Do You Think The Curb Appeal of This Duplex is a Plus or a Minus…?

Would you put this on the market the way it looks now…?   Would a Tenant Pay More to Live There…?

I just had to pass this on to those folks that are thinking of buying a Residential Investment, such as a Duplex, a Four-Plex or an apartment complex or even a Single Family Home.

People will make an instant judgement about a Duplex for Sale just about as soon as they pull up to the curb.

This Duplex I’m profiling here today is located at 2719 & 2721 Bravado Drive, Rancho Cordova.  Despite it’s poor curb appeal, it’s on a corner lot that backs up to one of our other Investors who have been outstanding in helping create a nicer neighborhood.

In this slide show, we’ll show you the “subject property” and then you’ll see the other units our Property Management company currently maintains.

This Duplex closed escrow back in December of 2013 at a sales price of $161,000.   The new owner hadn’t done much if anything since he’s had it but,  now wants absolute top dollar.    His rents currently are at $900 and $850 per month and they should be at $1,000.

Generally in my opinion, I think investors who skimp on curb appeal and landscaping are leaving dollars on the table in returns they would otherwise have received.   Not only in a higher sales price, but higher rents during their ownership as well.

Tenants will pay more for a nice pad.    Let’s see if he gets his price because I think it’s worth no more than about $245,000.

CLICK HERE for a proforma cash flow analysis.  It’s really ugly in front but just needs some TLC…..    So, overall,  I think this could be a nice investment given that the surrounding properties have a lot more “pride of ownership” then this owner and it won’t really take that much to bring it up to par with the neighbors.

 

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

 

Is Value Added When You Install a Pool or a Solar System…?

It All Depends… of course…!

If you have pondered adding a Solar electric system to your home or a pool, then take a minute and read here.

There was an interesting discussion started today on a Facebook Real Estate Group page that I and other Brokers/Agents belong to  regarding the costs/savings of installing a solar system.   Ryan Lundquist a local appraiser and Real Estate Blogger pointed out some interesting numbers.

I’ve cut and pasted his question to the group here:

A solar salesman told an owner the system would add $6,000 in value for each kilowatt of power. Since this system was 6kw, it would supposedly add 36K. Keep in mind this home is located in a 350K neighborhood. On a practical level would we expect to see a home without solar sell for $350K and one with solar sell for $386K? Here’s the thing. Buyers don’t pay the full cost of a solar system in the resale market. Moreover, even if it did add $36,000 in value, borrowing that much money for 30 years would cost a Borrower $170 per month (and $61,000 over 30 years). Of course the system is probably only going to last for 20 years though. At the least the first question a buyer should ask if there is at least $170 savings every single month. Thoughts?

After reading the above, I asked him “if a pool costs $50,000 to install, I know you’re not going to get that back,  but is there some kind of a rule of thumb you look at..?”

He had a very interesting response that hadn’t occurred to me, even though I’ve been selling real estate over 30 years.

Ryan Lundquist Good question Ed.

It would be nice if there was one adjustment that fit every situation, but the truth is that 50K pool in Granite Bay is probably worth way more there than it would be in a 200K neighborhood because the market expects a pool like that in the neighborhood.  Thus the adjustment is about where the pool is located and what buyers expect and pay for in that area.

We’d like to think there is one adjustment to apply everywhere, but that just wouldn’t work. On a practical level, we can consider the cost because it probably says something about the quality, but at the end of the day let’s start comparing homes with and without pools to see if we can come up with a reasonable and supported adjustment (or a reasonable range of what buyers having been willing to pay).

It’s okay if there are no recent sales too because we can look through years worth of data as well as competitive neighborhoods. I actually wrote a post about the percentage of pool sales in different areas of town.

When the market expects a pool, it can be a big hit to value when there is not one, but when the market doesn’t expect a pool, it might not be that big of a deal for value to have one.  http://sacramentoappraisalblog.com/…/what-does-the…/

What do you think….?   My thoughts are that what ever you decide to do as an improvement I don’t think you should expect to get it all back.  I would rather look at the test of whether or not the improvement I added would make my life a little more enjoyable when I’m home.

In the Mean Time…?

Make it a Great Day…!

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