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Wednesday, January 25, 2012

Real Estate Investment Opportunities in 2012

MarketSnapshot01_2012

Thursday, January 19, 2012

True Story of a Successful Investment

~Names changed to protect the innocent

Suzy Chapstick and Joe Skier wanted to own a house in Lake Tahoe so that they could spend weekends and vacations recreating in the great outdoors. Over the course of several years, they watched the market values of houses drop and drop. In the fall of 2011, they decided that it was time to buy because of the low prices and historically low interest rates. So they began the search for just the right vacation property.

They initially looked at single family residences, but decided that it would be expensive to own a 2nd home that they would only use a couple of weekends a month. Their realtor Joy suggested that they consider a duplex so that they could lease one side to long term tenants and keep one side for themselves. This would help off-set costs and perhaps get to a breakeven point with the right property. They really liked that idea so began looking at available duplexes. They were put on an MLS drip so that they were notified whenever a new multi-family came on the market in one of their target areas. Within a couple of weeks, the perfect duplex became available. It was 1 BR, 1 BA on each side which provided the perfect crash pad after a day of powder skiing without the hassle of extra chores, utilities and maintenance costs of a larger house.

It was a good thing that they moved quickly because there were multiple offers on the first day. They were notified of this situation and asked to submit their “highest and best” offer within 24 hours. They really wanted the house so were willing to pay a little extra. But after looking at the house, they realized that it needed quite a bit of work. The house had been foreclosed on and the previous owner had removed some of the house’s main systems, appliances and fixtures. It also needed painting and some basic repairs. Suzy and Joe did a quick high level estimate of improvement and repair costs and subtracted that from the comparables that were provided by Joy. This left them with the highest price they were willing to pay. With that number they did an analysis of Return on Investment (ROI) based upon an estimated income from renting half of the duplex.

They were so excited about the ROI when renting just half of the duplex; they thought they should consider a possible vacation rental scenario for the half they had intended to keep for themselves. This would provide additional income and they would still be able to use their unit when it wasn’t rented. However, upon considering this option, they thought about the logistical challenges of managing a vacation rental remotely. There was of course the option to utilize a professional property manager, but that would take away from any profits. They ultimately decided to lease both units out to long term tenants because the ROI was too high to pass up. They’re now looking to leverage off of this investment into other opportunities.

Here’s the ROI breakdown, assuming no mortgage:

Purchase price $112,100
Improvements $5,000
Closing costs $450
Total price $117,550
Capital Investment $117,550
Annual Rent $14,400
Annual expenses $4,806
Net income (NOI) $9,594
Return on investment (ROI): 8.16%

Here’s the ROI breakdown, assuming they financed 75% of the price at 5% interest:

Purchase price $112,100
Improvements $5,000
Closing costs $450
Total price $117,550
Capital Investment $29,388
Annual Rent $14,400
Annual expenses $9,214
Net income (NOI) $5,186
Return on investment (ROI): 17.65%

The significantly higher ROI is due to the fact that you’re only tying up $29,388 of your capital versus $117,550 if you don’t finance it. This illustrates the principle of making a return on the bank’s capital instead of just on your own capital. Theoretically, you could buy 4 of these duplexes with the same amount of your money. And your net income would be double what you would make if you only bought one house and didn’t finance it.

Wednesday, January 11, 2012

Inventory Down over 52% in Sacramento County



There is only 2 month's worth of inventory of residential homes in Sacramento County! This is down over 52% from 15 months ago. If you are thinking about selling your home, whether it's a regular sale or a short sale, now is a good time to list. Please contact me if you would like a no obligation market analysis.

Inventory is down over 45% in El Dorado County!



With inventory down over 43%, now is a great time to think about listing your home for sale. Please give me a call for a no obligation market analysis of your home.

Friday, January 6, 2012

Looking for foothill homeowner willing to do OWNER FINANCING

I have a client who is looking for a 3+ BR, 2+ BA, 2200+', with a yard with room for dogs to run around.  Can be located anywhere from Placerville, CA to El Dorado Hills, CA. Client prefers the south side of Hwy 50 to Somerset, but will consider other foothill areas. Catch is they need OWNER FINANCING.  Do you know anyone who is trying to sell their home and who's also willing to do owner financing? If so, please let me know.  This situation IS NOT due to prior Short Sale or Foreclosure.  Thanks everyone!

Sunday, January 1, 2012

December Home Sales in Folsom, CA

There were 73 residential home sold in Folsom during December 2011, which was just one home less than December 2010.  This data almost exactly reflects the California Association of Realtors forecast that home sales would be down -0.1% year over year, (2010/2011).  CAR's forecast for single family home sales in 2012 is that we will see an increase of 1% in volume and a 1.7% increase in median price.  Below is the list of residential homes sold in Folsom during December:


254 Wales Dr Folsom, CA 95630-2852 $     58,500.00
885 Halidon Way #1023 Folsom, CA 95630-8439 $     85,000.00
209 Dean Way Folsom, CA 95630-2803 $   120,000.00
225 Price Way Folsom, CA 95630 $   120,000.00
171 MARKET St Folsom, CA 95630-3105 $   129,000.00
300 Moon Cir #334 Folsom, CA 95630-4119 $   132,000.00
400 Moon Cir #421 Folsom, CA 95630-4121 $   140,000.00
2002 Esplanade Cir #2002 Folsom, CA 95630-7370 $   151,000.00
811 Vessona Cir #811 Folsom, CA 95630-8724 $   162,500.00
127 Placer Mine Rd Folsom, CA 95630-5110 $   170,545.00
203 Towering Oaks Ct Folsom, CA 95630-7940 $   185,000.00
1302 Ferry Cir #102 Folsom, CA 95630-4012 $  200,000.00
202 Blossom Rock Ln #26 Folsom, CA 95630-8735 $   206,000.00
1266 Knopfler Cir Folsom, CA 95630-8520 $   215,000.00
320 Baird Dr Folsom, CA 95630-7915 $   220,000.00
110 Camberwell Way Folsom, CA 95630-8652 $   223,500.00
806 Spiva Ct Folsom, CA 95630-5436 $   225,000.00
963 Rathbone Cir Folsom, CA 95630-8535 $   227,000.00
312 Baird Dr Folsom, CA 95630-7915 $   230,000.00
273 Winding Canyon Ln Folsom, CA 95630-5018 $   230,500.00
117 Henderson Way Folsom, CA 95630-2915 $   231,000.00
1128 River Rock Dr Folsom, CA 95630-2029 $   238,000.00
111 Hazelmere Dr Folsom, CA 95630-5520 $   249,900.00
829 Stewart St Folsom, CA 95630-9566 $   259,000.00
325 Graham Ct Folsom, CA 95630-9562 $   260,000.00
1458 Strabane Way Folsom, CA 95630-6223 $   261,000.00
567 Given St Folsom, CA 95630-5456 $   261,000.00
105 Santana Way Folsom, CA 95630-2331 $   261,500.00
117 Eagle Creek Ct Folsom, CA 95630-7108 $   265,000.00
324 Parker Dr Folsom, CA 95630-7928 $   265,000.00
1339 Hartley Way Folsom, CA 95630-8417 $   268,900.00
2270 Lariat Ln Folsom, CA 95630-6184 $   269,900.00
1486 Strabane Way Folsom, CA 95630-6223 $   270,000.00
1841 Greenlaw Way Folsom, CA 95630-6109 $   280,000.00
1439 Taupin Ct Folsom, CA 95630-8452 $   280,000.00
2237 Zittel Dr Folsom, CA 95630-6178 $   285,000.00
1157 Cobble Fields Ct Folsom, CA 95630-7658 $   288,000.00
2250 Zittle Dr Folsom, CA 95630-6178 $   289,000.00
105 Foley Folsom, CA 95630 $   289,000.00
2049 Horseshoe Glen Cir Folsom, CA 95630-6294 $   290,000.00
463 Slocum Dr Folsom, CA 95630-7923 $   299,900.00
1101 Callander Way Folsom, CA 95630-6101 $   303,750.00
102 Valley Oak Ct Folsom, CA 95630-1821 $   303,900.00
170 Sunrock Dr Folsom, CA 95630-2125 $   310,000.00
101 Darrington Dr Folsom, CA 95630-2260 $   315,000.00
137 John Henry Cir Folsom, CA 95630-8133 $   315,000.00
732 Morningside Ct Folsom, CA 95630-6144 $   315,000.00
118 Hazelmere Dr Folsom, CA 95630 $   320,000.00
214 Briggs Ranch Dr Folsom, CA 95630-5260 $   330,000.00
439 Chaparral Dr Folsom, CA 95630-6172 $   330,000.00
105 DEMURRAGE Way Folsom, CA 95630-8122 $   330,000.00
1928 Broadford Dr Folsom, CA 95630-6116 $   336,000.00
414 Figueroa St Folsom, CA 95630-2508 $  340,000.00
144 Oak Rock Cir Folsom, CA 95630-2031 $   345,000.00
126 Loughridge Way Folsom, CA 95630-5205 $   345,000.00
788 Bluestone Cir Folsom, CA 95630-3530 $   345,000.00
1052 Sandwick Way Folsom, CA 95630-6127 $   350,000.00
133 Bloomfield Way Folsom, CA 95630-7629 $   365,000.00
1165 Elderberry Cir Folsom, CA 95630-7659 $   370,000.00
382 Prewett Dr Folsom, CA 95630-6521 $    388,888.00
118 Cruickshank Dr Folsom, CA 95630-7732 $  408,000.00
1201 Burwick Ln Folsom, CA 95630-6139 $   408,500.00
1109 Kidder Way Folsom, CA 95630-7318 $   411,000.00
1913 Alteri Ct Folsom, CA 95630-6163 $   435,000.00
612 Henry St Folsom, CA 95630-7725 $  440,000.00
1557 Manasco Cir Folsom, CA 95630-7348 $   455,000.00
167 Lost Creek Dr Folsom, CA 95630-1529 $   475,000.00
106 Tedford Ct Folsom, CA 95630-8109 $   495,000.00
802 Fieldstone Ct Folsom, CA 95630-6156 $  500,000.00
105 Hinkle Ct Folsom, CA 95630-1571 $  500,000.00
1917 Caversham Way Folsom, CA 95630-6251 $  504,000.00
688 Misty Ridge Cir Folsom, CA 95630-6244 $   680,000.00
100 Brugler Ct Folsom, CA 95630-2252 $   685,000.00


Please contact me if you would like a free, no obligation market analysis of your home.  I like to work by referral and appreciate your confidence in referring me to your friends, business associates and family.