Foreclosure Field Report

I’ll be the first to say it’s been way to long since I’ve posted. To be honest, all the ones I was going to post of late, I ended up selling. So rather than create even more competition for my clients, I sold the properties instead. The benefit to YOU is that you get actual real world case studies of what’s REALLY happening out there-plus I of course have a ton of new ones to throw in here.

Check out this bad boy:

Stormtrooper art-I guess it’s what happens in the “hip” part of town. Found it on the ancient garage door of this awesome place on Dale St:

You’ll see in the video this place is sweet. Bank owned, arguably the best neighborhood in South Park:

Catch is, it’s sold already. In six days. Doesn’t surprise me. A beautiful big old house with two extra units, a big chunk o’ land and a garage to boot. It is just in escrow, not closed yet, so I’ll let you know if it pops back up on the radar.

Stats:

List price $444,777. Built in 1911. One 2/1, one 1/1 and one 0/1.

Google Maps:

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This one ended up having three offers in about that many days; the seller accepted the first offer with no counteroffer as the initial offer was high enough for them to take right away.

I am seeing multiple offers on every property I look at now. This is one of those niche markets with a very responsive investor pool, so you just have to be prepared to know your numbers, evaluate and make a decision quick. That doesn’t mean you have to buy quick, but be prepared to think quick.

It’s much more common now than even a few months ago for the first round of offers to be good enough for the seller to take one right away with no counteroffer to anyone, so knowing those numbers is critical.

Ted

This was kind of an interesting one, as I’ve never been to this specific neighborhood. I bet a lot of locals have never even been there, unless they knew somebody. It’s a quick little drive or bike ride to downtown South Park, you pop out right at Rebecca’s Coffee on Juniper and Fern Streets. Check it out:

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This is a duplex property with two two bedroom, one bathroom units. Listing agent states actual rents of $1,200 and $900 and projected rents of $1,350 and $1,100, respectively. I guess there’s a family member renting the front unit and a long-time tenant in the back one so the rents are not up to market.

I couldn’t go inside as both are tenant occupied, but I walked the outside of the property and checked out the neighborhood. It’s really nice. All houses, no townhomes or apartment buildings-most of the houses in the area were really well maintained, and added onto. A lot of pride of ownership in this little forgotten nook.

One of the main things to pop out at me on this thing is that it’s priced like a foreclosure property, but is not a foreclosure. So I checked the tax record and saw that besides moving the title around in various trusts, the last thing this transferred hands for money was in 1984 for $1,000 bucks.

Probably a family member deal, but hard to say. The owner took out a loan for $100,000 in 2002, and that’s it for notes on the property. If you payed only $1,000 for this back in the ’80’s and only have one note for (now less than) $100,000, you can price it with the foreclosure market in mind, like this guy did.

The street dead ends at kind of a cool little park that points south and overlooks the 15, 94 and the rest of South Park.

Here it is:

Sorry for the delay in posts lately; there’s just been a trickle of properties to look at, but that looks like it’s changing. I’ll be out today looking at a couple.

Beech St ended up having nine offers on it with one accepted within four days. The other agent would not disclose the exact contract price, but said it was just above $350,000, all cash. About half of the offers were all cash on this one.

So, this one sold for over $100,000 more than it was listed. Was it still a good deal? Yes. I figured this one would shake out in between $350,000 and $375,000, and it did at the low end of that estimate.

Much, in fact most of the time, you need to take this kind of scenario into account when making an offer on property that is bank-owned and listed for a deeply discounted price. Just because it sells for above the list price (which is often a “teaser” to get people excited and make offers) does not mean it’s not a good deal anymore.

I have noticed a trend in the last two months that some banks are no longer doing the standard group counteroffer after the first round of offers. They’re just selecting the best initial offer, so in many cases, you may only get one shot at tying a property up in escrow.

Not to worry about paying too much though: the bank’s agent stated that on this one, four of the offers, almost half, were at or below the list price. Come on-are they serious?! Numbers don’t lie, and this one was easily worth more than the list price.

All you have to do is compare the potential rents vs expenses and go from there. Plenty of other people are trying to gouge the bank-owner, so don’t let multiple offers scare you off. They’re normal for this market, and you can still get a good investment.

This property is turning out to be one of the best bank-owned investment opportunities I have seen. Keep in mind that this is a “quick and dirty, back of the napkin” cashflow analysis.

The numbers could go up or down from here, mainly based on what this thing sells for. But it doesn’t take much to see that buying a duplex with four bedrooms for $232,750 is an AWESOME investment and these numbers establish a baseline to work off of.

Check this out: Purchase price of $232,750. 25% down (required by most lenders for these properties) gives you a loan amount of $174,562.50. At 5% interest, your principal and interest payment amortized over 30 years is $937.08. Add tax at $213.35 per month and throw in another $100 for insurance. Total payment is $1250.43.

Rents: $700 per room for $2,800 gross rents per month. Apply these rents to the PITI and you get cashflow ESTIMATED at $1,549.57 per month. To you, in your pocket. Or pay the loan off faster. Or you could use it to pay the rent at where ever you’re living now (maybe at the beach!?) and have a sound investment at the same time.

If you live in one of the houses as an owner occupant, and don’t even bother to rent out the other room, just take over the whole house, your cashflow will be $149.57. You will be PAID to live in your own house.

Keep in mind this place was remodeled some time ago and just needs a couple appliances in one of the units and some paint. The other unit is ready to be rented immediately. Right now, today. So you don’t have to shell out tons of cash upon closing to fix it up, not to mention your time.

You would be hard pressed to find a better deal than this one.

This duplex popped up this morning, and given the price and location, I drove over as soon as I could.

First of all, the price: $232,750 for two units with two bedrooms and one bath each. Great little neighborhood, nice and quiet. Condition of the units totally fine: wood floors, crown molding, no holes in the walls or other apparent damage. Looks like it was remodeled in the last five years or so. Missing a couple appliances, but a trip to craigslist will take care of that. Yard needs a bit work, been awhile since it’s been watered.

It’s a duplex (two units attached to each other), but each with their own separate yards and parking. Nice large corner lot in a quiet area of South Park. You can walk to Fern St (downtown South Park) in about ten minutes, it’s about six blocks away. So you’re away from the hustle and bustle of commercial traffic, but close enough to walk over there anytime you want.

The street dead ends into a canyon, so it’s pretty calm as well. I originally thought it might be a little too close to the highways judging from the map, but it’s situated on a bluff dropping down large canyons, a huge natural barrier.

I figure this would rent for about $700-$750 per room, so you’re looking at about $2,800-$3,000 gross. I don’t have my calculator on me, but it’s obvious that this thing will cashflow very nicely.

This is bank-owned, not a short sale, just hit the market. This is definitely worth an offer.

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Something seemed a little off besides the price when I checked this one out on the mls. It had that “bank owned” feeling, but the price was definitely not.

So I checked the tax record and lo and behold, the owner is trying to flip it. Amazingly, it was not a bank owned. It the owner purchased it from someone that has owned it since 1983 for $310,000 in 02/06/08. Now the list price is $549,000.

Units are shown as currently rented, the 1/1 for $995 and the 2/1 for $1,495. The market for that area supports the rents. Nice to have these comps in hand when evaluating other properties.

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Once in awhile I throw a house into the mix to preview if they look pretty good. This one appears to be owned by the same lender as 34th St, the other house that was remodeled extensively. There must have been a sale on travertine that day, because this one has loads of the exact same stuff…

For an owner-occupant, this is not a bad deal. Granted, it does cost the same or more than a duplex that produces more income, so I always recommend to my owner-occ type buyers to consider a duplex or two on one for the long-term financial and wealth building benefits. But not everybody wants to manage tenants. And for them we have opportunities like this one.

Location was good, very residential area with no commercial around. Fairly private for the metro area, not much to walk to. But that’s the point for many people. You could be in the heart of South Park in minutes by bike or car, downtown San Diego, a little longer. Three bedroom three bath.

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