If You Want Top Dollar for Your Rental Investment Property

Don’t Make the Mistakes This Duplex Owner Did.

I’m in the middle of an escrow for the sale of a Duplex located at 2614-2616 Bravado, Rancho Cordova.   I posted an article about it a couple of weeks ago and pitched it to a local investor along with other people in my data base.

The current owner paid about $146,500 in 2009 and really hasn’t done much to maintain it in the interim with the major exception of an Heating and Air unit about a year or so ago.

While this property started out at an asking price of $295,000 back in December the condition of this Duplex wouldn’t warrant an offer any where near that.   I know the area very well, we manage several Duplexes in this neighborhood including one directly across the street.   So I kept an eye on it and gradually the asking price came down to something decent at $275,000.    We made an offer and started the process out at $270,000.

I have a theory that has pretty much held up over the years.   If you ignore the curb appeal and don’t show pride of ownership, trust me the Tenants will pick up on that vibe and probably not take care of it either because if you don’t care about it…? why should they…?

When you maintain your property, inside and out you get the best possible tenants that will not only pay the rent on time but will take care of the property because they know you care about it.   If they don’t,  because you care, they know you will give them the appropriate “fix it” notice called a “3 day notice for covenants“.   This owner did a poor job of managing this and it cost her.

In the initial walk through,  we find out the tenants have dogs that are not permitted in their leases.   Of course the back yards were a mess with lots of “dog droppings” that had not been picked up.

Not only that, the interiors were in poor shape with one kitchen having drawers that were falling apart.

After the Buyer had this Duplex inspected by North American Home Services for the Home & Pest Inspections along with a roof report from Eagle Ridge Construction, the only way he was going to move forward was to get a big drop in the price to make up for the deferred maintenance which included the need for a new roof.

The price we finally settled on is $245,000 “as is”.   The existing tenants are; one on a month to month Section 8 which requires a 90 days notice to vacate if he wants her out and the other one we have to wait until this coming September to get possession because she’s on a lease.   In the mean time, the rents are frozen in place for a period of time.

Here are pictures I got of the property – one that was taken by Google in Street View March 2015.  Click on the picture and you’ll see how it looks from the street today just a year later.screen shot of 2614 bravado March 2015 street view

I hope the conclusion that you come away with by reading this is when you don’t maintain and manage your rental property in a “professional manner” you will get lousy tenants, you will not get the highest possible rents and when you go to sell, you’ll have to lower your expectations “big time”.

The Buyer/Investor on this deal made a comment to me after he looked up the address where the people that own this property lived.  He noticed it was in an upscale area.   His comment was that it was amazing to him how poorly this Duplex looked but he bet where they lived looked a lot better.

Let me know what you think.

By the way… If you currently own rental properties and need management help, check out our Property Management Service that is “2nd to none” by Clicking Here

If you are thinking of Selling or you are interested in buying a Duplex, Fourplex or an Apartment complex in the area, please call/text or email me at anytime.

In the Mean Time…?

Make it a Great Day..!

Ed Favinger, Broker, CRS, GRI, SFR, CDPE    favinger@rwnetwork.com   916-203-1260

 

The “Sleeper Investment” Area if You Are in the Market is Rancho Cordova…!

Did You Hear They Hate “chain link” fences…?

It’s an amazing thing to watch over the transition of the City of Rancho Cordova from what many people thought was a lost cause until the residents there incorporated in 2003.

Official seal of City of Rancho Cordova
Official seal of City of Rancho Cordova (Photo credit: Wikipedia)

One of the major reasons for the successful incorporation was the fact there were many “absentee” landlords who did not take pride of ownership of their rentals, did not screen their tenants very well and allowed their properties to deteriorate because they didn’t maintain them.

They’ve been using the power of “code enforcement” to get landlords in shape and while I’m not a big government kind of guy, in the cases I have observed, this city has an effective way of cleaning up their housing stock.

Which brings me to the “chain link” head line.

Check out this story from the Sacramento Bee – Rancho Cordova cleans up neighborhoods one chain-link fence at a time

And…  KCRA 3 must have read the SacBee so they had a story on the news as well.   Rancho Cordova pays homeowners to remove chain link fences

Let me know what you think.

In the Mean Time…?

Make it a Great Day…

Ed Favinger, Broker, CRS, GRI, SFR, CDPE     916-203-1260   favinger@rwnetwork.com

 

 

 

 

A Duplex That Has Some Potential Cash Flow

We Manage Several in the Area… this could be a “sleeper”.

This duplex located at 2614-2616 Bravado in Ranch Cordova has been on the market for about 40 days or so.   They started out much too high and I think at the recently adjusted price of $285,000 they are still a bit high.

Below you’ll find a link to a “proforma” cash flow analysis of this property based upon a lower price that I think is more appropriate.   We manage several duplexes within a very short distance away… one right across the street.

CLICK HERE FOR THE CASH FLOW FIGURES

If you’re thinking of Investing in a Duplex, a Four-Plex or even an Apartment complex, contact me and I’ll get you the best deal possible.   Since we also have a Property Management unit, we are probably in a better position to give you an accurate assessment of what you could rent properties for in this area.   If you buy through us, we’ll give you the 1st 3 months of Property Management free.

In the mean time…?

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI, SFR, CDPE   916-203-1260   favinger@rwnetwork.com

 

Sacramento Area Apartment Sales Amazing Prices – Amazing Rents..!

Cost per unit is sky high

I got this article off of the Sacrament Business Journal this morning and had to pass it on.

Click Here for that article.

The reason I’ve been keen on passing on articles like this is because I’m in the process of marketing the Twin Pines Apartments in Rancho Cordova.   Click here for the information I posted a couple months ago about it.

One of the factors some investors look at is “cost per unit”.   The list price on this complex is $100,000 per unit because it’s probably a “class C” or maybe “C+”.   The Costs Per Unit of the properties mentioned in the article above are about $189,000 and $193,000.

For-Rent-300x199The reporter for the article was quoting Brokers saying those complexes were “Class A” type of product.   They have all the latest amenities I presume and built fairly recently.   However, they don’t pencil out in the traditional sense.

What they are banking on is the fact that rents are projected to be going up “big time”.   That’s because there’s not been any major construction of apartments and entry level homes in this area for a long time and demand for rentals has increased.   By the way… this phenomenon is happening all over the country if you were to do a google search for rental rates.

Our property management company Haven Properties has no problem renting up units as they come up and you’d be surprised at the amount of rent you can get if you have a nice place with amenities.

So… if you’re thinking of investing in the Sacramento Residential Investment Market, call me.   We specialize in Duplexes, Four-Plexes, small to medium apartment complexes and of course Single Family homes.

Now… in the mean time…?

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI, SFR, CDPE    916-203-1260  favinger@rwnetwork.com

 

Sacramento Real Estate Market is On a Roll…!

Bottom Line…? It’s the Affordable Index..!

I received an email update from the Sacramento Business Journal this morning and thought I’d pass it on.

Some of the larger Real Estate companies in the area are talking about how the market is going to be about the same as it was last year.   Click Here for the Article, but read below why.   It’s not discussed in the article but below you’ll see why it’s important.

My take on what makes a great market…?   Buyers who can qualify for a loan and purchase the inventory.

If you look at the links below, you’ll see why,  even though prices have risen a lot over the last few years, the “affordability index” shows there’s plenty of Buyers out there able to qualify and purchase a home in this market.

Why is this important…?  It’s a gauge in my opinion to know when a market is about to change.   For instance I remember when I moved here to Folsom in 1989, the index was at 19% of Buyers who could qualify for the median priced home using the “traditional method” in the San Francisco Bay Area,  while it was at 49% here in the Sacramento area.Affordability_2015-Q3

Just before the big crash of a few years ago in late 2006 I saw an article where the index was at 19% here.   Shortly after I read that report, I started seeing lots of short sales and REO’s hit the market just like it did in the early 90’s.

From the data below you’ll come away with idea that we’ve got a long way to go before prices go up so high they become unaffordable.   Of course this assumes  interest rates stay near where they are now.

 

 

 

First Time Buyers

First Time Buyer’s Affordability Index

First Time Buyer’s Affordability Index Methodolgy

 

Traditional Affordability Index

The Affordability Index

Traditional Housing Affordability Index Methodology

Let me know what you think.

If you’re thinking about buying a home or an investment property,  today’s data should give you confidence your decision to get into the market.   Call, Text or Email today and we’ll get you started on your way.

We specialize in sales of Single Family Homes, Income and Investment Property such as a Duplex, Four Plex or even an Apartment complex.      Don’t forget we also offer Property Management services – Click Here for Our Property Management Page.

In the Mean Time…?

Make it a Great Day…!

Ed Favinger, Broker, CRS, GRI, SFR, CDPE      favinger@rwnetwork.com     916-203-1260