A dilapidated shack in the Potrero Hill neighborhood of San Francisco is on the market for $2.5 million. The 640-square-foot home isn’t safe to enter, but it comes with two things that explain its staggering price tag: a view of the city (see photo below) and a demolition permit. 

The city’s Planning Department already has granted permission to demolish the existing shack and replace it with a four-story, 4,451 square-foot building with four bedrooms, four bathrooms, a two-car garage and private elevators. It could be built as either a one-unit or two-unit building. It took the current owner two years to go through the permitting process. However, new owners would need to obtain a final building permit before starting construction.

San Francisco is a city that is famously opposed to tearing down buildings -- whether they’re the Victorian style that dominates its neighborhoods or something more modern. In December, the Planning Department ordered an owner to rebuild a contemporary-style home exactly as it had stood before he demolished it without permission last fall. In a unanimous vote, he was ordered to use “original methods and materials” to match the look of the original structure. If he doesn’t, all he has is a piece of land -- he won’t be allowed to construct anything else.

So, to find a home in a desirable neighborhood with views of the city that also comes with a demolition permit is notable. According to the Zillow listing, the home -- ahem, shack -- has been on the market for 9 days and has been viewed by more than 3,000 people. Anne Laury, the Coldwell Banker agent representing the seller, said she has handed out more than two dozen "disclosure packettes" to potential buyers -- a high-level of interest for a property. The lot is 2,495 square feet, or 0.06 acres. That’s just enough for a narrow house and a small backyard. 

According to Zillow, the property last sold for $1.5 million in September of 2016. If the owner does get the $2.5 million asking price, that’s payback of a cool $1 million -- minus about $36,000 in property taxes assessed from that time by the city, the cost of selling the home, and fees associated with getting the permits.

Here's a picture of the view, taken with a drone, with a partial rendering of the building approved for the site. (Photo Anne Laury/Sutro Architects)