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Buying & Selling a Home

Condos for a Crowd

Buyers join forces to battle high city housing prices.

In San Francisco, where condominiums cost an average of $600,000 and ordinary townhouses frequently top $1 million, buyers have found a money-saving alternative. They're banding together to buy small apartment buildings as TICs, or tenants-in-common -- legalese for co-owners. For $100,000 to $250,000 less than a single unit, each partner owns a percentage of the building instead of an apartment. A legal agreement establishes the division of living space, expenses and chores, plus what will happen if a partner wants to sell.

Jeff Torchon, 45, went in on a two-unit building with a married couple. Torchon bought his 46% share of the Edwardian building for $485,000, which got him 1,500 square feet and parking. Like many TIC owners, the partners share a mortgage, too. Their goal is to stand on their own eventually, so they're converting the building to a condominium and anticipate refinancing when that's done.


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The downside is the cost of financing. Several San Francisco-area lenders offer custom mortgages for TIC groups, but at 1 to 1.5 percentage points more than for a standard condo. TIC buyers should still benefit because they pay less per square foot than they could negotiate individually. Rates are higher because institutional investors can't buy packages of TIC loans yet. Once they can, not only might borrowing rates ease, but the movement could go nationwide -- or at least to other expensive cities.