ACT NOW: Perris Real Estate Investor Special $100K | ARV $150K+

Real Estate Agent with Mason Real Estate CA BRE 01444168

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  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


1475 Medallion Ct  |  List:  $132,000  |  List Date: 5/9/12  |  DOM: 63  |  Short Sale

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

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.

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.

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.

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.

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%  


Posted by

Until Next Time, Have a Blessed Day,

John Occhi, ePRO, REALTOR®
DRE Lic No: 01444168

ePro,John Occhi,,realtor      Certified Probate Real Estate Specialist Logo Awarded to John OcchiFive Star Logo,Certification,REO,Five Star Institute     

Excellence in Real Estate,Team Log,John Occhi,,hemet,san jacinto,CA  

This blog and the contents written here is the intellectual property of John Occhi, Temecula - Murrieta, CA REALTOR® in the South West Riverside County region of the Inland Empire of Southern California.  The views and opinions expressed are just that - views and opinions of John Occhi and those who comment.  Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance. 

I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.

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