ACT NOW: Perris Real Estate Investor Special $100K | ARV $150K+
Good Morning...
Yesterday I took an important step in creating a list that I can blast when I have something important to share...such as this listing. If you are reading this blog post because of my letter....Thank-You...If you are a regular reader or a new one...Thank-you as well.
So lets cut to the chase...
I have a home for sale, under contract at XXXX Remberance Dr., Perris, CA 92571. Below are the specifics:
List Price: $100,00
Square Foot: 1,749
Year Built: 1990
Lot size: 3,484
Bedrooms: 4*
Baths: 2.5
Garage: 2 Car Attached with Newer Garage Door
Exterior: Yard needs Sod/ground cover. Covered Patio with Balcony off of Master Suite.
I know the first thing 90% of Investors do is take a look at properties and run them through several online sites to look at comps and automated values. I'll discuss those results and provide REAL COMPS in a minute, in the meantime, here are the links for your convenience:
Web VALUE Searches**
REALTOR.Com: Estimated Value: $124,088
Zillow: Estimated Value: $127,200 | Estimated Rent: $1,372
Trulia.Com: Estimated Value: $129,000
Homes.Com: Estimated Value: $127,800
RealtyTrac: Estimated Value $131,791
RENT Searches:
Zillow: Estimated Rent: $1,372
MapLiv.com: Estimated Rent: $1,350
WalScore: Neighborhood Rent: $1,350
Rent.Com: Perris 4 Br Rental: $1,695
* Formal Dining Room has been converted to a 5th Bedroom with a closet and 2 Windows. Passage between Living Room and Dining Room has been closed off professionally. Prior to careful inspection, the enclosure is undetectable. It would not be very difficult to restore the dining room to its original use. (389 Recognition - below has the same dining room/bedroom conversion - uncertain of the quality.)
**The problem with online value estimates is they do not properly analyze their own data. As a Professional Full Time REALTOR I utilize the MLS and actual Title Company Records to compare properties to one another.
In the same trac, there have been 7 model match sales in the last 6 months. What brings the value down is that 3 of them were purchased by Investors with cash for purchase prices between $100,000 and $103,550. All were Distressed Properties. Two of these three were Short Sales and the third was a REO.
1459 Keepsake Ln | $100,000 | Sold 5/30/12 | DOM: 7 | Short Sale
341 Recognition Ln | $102,000 | Sold 2/10/12 | DOM: 5 | REO
1505 Heirloom Ave | $103,550 | Sold 4/26/12 | DOM: 1/CDOM 160 | Short Sale
The next two SOLD COMPS were bid up in the competitive market we have seen since the Spring of 2012.
1471 Keepsake Ln | List: $107,900 - Sold $118,125 | Sold: 5/7/12 |DOM: 4/CDOM 176 | REO
389 Recognition Ln* | List: $112,700 - Sold $130,000 | Sold: 4/2/12 | DOM: 14/CDOM 103 | REO
BACK-UP COMP
1475 Medallion Ct | List: $132,000 | List Date: 5/9/12 | DOM: 63 | Short Sale
RETAIL COMPS
The encouraging part of the comps are those that are selling retail - creating a true ARV and not just averaging the rehab distressed properties. These represent what the subject would be worth with the right repairs and rehab.
1490 Remberance Dr | List: $149,000 - Sold $153,800 | Date Sold: 6/12/12 | DOM: 6
1505 Heirloom Ave | List: $159,999 - Sold $153,800 | Date Sold: 6/14/12 | DOM: 22
DAYS ON MARKET
Looking at the Days on Market (DOM) - homes have sold, this year, in 11 Days. If looking at the Cumulative Days on Market (CDOM) the number jumps to a reasonable 64 days.
A FLIP
While the disposition of the above properties is uncertain, it should be pointed out that the home at 1505 Heirloom Ave was flipped. The Investor purchased the property on 4/26/12 for $103,550 and sold it 49 days later for $153,800.
REPAIRS
My estimate is that $10,000 would have this property standing tall. This would include the basic cosmetics of pain and carpet. There are a few interior doors that would probably have to be replaced. There are 4 dual pane windows that need to be replaced as a result of some pellet holes. Window screens are in marginal condition. The garage door has a small dent. Plumbing fixtures are original. The appliances are mixed - a white stove and a black dishwasher (or the other way around). There are a few minor repairs that will have to be addressed, but nothing significant. The landscape should be brought up to the community standard with some sod - but this is a very small yard.
APPLIANCES
The Refrigerator, Washer and Dryer will transfer along with the gas stove and dishwaser. Like the rest of the house, they are sold AS-IS without warranty. The home has central HVAC and a gas hot water heater.
THE NUMBERS
Based on My PERSONAL Calculations - without warranty or guarantee, this is how I see this deal going down for an investor, in a worst case scenario taking a total of 5 months to buy and sell the property:
Purchase Price: $100,000
Down Payment: $10,000
Rehab Cost: $10,000 (Included in Hard Money Loan)
Cost of Hard Money: $5,000 (5 points @ $100K - paid on back end)
Closing Costs: $2,500
Contingencies: $2,500
Out of Pocket: $15,000
Amount Borrowed: $100,000
Take 30 Days to ReHab Property and allow 120 Days to Sell/Close Escrow
Projected Sale Price: $150,000
Escrow/Title: $2,500
Agent Commissions: $7,500
Loan Payments: $5,000
Taxes/Insurance: $500
Loan Payments: $5,000
Front End Lender Points: $5,000
Initial Out-of-Pocket Payback: $15,000
Loan Payoff: $100,000
Total Cost: $135,500
PROFIT: $14,500
The Cash-on-Cash Return would then be 96.66%
The Annual Cash-on-Cash Return would be 241%
If you don't need the hard money - then of course the rate of retund in amplified...sell the property quicker and the same thing happen - you make more money. Can you sell it yourself? Then you can save on the Real Estate Agent Commissions.
Look at the BEST CASE Scenario:
Purchase Price: $100,000
Down Payment: $10,000
Rehab Cost: $10,000
Closing Costs: $2,500
Contingencies: $2,500
Out of Pocket: $115,000
Amount Borrowed: 0
Take 30 Days to ReHab Property and allow 120 Days to Sell/Close Escrow
Projected Sale Price: $150,000
Escrow/Title: $2,500
Taxes/Insurance: $500
Out of Pocket: $115,000
Total Cost: $118,000
PROFIT: $22,000
The Cash-on-Cash Return would then be 19.13%
The Annual Cash-on-Cash Return would be 47%
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