A 26-year-old property owner shares his non-traditional approach to breaking into a red-hot housing market — even in one of the most expensive cities in the US

• 26-year-old Anirudh Kaushik decided to purchase a home in San Francisco during the pandemic.
• He chose a tenancy-in-common, or TIC, ownership model with an adjustable-rate mortgage.
• Kaushik shared the details of his investment strategy in an interview with Business Insider.

Today's housing market poses various challenges for Gen Z and millennials looking to buy property. High mortgage rates, skyrocketing home prices, and pesky hidden costs all make owning a home extremely difficult.

It's not impossible, though. Anirudh Kaushik, 26, successfully navigated the real-estate market in San Francisco and became a homeowner two years ago. In an interview with Business Insider, he shared how he bought property in one of the US's priciest markets and how he's since been managing his investment.

The nationwide housing crisis is exacerbated in the Bay Area. Even though San Francisco housing prices have fallen from pandemic highs, the city frequently tops the list of the most expensive housing markets in the US, with a median price-to-income ratio of nearly 10 times.

Buy or rent?

Kaushik took advantage of more favorable buying conditions during the pandemic. The Fed had lowered interest rates to near zero, making it a good time to purchase property with low mortgage rates. After Kaushik did the math, he realized that it was only slightly more expensive to buy an apartment compared to renting one. His monthly mortgage, property taxes, and HOA fees came out to roughly $3,300 a month, documents viewed by Business Insider show. Around $2,200 is his monthly mortgage payment, followed by around $700 in property taxes and $400 in HOA dues.

Owning property has given Kaushik the flexibility to travel around and live a bicoastal lifestyle, as he rents out his San Francisco apartment during the summer while he lives in New York.

One property, multiple owners

What makes Kaushik's situation slightly different than buying a traditional apartment or house is that his apartment ownership model is classified as a tenancy-in-common (TIC). This means that two or more parties share a percentage of the total ownership rights to the property. A written agreement stipulates who gets access to which units and how common areas like parking spots are split.

Essentially, a TIC is a way to co-own a property. Each individual owner can exercise control over their portion of the property while being able to pool resources with other owners to make investments that they wouldn't be able to do alone.

In California, TICs are common because they provide a more affordable way for people to buy property — often at prices 10-20% lower than traditional ownership methods. TICs are especially popular in San Francisco, a city where strict regulations have led to a constrained supply of condos and housing.

"I knew going in that those TICs or those co-ops were definitely cheaper than an equivalent condo in San Francisco," Kaushik said.

Although the overall cost might be cheaper than a condo, TICs often require higher down payments. Kaushik's lender, a local San Francisco bank, required a minimum 25% down payment for residential TIC lending. He owns one out of the total nine units in his building, or 11.11%, Kaushik told Business Insider.

Adjustable-rate mortgages: a double-edged sword

While shared ownership can make it easier to buy property, it can also make it more complicated for lenders to give out mortgages since TICs are less liquid than single homeownership models. Kaushik went to a specialized local bank experienced in TIC lending for a fractional TIC loan instead.

"Most lenders don't give out mortgages to these types of housing units like shared ownership, so I ended up getting an adjustable-rate mortgage," Kaushik said. Adjustable-rate mortgages (ARMs) typically start at a low fixed rate and can fluctuate after the initial fixed-rate period is over.

Kaushik was able to lock down a mortgage rate of 3.1% when he bought his apartment in January 2022. At the time, the 30-year average fixed rate was 3.22%, significantly lower than the current 30-year average fixed rate of 6.86%. Looking back, Kaushik bought at an optimal time — by the end of 2022, mortgage rates had nearly doubled, with the 30-year rate jumping to 6.27%.

Kaushik's fixed rate period is seven years, which means that after 2029, the rate could change based on market conditions.

Kaushik's done his homework on ARMs. "That ARM concept is very, like, 2007," he said. It's true that ARMs played a role in the subprime mortgage crisis of 2007 and 2008 — the adjustable rate does have the potential to saddle homeowners with steep monthly payments once the fixed rate period ends. However, the fixed rate period allows homeowners to pay a lower mortgage rate than if they had a traditional mortgage.

Kaushik is fairly confident that once seven years are up, his bank will increase the mortgage rate. Even though the Fed is likely to start cutting interest rates soon, Kaushik believes the near-zero interest rates of 2021 and 2022 are solidly in the past.

"As a result, I viewed this as like a seven-year lease," Kaushik said.

As a younger homeowner who likes to travel, he's not particularly attached to keeping his apartment for the long term, so the seven-year period felt like the perfect amount of time to him.

So what is Kaushik planning to do once the fixed rate period ends? He's contemplating a few options.

"My rate is almost certainly going to go up," he said. "So at that point, I'm unlikely to continue paying that for the same property."

The simplest option is to sell the property and move somewhere else. Selling a few years down the road could be a good choice, as it's expected that the housing market should open up and mortgage rates will come down from their current highs. Even though San Francisco home prices have come down since the pandemic highs, Kaushik is confident that if he chooses to sell at the end of his seven-year period, prices will rebound back to how much he paid for the apartment initially.

Kaushik is also considering renting out the apartment full time to generate passive income. He already rents for a portion of the year as he travels, so this wouldn't be a big leap. This decision would depend on how much his mortgage rate increases in 2031, as well as his lifestyle goals at that time.

For now, Kaushik is channeling the younger generation's ethos of flexibility and optionality when it comes to planning for the next decade.

"Once I'm at year six or something, I'll probably have a lot more information to make that kind of decision," Kaushik said. "But I think ultimately none of the options are super risky or dangerous."