Buying a Fixer in San Francisco

Posted On: July 27, 2023
By: Team JacksonFuller

Ever wondered what it takes to buy a house, tear it down, and rebuild it as your dream house? You’re not alone — and in San Francisco, your tear-down options will be severely limited by the SF planning department. From the cost of acquisition to permitting, demolition, and construction, navigating the process can be overwhelming. Here’s a quick overview of what to think about before buying a fixer-upper in San Francisco.

Currently Available Glen Park development opportunity:

Single Family Home
$1,495,000 | 2, 2, 0
MLS# 423755019
Bring your contractor and your imagination to this diamond in the rough single family fixer with RH-2 zoning and downtown views in a stellar Fairmount Heights location along the border of Glen Park and Noe Valley. Originally built in 1907,...


Financing a Fixer
Let’s talk money. Financing a home purchase with the intention to destroy said home is a serious challenge. For obvious reasons, if you buy the property with a loan and the existing house is the collateral for your loan, your lender will not be okay if you tear it down.  Mortgage agreements do not allow the borrower to demolish the home, because you’d be destroying the asset that secures the loan.

Paying for the purchase in all-cash solves the “lender says no” problem by eliminating the need for a lender. If that’s not an option, there are generally also a variety of loans geared to rehab a property or a construction loans. These generally aren’t conforming loan products, you’ll want to work with a local mortgage broker who has relationships with local lenders and other portfolio lenders.

Only in The Bay Area: A couple in Marin County, California, bought a $4 million estate just to knock it down, because it blocked their view of the San Francisco skyline and Golden Gate Bridge. That’s certainly one type of fix!


Zoning, Historic, & HOA Restrictions
As the mantra goes, “begin with the end in mind!” Before you buy, think carefully about what you want your project to look like when complete.

Zoning laws govern the type, size and location of buildings on any property, and in San Francisco, home rebuilds that extend the existing footprint of the original house require substantial notification and neighborhood involvement processes. Zoning laws also restrict the height and density of new buildings, meaning a single-level home could not be replaced with a two-story structure without a variance. If a new proposed use doesn’t conform with the existing zoning, the city may grant a variance for the proposed project.

In reaction to the great state housing crisis, there have been a lot of recent changes to statewide and local zoning laws and requirements.  If a lot currently contains a single-family home, local zoning regulations could prevent you from building anything other than another single-family home there. But recent state laws may override that restrictive zoning. Having a smart land-use attorney on your team is definitely important.

©Katie Chizhevskaya/Adobe Stock

There are a variety of historic designations from the city, state, or federal level that may impact your ability to fix up or rehab a property. From being a historically significant property because of a past resident or builder, to just being located in a historic district or area, understanding the historical context and importance of your property is critical.

San Francisco also has neighborhoods that have covenants regarding landscaping, construction, building style, or other restrictive building covenants. Most of these neighborhoods can be found in the West of Twin Peaks area of San Francisco and include classic SF neighborhoods like St. Francis Wood. Be sure to check whether there is a homeowners association that governs the neighborhood. HOA bylaws can be even more restrictive than zoning ordinances, so be sure to understand all the possible rules that impact your building site.

Having a great real estate team help you find the right property and navigate all of these issues prior to making an offer is critical, and that is part of our value. 


Are Permits Required?
Yes, they absolutely are. Once you understand site zoning and any other planning requirements, it’s time to think about permits. You will need a lot of them. In San Francisco the building and planning departments will typically be the lead agencies that you interact with when pulling permits to update a home. However, there are many other city departments that could get involved and many other types of city and/or county permits may need to be pulled as well.

Permits to demolish a building or portion of a building vary based on location, and applications for them may are typically bundled with the other permits needed to rebuild, such as ones for plumbing, utilities, tree preservation, site grading, drainage, and more. You’ll want to apply for permits as soon as possible to make sure you comply with local planning and code provisions and have plenty of time to implement to finish your project.

Before the work begins,  the site must also be secured for safety and to contain construction dust or sediment. In addition to the city or county permits you’ll need to pull, you can also expect sizable hauling and dumping fees. Temporary utility infrastructure to the house must also have to be properly planned for.


How much does it cost to demolish a house?
This is San Francisco, so the reality is that fixing up homes is not inexpensive. The city of SF typically doesn’t issue demolition permits, but will instead require that some portion of the original building be retained. Demolition costs vary wildly. Prices will typically be higher in cities and lower in less populated or rural areas, and the more complex the structure is to tear down, the more expensive the cost will be.  In other areas of the country, demolition of a home that’s less than 2,000 square feet can range from $6,000 to more than $25,000, according to puts the national average cost of home demolition at $18,000.

Here in San Francisco, home projects that seek to change a building’s envelope or footprint typically have six-figure budgets. The abatement of environmental issues, like asbestos or lead paint can also add substantial costs.

©aleutie/Adobe Stock

Bottom line
Buying and fixing up a house can be expensive and will require multiple permits and many government agencies. It requires navigating complex zoning and development restrictions, so it is important to consult with experienced professionals and local authorities before proceeding.

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