Underwriting a Cow Hollow Condo as a Rental

Thinking about renting out a Cow Hollow condo but unsure how to run the numbers? You are not alone. Between HOA rules, San Francisco rent regulations, and financing hurdles, the details can get confusing fast. In this guide, you will learn how to underwrite a Cow Hollow condo like an investor, avoid common pitfalls, and build a simple model you can trust. Let’s dive in.

Cow Hollow rental fundamentals

Cow Hollow sits near the Marina, Pacific Heights, and Russian Hill. You get strong demand from professionals, couples, and small families who value walkability, dining on Union and Fillmore, and access to downtown and tech corridors. Many buildings are mid-rise or boutique, with older walk-ups sprinkled in.

The units that rent fastest are usually 1 and 2 bedrooms. Features like a terrace or roof access, in-unit laundry, and parking often command a premium. The market is high cost and can be cyclical. Seasonality and the broader tech economy can affect rents and vacancy, so always check current comps before you buy. Unit condition and amenities matter in Cow Hollow, so be conservative until you confirm proof of rent.

Confirm what you can legally rent

Check San Francisco rent control

San Francisco’s Rent Ordinance can limit rent increases and eviction options on many older units. Whether your specific condo is covered depends on the building’s age and history. Start with the San Francisco Rent Board’s guidance on rent control to verify your unit’s status. If a unit is rent controlled, do not underwrite using a big jump to “market rent” without legal guidance.

Understand AB 1482 statewide protections

California’s Tenant Protection Act (AB 1482) sets limits on annual rent increases and adds just-cause eviction rules for many properties. Some condos are exempt, and newer buildings are generally exempt for a period. Review the Tenant Protection Act (AB 1482) text to see how it may apply to your unit. Even if your condo is not under local rent control, AB 1482 can still affect your rent and exit strategy.

Know the short-term rental limits

San Francisco restricts short-term rentals to primary residences, and registration is required. Many HOAs also ban or limit short-term rentals. If you plan to explore furnished or short-term strategies, first review the City of San Francisco’s short-term rental rules and your HOA documents. Do not assume short-term income is allowed.

Read the HOA packet like an investor

Verify rental policy and screening

Obtain the CC&Rs, bylaws, and rules. Look for rental caps, owner-occupancy minimums, minimum lease terms, board approval steps, and any sublet or guest restrictions. If a rental cap is close to the limit, you might not be able to lease right away or after turnover. Also note if the board requires tenant background checks, which can extend vacancy between tenants.

Analyze budget, reserves, and assessments

HOA dues can be the single largest operating expense line item. Read the current budget, year-to-date financials, and the reserve study to see if reserves are healthy. Meeting minutes from the last 12 to 24 months can reveal upcoming projects, litigation, or special assessments. Model a range of HOA increases and consider a contingency for surprise assessments, especially in older or smaller buildings.

Understand insurance responsibilities

Request the HOA’s master policy and deductibles. Clarify what the master policy covers versus what you must insure with an HO-6 condo policy. If you will rent the unit, add landlord coverage options that include liability and loss of rent. A large master policy deductible can become your out-of-pocket cost after a covered loss, so factor that risk into your reserves.

Know the legal framework

California HOAs operate under the Davis-Stirling Common Interest Development Act. If you need a reference on board responsibilities, assessments, and process, review the Davis-Stirling Act for definitions and procedures.

Finance with project eligibility in mind

Investment loan basics

Investment property loans often require larger down payments, commonly 20 to 30 percent, and may have higher rates and fees than owner-occupied loans. Lenders also review project-level risk, including HOA delinquency and pending assessments, so address those items early.

Condo project approval

Many lenders follow Fannie Mae, Freddie Mac, or FHA rules for condo project eligibility. If a project is not approved, you might still finance the purchase with a larger down payment or different loan product. Ask your lender for the condo questionnaire and project review requirements early. For reference, see Fannie Mae condo project eligibility, Freddie Mac condominium guidance, and HUD’s FHA condominium resources.

Conforming limits and jumbo loans

San Francisco is a high-cost area. Compare current conforming limits to jumbo product options when you price financing. You can review the latest limits at the FHFA conforming loan limit page.

Taxes and depreciation basics

Rental income is taxable, and you can generally deduct ordinary operating expenses, mortgage interest, property taxes, HOA dues, and depreciation. Residential rental property is typically depreciated over 27.5 years. When you sell, depreciation may be recaptured and long-term capital gains may apply. Review the federal rules in IRS Publication 527 and speak with a CPA about your specific situation. Some investors also consider 1031 exchanges for tax deferral in qualifying scenarios.

Build your underwriting model

Start with a simple framework that you can refine once you have the HOA packet, current rent comps, and preliminary lender feedback.

• Gross Scheduled Rent (GSR) = monthly rent × 12.
• Vacancy & Credit Loss = GSR × vacancy rate.
• Effective Gross Income (EGI) = GSR − Vacancy & Credit Loss + Other Income.
• Operating Expenses = property taxes + insurance + HOA dues + utilities (if paid by landlord) + management fee + routine maintenance + legal/accounting + reserves for replacements.
• Net Operating Income (NOI) = EGI − Operating Expenses.
• Debt Service = annual mortgage payments.
• Cash Flow Before Taxes = NOI − Debt Service.
• Cap Rate = NOI / Purchase Price.
• Cash-on-Cash Return = Cash Flow Before Taxes / Cash Invested.
• Debt Service Coverage Ratio (DSCR) = NOI / Debt Service.

Expense assumptions to scope

• Vacancy: use a baseline of 3 to 8 percent and stress higher. San Francisco can vary with the season and economy.
• Property management: 6 to 10 percent of collected rent for long-term rentals, often higher for single units or full-service.
• HOA dues: use the actual number from the budget. This can make or break your deal.
• Maintenance and repairs: if the HOA covers many building systems, your routine maintenance can be lower. Set aside 5 to 10 percent of EGI or a fixed annual amount that fits the unit size and age.
• Capital expenditures or special assessments: add a contingency if reserves look thin or projects are pending.
• Property taxes: San Francisco’s base rate is roughly 1 percent of assessed value, plus parcel assessments. Use the projected tax bill.
• Insurance: HO-6 with landlord coverage. Request multiple quotes and review the HOA master policy deductibles.

Revenue considerations

• Parking: if your unit includes a parking space, research what similar spaces rent for and whether you can rent it separately.
• Storage or roof access: premium features in Cow Hollow can lift rent. Verify market demand before assuming a large bump.
• Utilities: if you plan to include utilities, estimate those costs carefully and cap your exposure in the lease.

Stress test your deal

San Francisco is dynamic, so bake in room for surprises. Run downside cases to understand your margin of safety.

• Sustained rent decline of 10 to 20 percent.
• Extended vacancy of 6 to 12 months versus a typical 1 to 3 months at turnover.
• HOA dues increase of 10 to 25 percent.
• Special assessment equal to 1 to 5 percent of unit value.
• Interest rate increase if you plan to refinance or use adjustable financing.
• Changes in local rules that affect leasing or expenses.

Due diligence checklist

Unit-level items

• Current lease, rent roll, and last 12 months of income and expense.
• Utility bills and any service contracts.
• Proof of owner occupancy history and rent receipts, if applicable.

Seller and property disclosures

• Transfer disclosure statements and known defects.
• Pest report and any roof or common element notes if accessible.

HOA documents

• CC&Rs, bylaws, rules, and rental policy.
• Current budget, year-to-date financials, and reserve study.
• Meeting minutes for 12 to 24 months and any special meeting minutes.
• Insurance declarations and master policy details.
• Statements of special assessments and owner delinquency reports.

Lender and project approval

• Condo questionnaire and project approval status.
• Any lender overlays tied to HOA delinquency or assessments.

Inspections and building condition

• General inspection and pest inspection.
• Any seismic or structural issues noted in minutes.

Legal and regulatory checks

• Building age and rent control status with the Rent Board.
• AB 1482 applicability based on ownership and building age.
• Short-term rental registration requirements if relevant.

Professional contacts to line up

• Mortgage lender experienced with SF condos and investment loans.
• HOA manager or counsel for clarifying budget, reserves, and rules.
• Local property manager for rent comps, fees, and turn costs.
• CPA for depreciation, tax planning, and hold vs sell scenarios.
• Real estate attorney for specific rent control and eviction questions.
• Insurance broker for HO-6 and master policy coordination.

What makes Cow Hollow pencil

In Cow Hollow, three factors drive your underwriting more than anything else. First, verify whether the unit is subject to San Francisco rent control or statewide tenant protections. Second, analyze HOA dues, reserves, and rental rules because they directly shape cash flow and tenant eligibility. Third, use current, unit-specific rent comps and a realistic vacancy assumption. If you check these boxes, you will avoid the biggest surprises and underwrite with confidence.

Next steps

Underwriting a condo here is part numbers, part paperwork, and part local nuance. Start with legal status and HOA health, confirm what you can finance, then build a conservative model. If you want a second set of eyes or access to local manager and lender referrals, connect with Steve Giannone to review your scenario and fine-tune your plan.

FAQs

How do I tell if my Cow Hollow condo is under San Francisco rent control?

• Check the building’s construction date and confirm status with the San Francisco Rent Board. If covered, rent increases and eviction options are limited by local rules.

Does AB 1482 apply to condos in San Francisco?

• It can. Some condos are exempt, and newer buildings are generally exempt for a period. Review the law’s criteria and verify based on your ownership and building age.

Can I run a short-term rental in a Cow Hollow condo?

• Only if you meet San Francisco’s primary-residence and registration requirements and your HOA allows it. Many HOAs restrict or ban short-term rentals.

What HOA issues most affect rental underwriting?

• Monthly dues, reserve strength, rental caps, and upcoming projects or litigation. These drive operating costs, leasing ability, and lender risk reviews.

What DSCR do lenders often look for on investment condos?

• Many investment lenders target a DSCR near 1.2 to 1.25 or higher, depending on the loan and borrower profile. Ask your lender about their specific requirement.

How should I estimate property taxes for a new purchase?

• Use the expected assessed value and apply San Francisco’s base rate of roughly 1 percent plus parcel assessments. Your lender or tax bill estimator can help refine it.