium term, especially when conversion upside is in play. Run the numbers for your specific price point before assuming TIC is the better deal.
Why Buyers Choose TICs in San Francisco
The primary reason to buy a TIC instead of an equivalent condo is price. TICs typically sell at a 5–15% discount compared to equivalent condos in the same building or neighborhood. In San Francisco's market, that discount can represent $60,000 to $200,000 or more depending on the property — real money that can significantly improve your cash flow or return on investment over a 5-to-10-year holding period.
Secondary reasons include conversion upside. If the building qualifies for SF's condo conversion lottery in the future, converting from TIC to condo status typically adds value and unlocks conventional financing options at close. And in some neighborhoods — especially the Richmond, the Sunset, Noe Valley, and Cole Valley — TICs are simply what is available. Many of San Francisco's older flats and Victorian-era buildings have never been converted to condos and may remain as TICs indefinitely due to their size or tenant history.
A third driver is access to inventory that would otherwise be unaffordable. For buyers priced out of condo or single-family options in their target neighborhood, a TIC at a meaningful discount can be the difference between ownership in SF and continued renting. That calculus has made TICs a durable part of San Francisco's ownership landscape for decades.
TIC Advantages
- 5–15% price discount vs. equivalent condo
- Potential condo conversion upside
- Access to neighborhoods where condos are scarce
- Fractional loans isolate you from co-owner default risk
- Same ownership rights and tax benefits as any property
- Eligible for 1031 exchange treatment
TIC Disadvantages
- Rate premium on fractional loans (0.25–0.75% above conventional)
- Narrower resale buyer pool
- TIC agreement constraints on sale, rental, and renovation
- Conversion eligibility is never guaranteed
- Co-ownership coordination requirements
- Soft story retrofit costs may fall on owners
You plan to owner-occupy for at least 5 years. The building is a 2–6 unit property with conversion potential. You can qualify for and accept fractional loan pricing. The TIC discount meaningfully outweighs the financing rate premium over your holding period. You have reviewed the TIC agreement with an attorney and it is clean. If all five apply, a TIC can be an excellent buying decision in San Francisco. Call (510) 277-4420 to talk through whether a specific TIC passes all five criteria.
Step 1: Getting Fractional Loan Pre-Approval
This is where most TIC buyers make their first — and sometimes fatal — mistake. They find a TIC they love, make an offer, and then discover they cannot get financing or the rate makes the purchase uneconomic. The right order: financing pre-approval first, then property search.
A fractional loan is a mortgage secured by your individual ownership interest in the TIC. Unlike a blanket loan (one mortgage covering the whole building shared by all co-owners), a fractional loan means your financing is independent of your co-owners. If one co-owner defaults on their fractional loan, your mortgage is not directly affected. This structural separation is why fractional financing is the preferred approach for nearly all SF TIC purchases today.
Blanket Loan vs. Fractional Loan: Key Differences
Some older SF TICs still operate under blanket loan financing — a single mortgage covering the entire building where all co-owners are co-borrowers. This structure creates significant cross-default risk: if one co-owner stops paying, the entire building's mortgage is in jeopardy, and all co-owners face foreclosure risk. When you encounter a TIC with a blanket loan, treat it as a major due diligence flag and confirm with your lender whether the building can be refinanced into individual fractional loans before you proceed.
| Lender Type | TIC Fractional Availability | Notes |
|---|---|---|
| SF TIC specialist portfolio lenders | Best option | Understand the product; competitive fractional rates; familiar with SF TIC structures. Ask your agent for a current referral list — lender availability changes. |
| Major national banks | Usually not available | Most major banks do not offer fractional TIC loans; they require individually deeded collateral. Chase, Wells Fargo, BofA will generally decline. |
| SF-area credit unions | Varies | Some SF-area credit unions offer TIC loans; confirm current availability before assuming. Product availability shifts year to year. |
| Mortgage brokers | Depends on lender network | Brokers with SF TIC experience can access portfolio lenders; avoid brokers without specific TIC experience — they may send you to lenders who will ultimately decline. |
Fractional TIC loans typically carry a rate premium of 0.25%–0.75% above equivalent conventional mortgage rates. On a $750,000 loan, a 0.5% premium adds approximately $312 per month and about $112,000 in additional interest over 30 years. Compare this to the purchase price discount to confirm the TIC still makes financial sense for your specific situation. Run this math before you fall in love with a TIC property. Call (510) 277-4420 and I can walk through the numbers with you.
Need a referral to a current SF TIC fractional lender? I maintain an active list of lenders who are closing TIC loans right now — not lenders who did it three years ago.
Call (510) 277-4420Step 2: Finding the Right TIC
TIC listings appear in the MLS alongside condos and single-family homes, but they are not always clearly labeled. Some agents list TICs as "condominiums," which can cause confusion. An experienced agent will flag TICs correctly and know how to identify them from MLS data, County Assessor records, and the listing description.
Not all TICs are created equal. A 2-unit Victorian flat in Noe Valley with owner-occupying co-owners, a clean TIC agreement, and soft story compliance is a very different purchase than a 6-unit building in the Richmond with a blanket loan, investor co-owners, and outstanding permits. The evaluation factors below separate the TICs worth pursuing from the ones that will cause headaches.
| Evaluation Factor | What to Look For | Why It Matters |
|---|---|---|
| Building size | 2–6 units preferred for conversion potential | Larger buildings face conversion restrictions; 2-unit buildings have a streamlined path |
| Building age and construction | Pre or post-1979 for rent control purposes; soft story identification | Pre-1979 buildings mean any non-owner-occupied units are rent-controlled; soft story status affects compliance cost exposure |
| Soft story retrofit compliance | MSSR compliance status at sfdbi.org | Outstanding violation = major due diligence issue and potential assessment cost |
| Eviction history | No no-fault evictions (Ellis Act or OMI) in past 10 years | Ellis Act or owner move-in evictions can disqualify the building from conversion lottery eligibility |
| Co-owner occupancy status | Owner-occupied vs. investor-owned co-owners | Owner-occupied co-owners are typically easier to work with; investor co-owners may prioritize income over conversion |
| Loan structure | Fractional loans already in place vs. blanket loan | Fractional structure isolates your risk; blanket loan creates cross-default exposure for all co-owners |
| TIC agreement quality | Clean, modern, fractional-loan-compatible agreement | Old or poorly drafted TIC agreements can block fractional financing or create future disputes |
| Neighborhood and building type | Neighborhoods where TICs are established (Richmond, Sunset, Noe Valley, Cole Valley) | Established TIC neighborhoods have deeper buyer pools at resale and stronger attorney/lender support networks |
I run SF TIC searches for buyer clients with filters for building size, conversion eligibility, and soft story compliance status. Browse current SF listings or call me to set up a targeted search.
Search SF ListingsLooking for TICs in San Francisco?
I run SF TIC searches for my buyer clients with filters for building size, conversion eligibility, and soft story compliance status. Text me your budget and target neighborhoods to get started.
Step 3: TIC Agreement Review
Do not make an offer on a TIC without reviewing the TIC agreement with your attorney first. This is non-negotiable in my TIC buyer practice. The TIC agreement governs your rights as a co-owner for the entire time you hold the property — it defines your unit, your financial obligations, your ability to sell, and your path to conversion.
A well-drafted TIC agreement from an experienced SF real estate attorney typically runs 15–30 pages and addresses every foreseeable ownership scenario. A poorly drafted agreement — or one created decades ago without current fractional loan provisions — can create problems that are difficult and expensive to unwind after close. The cost of having an attorney review a TIC agreement before you make an offer is modest compared to the risk of buying into a poorly structured co-ownership.
Budget 1–2 weeks for TIC agreement review, especially if the attorney requests modifications before you are comfortable making an offer. Some sellers will not accept a TIC agreement contingency — in those cases, it is common practice to review the existing agreement before submitting the offer. Do not skip this step to move faster. The TIC agreement is a long-term contract and needs to be clean before you commit.
| Provision | What to Verify | Red Flag |
|---|---|---|
| Unit assignment | Your specific unit is clearly identified with physical boundaries | Vague descriptions; no exhibit or floor plan attached |
| Ownership percentages | Your % interest is correctly stated and matches the purchase | Percentages do not add up to 100%; mismatch with listing |
| Right of first refusal (ROFR) | Window length (30–60 days typical); process is workable for resale | Very long ROFR (90+ days) makes your unit difficult to sell quickly |
| Expense allocation | Clear formula for common area costs, insurance, and repairs | No enforcement mechanism for non-paying co-owners |
| Default remedies | Clear process if a co-owner stops paying their share of expenses | Weak or absent default provisions — this creates unmanageable co-owner risk |
| Rental restrictions | Whether you can rent, sublease, or use platforms like Airbnb | Blanket prohibition or requirement for unanimous consent to rent |
| Conversion consent | How many co-owners must agree to pursue condo conversion | Unanimous consent requirement — one uncooperative co-owner can block conversion indefinitely |
| Amendment process | How the agreement can be changed over time | Requires unanimous consent to amend (compounded with other unanimous requirements) |
| Fractional loan compatibility | Agreement explicitly permits individual fractional financing | Agreement was drafted under blanket loan structure and has not been updated |
Step 4: Enhanced TIC Due Diligence Checklist
TIC due diligence goes significantly beyond a standard home inspection. You are not just evaluating your unit — you are evaluating the building, the co-ownership structure, the legal and regulatory status, and the conversion pathway. Below is the full checklist I use for every TIC buyer I represent.
Understanding SF Soft Story Retrofit Requirements
San Francisco's Mandatory Seismic Retrofit Program (MSSR) requires soft story buildings — typically wood-frame structures built before 1978 with a ground-floor garage or retail space — to complete seismic retrofits. The SF Department of Building Inspection maintains a public database at sfdbi.org where you can check a building's compliance status. Buildings with outstanding retrofit notices may require significant capital investment from owners. Confirm compliance status before making an offer and factor any outstanding costs into your purchase price calculation.
A no-fault eviction (Ellis Act or owner move-in) in the building's recent history can disqualify it from condo conversion lottery eligibility. If you are buying a TIC with conversion as part of your investment thesis, this check is critical before you offer. Your agent and a conversion attorney can help you research the building's eviction history through the SF Rent Board at sfrb.org. A building with an Ellis Act eviction in the past 10 years is effectively conversion-ineligible for the foreseeable future.
Not sure how to pull a building's DBI compliance record, rent control status, or eviction history? Call me — I run this research for every TIC buyer I represent before we write an offer.
Call (510) 277-4420Step 5: Making the Offer on a TIC
TIC offers in San Francisco use the standard California Residential Purchase Agreement (RPA) with specific disclosures related to the TIC structure. The mechanics are familiar — deposit, offer price, contingencies, closing timeline — but several TIC-specific considerations require careful attention before you sign anything.
One area many buyers underestimate is contingency structure. TIC purchases typically benefit from a TIC agreement contingency (protecting you if the attorney review reveals problems with the agreement), a financing contingency specifying fractional loan type, and an extended inspection contingency that covers common areas and structural elements beyond your unit. Be prepared for sellers to push back on TIC-specific contingencies in competitive situations — this is where having a TIC-experienced agent pays off.
| Offer Element | TIC-Specific Consideration |
|---|---|
| Financing contingency | Specify fractional loan type; confirm your lender can close within the contingency window. Fractional lenders may need more time than conventional — build in 21–28 days at minimum. |
| Inspection contingency | Request access to common areas, foundation, roof, and all shared mechanical systems — not just your unit. A full building inspection is appropriate for a TIC purchase. |
| TIC agreement contingency | Include a contingency on attorney review of the TIC agreement if you have not already completed the review. This protects you if the agreement contains unacceptable provisions. |
| Right-of-first-refusal | Confirm that co-owners have been notified and the ROFR period has elapsed or will elapse before your projected close date. A ROFR surprise can derail your timeline. |
| Seller disclosures | Request disclosure of evictions, code violations, soft story status, pending DBI notices, and any pending litigation involving co-owners or the building. |
| Close of escrow timeline | Allow 45–75 days; fractional lenders typically need longer underwriting cycles than conventional. Confirm the specific lender's current timelines before setting your COE date. |
Ready to Make an Offer on a TIC?
Before I let any of my buyer clients write an offer on a TIC, we have financing confirmed, the TIC agreement reviewed, and the due diligence checklist started. Call or text me to get that process started before you find the property you want.
Step 6: Closing the TIC Purchase
Closing a TIC follows the same general escrow process as a conventional purchase, with a few additional steps specific to the TIC structure. Your escrow officer and title company need to be familiar with SF TIC transactions — not every escrow company handles them regularly. Ask your agent for a referral to a title company with SF TIC experience before opening escrow.
Fractional lender underwrites your interest
Your lender evaluates your financial qualification and the specific TIC interest — percentage ownership, unit assignment, and TIC agreement quality. Fractional underwriting examines the TIC structure itself, which adds time. Build in at least 21–28 days for this phase and communicate directly with your loan officer about anticipated timing.
Title search and insurance on the TIC interest
The title company confirms clear title on both the building and your specific TIC ownership percentage. Title insurance is issued on your TIC ownership interest. Any liens on the building — property tax delinquencies, mechanic's liens, or judgment liens — are identified and must be resolved before close. This step is especially important in older buildings where lien history may be complex.
TIC agreement executed by all co-owners
If you are entering an existing TIC, confirm you are being formally added as a party to the TIC agreement. If the agreement is being updated or amended for the sale, all co-owners must execute the updated version before close. Do not close without confirming that the final, executed TIC agreement is in your possession.
Grant deed recorded with SF Assessor-Recorder
The deed conveying your TIC interest is recorded with the San Francisco County Assessor-Recorder. Review the deed carefully before signing: confirm that your percentage interest, unit assignment, and the building's APN are accurately stated. A recording error in your TIC deed is difficult and expensive to correct after close.
Transfer tax calculated and paid
SF Prop M transfer tax is calculated on your TIC purchase price. The seller typically pays this at close. Verify the applicable rate for your price tier with your escrow officer and confirm it appears correctly on the closing statement. For TIC purchases in the $700K–$1.5M range, the applicable transfer tax rate is typically $7.50 per $1,000 of the sale price (0.75%). Confirm current rates at the time of your transaction.
After Close: Conversion and Exit Strategy
Once you own your TIC, the ongoing ownership experience is generally straightforward — you live in your unit, pay your share of common expenses per the TIC agreement, and coordinate with co-owners on building decisions. The two larger strategic questions are: will you pursue conversion, and how will you exit?
On conversion: if your building is eligible for SF's condo conversion lottery, the process begins with confirming eligibility (no recent no-fault evictions, all units owner-occupied or meeting lottery criteria, building size 2–6 units) and then applying annually. The conversion lottery is administered by the SF Department of Building Inspection, and buildings that have applied in prior years without winning accumulate preference points. Successfully converting a TIC to condo status typically increases the unit's market value by 5–15% and unlocks conventional financing for future buyers — compounding the investment return.
On exit: TIC resales require working through the ROFR process — notifying co-owners and giving them the opportunity to purchase your interest at the offered price before you can complete a sale to an outside buyer. With a well-structured TIC agreement and a 30–45 day ROFR window, this adds manageable time to the sale process. The buyer pool for TICs is narrower than for condos, but in established SF TIC neighborhoods, qualified buyers actively search for TIC inventory and fractional lenders are familiar with the product.
| Post-Close Topic | Key Considerations | Action |
|---|---|---|
| Condo conversion tracking | Monitor building's lottery eligibility and annual application window | Work with a conversion attorney; check SF DBI lottery status annually |
| Owner-occupancy maintenance | Some conversion pathways require continuous owner-occupancy by all co-owners | Do not rent your unit without understanding the impact on conversion eligibility |
| AB 1482 statewide rent cap | If you rent to a new tenant, AB 1482 may cap annual rent increases at CPI + 5% (max 10%) | Consult an attorney before placing tenants in any unit subject to AB 1482 |
| TIC agreement amendments | As co-owners change over time, the TIC agreement may need updating | Use a real estate attorney for any amendments; require all co-owners to sign |
| Selling your TIC interest | Narrower buyer pool; ROFR process required | Work with an SF TIC-experienced agent; allow extra time; notify co-owners per ROFR provisions |
| Refinancing | Fractional lenders only until converted to condo; same pool as purchase lenders | Post-conversion, conventional financing opens up — time your refi to take advantage if rates improve |
Thinking about conversion potential when buying a TIC? I walk my buyer clients through conversion eligibility analysis as part of the purchase process — before you make an offer, not after.
Call (510) 277-4420Full TIC Buyer Cost Breakdown
Understanding the total cost of purchasing a TIC in San Francisco goes beyond the purchase price and down payment. Below is a comprehensive look at all the transaction costs a TIC buyer should budget for. These figures are estimates — confirm exact amounts with your lender, escrow officer, and attorney before relying on them.
| Cost Item | Typical Range | Notes |
|---|---|---|
| Down payment | 20–25% of purchase price | Most fractional lenders require 20% down; some may require 25% for certain building types |
| Fractional loan origination | 0.5–1.0% of loan amount | Portfolio lenders typically charge higher origination than conventional; confirm fee schedule upfront |
| Appraisal | $600–$1,200 | TIC appraisals may cost more than standard appraisals due to additional complexity |
| Title insurance (lender and owner policies) | $1,500–$3,500 | Based on purchase price; both lender and owner policies typically required |
| Escrow fees | $1,200–$2,500 | Split between buyer and seller; confirm allocation with your escrow officer |
| Attorney: TIC agreement review | $500–$1,500 | Budget more if the attorney recommends modifications and negotiations are required |
| Attorney: conversion eligibility analysis | $300–$800 | Optional but recommended if conversion is part of your investment strategy |
| Home inspection (unit + common areas) | $500–$900 | Full-building inspection recommended; more than a single-unit inspection |
| SF Prop M transfer tax (buyer's share if negotiated) | 0.5–0.75% of purchase price | Seller typically pays; occasionally negotiated as a split or buyer cost in competitive offers |
| Recording fees | $100–$300 | SF County Assessor-Recorder fees for deed recordation |
| Prepaid interest, property taxes, insurance | 2–4 months' worth | Standard prepaid/impound account funding at close |
For a typical SF TIC purchase at $900,000, total out-of-pocket costs beyond the down payment typically run $12,000–$22,000, depending on negotiated terms and whether conversion analysis is included. This is modestly higher than a comparable condo purchase, primarily due to attorney fees and fractional loan costs. Build this full cost picture into your pre-purchase budget. Call (510) 277-4420 for a personalized estimate based on your specific price target.
TIC Buyer Quick-Reference Cheatsheet
Frequently Asked Questions
Related SF Ownership Resources
Ready to Buy a TIC in San Francisco?
I walk every TIC buyer through financing pre-approval, attorney referrals, and the full due diligence checklist before we even start searching. Call or text me to get the process started the right way.
