TICs are one of the most misunderstood ownership structures in San Francisco real estate, and because they do not really exist in other markets, buyers arrive here with secondhand information that scares them off entirely. I am a TIC owner myself, and I work with buyers on TIC purchases regularly. The four concerns I hear most often are either outdated, overstated, or apply equally to condos. Understanding what a TIC actually is in today’s market can open up real opportunities, especially for buyers who are on the edge of their price point and need every advantage they can get.
A TIC, or Tenancy in Common, is a form of property ownership where each owner holds a percentage of a building with the exclusive right to occupy a specific unit. It is a uniquely San Francisco structure and it makes up about 10% of the overall TIC and condo market in the city.
In a TIC, you do not own your unit outright the way you do with a condo. You own a percentage of the whole building, with a legal agreement that designates your specific unit as yours to use. If you are in a building with two equal units, you own 50% of the building with exclusive rights to your unit. The day-to-day experience of living in a TIC is nearly identical to living in a condo. You have HOA-style rules, you meet with co-owners about building decisions like reserves and exterior maintenance, and you have your space. It just does not show up as a separate parcel on the city’s records the way a condo does.
TICs exist in large numbers in San Francisco because of the city’s condo conversion restrictions. Many buildings that would have become condos in other cities never went through that process here, so they stayed as TICs. That history is also what gives TICs their discount relative to condos, and why understanding them matters for buyers trying to get more for their money.
The TIC information will begin after the home tour.
TIC loans require going to specific lenders rather than major banks, but the product has evolved significantly and the interest rate gap between TIC loans and condo loans has narrowed to roughly a quarter of a percentage point today.
This is the concern I hear most often, and it is the one that has changed the most over time. Yes, TIC loans require specific lenders. You cannot walk into a Chase or Wells Fargo and get a TIC loan. There are roughly four to seven active TIC lenders in San Francisco at any given time and we have our go-to contacts, so reach out if you want an introduction.
What has changed is the product itself. Traditionally, TIC loans carried interest rates up to 2% higher than comparable condo loans. That is a meaningful hit to purchasing power. Today the gap is roughly a quarter of a percentage point. There was actually a period in recent years when TIC rates were lower than condo rates. The gap has essentially closed. On top of that, 30-year fixed products are now available from some TIC lenders, which was not the case historically when adjustable-rate mortgages were the only option. Most TIC lenders require 20% down, and some require 25%, so that is worth factoring in. But the concern that TIC financing is in some way exotic or risky does not reflect the current market.
Fractional financing has replaced the old group loan structure, so each TIC owner has their own independent loan and their own relationship with their lender. A co-owner’s default does not directly affect your mortgage.
This is a concern rooted in how TIC financing used to work. Years ago, TIC buildings had one group loan covering all owners, which meant everyone’s financial position was tied together. That structure is largely gone. Fractional financing means each owner gets their own loan, makes their own payments, and has their own lender relationship.
The one shared financial element in a TIC is the property tax bill. Because there is one APN number for the entire building, there is one property tax bill for the whole property, and all co-owners contribute to paying it twice a year. It is valid to ask what happens if a co-owner does not pay their share. But I would point out that you could ask the same question about a condo building where other owners stop paying their HOA dues. That affects the building’s reserves and everyone’s ability to fund shared maintenance. Co-ownership in any form involves some shared financial exposure. A TIC is not uniquely risky on that dimension.
The discount between TICs and comparable condos has narrowed from roughly 20% historically to about 5 to 10% today, driven by better financing options and more buyers considering them. That remaining discount is actually what makes them attractive.
There was a time when TICs sold at significant discounts of around 20% below comparable condos. That made them appealing to investors and buyers who wanted a deal, but it also reinforced the perception that nobody wants them. The discount has compressed as TIC financing has improved and more buyers have become comfortable with the structure. Today the range is more like 5 to 10% depending on the quality of the unit and the building.
That remaining discount is still meaningful. The condo market in San Francisco rose at least 10% last year. A 5 to 10% discount on entry price, combined with a financing rate that is now nearly identical to condo rates, adds up to real purchasing power for buyers who are close to the edge of their budget. In a market this competitive, finding any way to get more for your money matters.
One additional factor for two-unit TIC buildings specifically: they currently have a pathway to fast-track condo conversion in San Francisco, which buildings of three or more units do not have right now. A two-unit TIC that converts to a condo closes the resale gap entirely. That is worth considering when you are evaluating a purchase.
TICs involve real considerations worth understanding, but the day-to-day experience of owning one is nearly identical to owning a condo. I own a TIC and I think buyers who rule them out entirely are closing the door on real opportunities.
The risks worth actually thinking through are these: you are buying at a discount, which means you will likely sell at a discount. Your pool of buyers when you go to sell is smaller than it would be for a condo because fewer buyers consider TICs. And if you plan to rent your unit, rent control in San Francisco is more stringent for TICs than for condos, which limits how much you can increase rent annually. If you are thinking about a TIC primarily as an investment property in a soft rental market, that is a real constraint.
But if you are buying to live there, and most buyers are, those risks look much smaller. I own a TIC. The day-to-day experience feels no different from owning a condo. You have your space, your rules, your co-owners, your reserves, your building decisions. The tangible things you are managing every day are identical.
What I keep coming back to is this: buyers who rule out TICs entirely because of concerns that are either outdated or apply equally to condos are eliminating about 10% of the available market from their search. In a city where inventory is this tight and competition is this intense, that is a real cost. If understanding TICs better would help you get into a neighborhood or a product type that you otherwise could not reach, it is worth the conversation.
Reach out to us if you want to talk through whether a TIC makes sense for your situation. We work with a lot of buyers navigating this question, and the answer is genuinely different for everyone.
