Foreclosure Field Report

This is a duplex with no parking, one two bedroom unit with two baths and one one bedroom unit with one bath and an extra room, both attached to each other. Condition inside the units was excellent, the past owner had done a total remodel recently.

The previous owner had purchased this place for $585,000 in 2006. This came onto the market as a reo for $368,900. I previewed it asap, within one day, there were already multiple offers over list price.

I estimated the gross rents on this one to be $27,000 per year/ $2,250 per month or $700 per room on the two bedroom and $850 for the one bedroom. Even though the condition of the units was excellent, no parking does impact the rents, although not severely.

I submitted an offer on this one for one of my clients (hi T.M.!), but after days of silence from the listing agent side, we discovered that this bank just took one of the other initial offers with no counteroffer to any of the buyers One round only, the initial round.

Every bank is different, but I’m seeing this more and more now. This one was an Indymac, something to take note of for future offers.

If you’re into numbers check out this chart that lays out all the cashflow, percentage returns, etc. I just started using this program, and it’s pretty nice to have visual representations of what’s going on with the property.

One caveat: I was pretty conservative on this one with the expenses and such, so the cashflow is quite low compared to what we’re used to. Still, you could own this property for zero money out of pocket on a monthly basis.

Check it out:

You Know You Want To Read This…

Google Maps:

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And of course I have a few pictures:

I didn’t even get a chance to preview this one, it went into escrow in seven days. Here’s some comments from the listing agent: “SELLER HAS RECEIVED MULTIPLE OFFERS! HIGHEST AND BEST DUE FRIDAY 3RD AT 5PM! Seller is in the process of finishing the work.”

It’s a triplex, with two two bedrooms and one studio. Projected rents are $1,500 for the two bedroom units and $625 for the studio for a gross of $3,625. They seem rather high for this property being so close to El Cajon Blvd.

So far, so good, and then I looked at the tax record. Owner of record is “Budget Handyman Inc”, a corporation that appears to be owned by the listing agent for the property. Tax record shows only two units, not three as advertised on the mls, so you have potential permitting issues.

The owner bought it 02/05/09 for $261,000 and is now trying to sell it after a “quick and dirty” remodel for $420,000-$450,000.

Interesting.

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Seven day market time. Faster than I expected. I’ll keep my eye on it to see if it falls out.

This is a great investment property and is interesting for several reasons. One, the list price is too high: $569,000. The bank took it back for $567,000, so it’s easy to see where it came from. Back in October of 2004, this fourplex sold for the remarkable price of $810,000. Not sure how that was pulled off, it was high even for back then.

The great thing about this being priced high at the outset is that it turns off other potential buyers. Most bank-owned properties are listed so low that there are multiple offers in on them in a matter of days. Price it high, and it just sits. The seller is still a bank that needs to unload it’s inventory though, so the savvy buyer can make a low offer and take their time negotiating it without (in many cases, but not all) feeling pressured by the ever present “other offers”. The low offer will be submitted and the process can started.

I like the location of this one-right down the street from a walkable part of Adams Ave, next to a coffee shop. University Heights itself is a step up from Normal Heights (as much as I like it there).

Nice little parcel and vintage ’40’s units with well-maintained wood floors. Some are original inside, some aren’t. There are two 1/1’s and two 2/1’s with four separate garages that appeared to be single car. One of the units was above the garage. The garages lend themselves nicely to either increased rents on the units or for renting them out separately for storage to outside renters $100-$200 bucks a month depending on size.

This one is worth taking a shot at.

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front of idaho

exterior entrance

basically an original, funtional kitchen

more of an original bathroom

floor second unit

this bathroom was remodeled at some time

garages with unit on top

This one looks pretty rough as well,  although the mls does state “80% of a remodel completed”. So I guess they walked away from the remodel when they ran out of money. It is another short sale, tenant occupied.  Offer status unknown, mls says “offer accepted pending lender approval of short sale”, then “all offers being submitted to lender”. Doesn’t mean much anyway. People jump in and out of short sales all the time. 

Unit makeup is pretty good, a 3/1 and a 2/2 at 1,257 and 726 square feet. 

I didn’t get to see the inside-the mls pictures look pretty good. Still tenant occupied. It’s a nice parcel with quite a bit of parking.  Location is great, up in the north part of University Heights with a desirable tenant mix and nice walkable neighborhood.

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List price is $425,000-$465,000. Compared to units I’m currently seeing sell in the $350,000 range, I definitely think it’s overpriced. Being that it’s a short sale, if you’re interested in an offer, I would recommend the “fire and forget” approach. Get a low offer in and check up every month or so while you continue to look at other stuff. 

All in all, this could be a great long-term property to own-the price just needs a lot of work. 

front house viewed from street

back view of front house

view towards the back unit from the back of the front house