A Citrus Heights Bank Owned Duplex – On a Busy Street – Quiet Inside

Yea It’s Next to a Busy Street – But Fix It Up – Show it off to Thousands of Cars Everyday

I drove by this one located at 7107 Madison Avenue, Citrus Heights because I knew this was one of a few duplexes along this main artery that was located on the “frontage road”.    The frontage road itself does not have much traffic.  I was out there for about 10 minutes and only one car drove by and that was about 1PM today.

It also borders a Single Family Neighborhood.  The only bad thing….?   That’s right…!    It’s on a very busy and yes… it’s a pretty noisy street after the light turns green at the corner of San Juan and Madison.

The place needs to have someone trim the trees in front so you can see it.   That’s why the pictures on the flyer didn’t turn out well. 

I have Palm Videos of the exterior and each side.   You’ll get an idea of how loud it is and the contrast when you go inside.

Exterior and Left Side

Exterior and Right Side

 

Make it a great day…!!!!!

Cash Rules in the Bank Owned Duplex/Four-Plex Market

Multiple Offers In a Recession.? You Kidding…?  Read On….

You’ve heard though the Main Stream Media that we are in a recession “nationally” and if you didn’t know, the most recent report regarding unemployment in the Sacramento Region pegs us at 12.3% 

Most of us in the real estate business know that there is a lot of money looking for a home…especially… in the investment real estate sector.

Would you believe that  50% of the 171 Closed Transactions in the 3rd Quarter 2009 were all Cash deals with no financing involved..?   Check out the stats below here.

 Cash Deals                                                         85        49.707%

Conventional Financing – Min. 25% Down      61       

FHA – Owner Occupied – Min. 3.5% Down      11       

Other                                                                         14      

Total Closed Sales 3rd Quarter – 2009              171

Not only is Cash king here,  on top of that prices are not coming down.  The Average List Price to Sales Price Ratio  these 171 closed escrows came in at 102.33% during this time period.

I’ve provided some of the hard data, such as the Address, List Price, Sales Price, Year Built, Days on Market, etc in the link below.   I hope you find it useful and informative.

DUPELX – FOUR PLEX CLOSED SALES DATA FOR THE PERIOD OF JULY 1, 2009 – SEPTEMBER 30, 2009

If you would like a more detailed report or have some interest in a particular property just drop a note my way by clicking here.

MAKE IT A GREAT DAY….!

If Rents Are Going Down…? What Can You Do About it…?

 

Start By Investing in a Good Area.

I know that headline is really something you’ve never heard before…(yes my tongue is in my cheek).

Let’s  assume here that your rental property is in a decent enough area that you haven’t had to take your Pit Bull dog and a side arm with you to collect the rent ok…?

Ok Now What…? Your Property is Vacant…!

Part of the problem in today’s market with turn over in rental units is that many good tenants are moving up to Home Ownership after several years as a Renter.

Those renters are also in competition for the Re-sale Inventory with Investors that have a lot of cash and equity that is looking for a more stable and secure equity position.    We also have low interest rates for those investors and first time buyers that are able to qualify for a loan.  I bet you didn’t know that many of the transactions today are “all cash” with no financing involved at all.

I’m giving you this background to show you that there is competition among many Landlords for the same prospective tenants.

Here’s a good exmaple of what I am talking about.   Our Management Company recently leased up two homes in Folsom, one in the Broadstone area and one in Empire Ranch.   Both of these homes started out at $2,350.  They pretty much had the same amenties, such as Granite Counter Tops, 3 car garages and were well landscaped.  The Broadstone home was a 5 bedroom while the Empire Ranch home was a 4 Bedroom.

During the course of showing these homes, we were amazed at the number of prospective tenants who wanted us  to negotiate a “reduction” in the rental rate we advertized.   Only those propects that were interested in these houses asked us.   All the others…..?    just thanked us for our time, but told us “they were still looking”.  

At first we resisted lowering the rent but as the weeks went on, I realized that the market had changed and become more competative.

And So…?  Yes…. we did in fact lower those rents and both homes now have well qualified tenants.

Don’t forget that during this time period, when our staff met each week to go over our  “available rentals”  that we had on the board,  we’d also discuss phone traffic, comments made at showings,  email inquiries and “pending applications”,  if any.

Our Conclusion…?

We decided to get ahead of the market and to offer specials, such as 1/2 off the 1st months rent,  some “move in date”  flexibilty and an across the board reduction on our asking rents.   This is also a slower time of the year with folks moving and we do have some “unemployment” that is causing rents to be a little flat today.

In addition we’ve kept track of the competition in our service areas so we know what is a reasonable rent for each product we have to offer.

To get an idea of what prevailing rents are, take a survey of the immediate area surrounding your property, contact a property management or two to get their input and do some “web research”    Check out this little information site that I think is useful:   http://www.rentometer.com/  

I don’t want to beat a dead horse here, but please remember that “curb appeal” and “condition” will now play an even bigger part of not only getting top dollar rents, but in the amount of inquiries you receive to get you that great tenant.  Tenants can be picky in a “Renters Market”.  

 

Make it a great day….!

Don’t Forget Curb Appeal When You Fix Up a Duplex Rental..!

Some Before and After Pictures To Make My Case

I probably am preaching to the choir for those of you that read this blog on a regular basis.   However if you are new to this site and are thinking about Investing in Real Estate such as a Duplex, Four-Plex or a Single Family Home, don’t forget to invest in some “curb appeal”.

I’m talking not just the exterior paint.   No I’m talking about landscaping your rental almost like you would a single family home in a nice neighborhood.

Check out this Duplex purchased earlier this year at 9610 Knickers Court in the Rosemont area: 

 Knickers before - 1

Here’s the “before” picture of this property taken shortly before the new Owner started the “Fix Up”.  This is a corner lot and had a lot of over grown shrubs & trees.

 

The Owner did install new roll up garage doors, painted the trim only and put a few $$ in landscaping.  The 3 Bedroom unit on the right does have a Patio Slider off the Master Bedroom.   For a look at what he did see this slide show.    By the way it rented in just a couple of days.

Remember when you add some nice landscaping like the owner did above, you give a prospective tenant some “extra living” space with not only a patio outside the dining area, but also outside the Master Bedroom as well.

 

Now below here is a Duplex that I am a partner in on Lake Natoma Drive in Orangevale.  We had a tenant on the left side that lived there for almost 5 years after we purchased it. When she moved out, do you think it took me long to find a new tenant…?

 Front Page Lake Natoma Drive

Some of the things we did 5 years ago to this duplex were, to paint the exterior & install new roll up garage doors.   We also fixed the sprinkler system & spent a little extra & planted a “big box” Maple Tree. 

 

 

Do you think landscaping makes a difference here?     By the way, this is some what of a busy street, but it rented up after being vacant for only about 3 weeks in late June of this year.

Hey Take a look at this one.   I think you will get my point….

 trovita 1 before

Here is a “before” picture of a former Bank Owned Duplex on a street of large duplexes in Citrus Heights, purchased by a partnership

 

 

 

Click here for a web page that will also show you that if you fix these Duplexes up nicely, you will not have a difficult time finding tenants who will want to pay top dollar to live there. 

So Did I Make My Case Well Enough…?

You are the judge, but all of these units are rented up even though we are in a little bit of an unemployment situation here in the Sacramento Area.

Ask yourself the question, if you were a prospective tenant, do you think you would pick these units over some that weren’t as nicely fixed up when you first pull up to see them….?

I’d appreciate the feed back.

In the Mean Time…?

MAKE IT A GREAT DAY….!

What To Do When You Buy An Investment with “Tenants in Place”.

When taking over a property be sure you know who the tenants are.

If you have followed this blog for a while, you know that I specialize in Residential Rental Real Estate and that we also provide Property Management Services.

REO/Bank Owned properties generally will give you possession at close of escrow without any existing tenants.   However, in many “short sale” situations,  you may inherit some existing tenants.

If you have just purchased your first investment with a “tenant in place”, you may or may not be lucky.    On the one hand, you won’t have the prospect of doing a “turn over” right away,  which can cost a couple thousand in painting, carpet replacement and clean up.  However, on the other hand,  you may wind up having problems with the existing tenants if you aren’t careful.

Ok then… what do you do to protect yourself…?

If you and your agent are using the California Association of Realtors Form, Residential Income Purchase Agreement (RIPA – revised on 4-10-2010), there are some great “due diligence clauses that pertain to “Rental/Investment” property.  Paragraphs 9. A. Rental/Service Agreements,  8. B. Income and Expense Statements and 8.C. Tenant/Estopple Certficates.

I am going to summarize them below.

Rental/Service Agreements – You won’t get these on a Bank Owned/REO in most cases because the property is vacant.   If the property is occupied, this paragraph requires that the Seller is to provide copies to you of all Rental and Service agreements.   These normally would not only include the Lease agreement, it would also include, the tenants’ payment history…   any rebates, the date of their tenancy, copies of service agreements,  such as a Landscaper’s Maintenance Agreement and copies of the water, sewer and garbage bills.

Income and Expense Statements You won’t get these on a Bank Owned/REO and rarely on a Short Sale.   They are either Bank Owned and they don’t have them anyway and on a Short Sale you won’t get much help from the Seller,  in most cases,  unless it’s been professionaly managed.

Tenant Estoppel Certificates –  These are important…!  These documents are filled out by the existing tenants and given to the Buyer.   These certificates will have information, according to records of the Tenant.  They will show what the rent is, what they said they paid for a deposit, if they were given any kind of “incentives” or “rebates”, who the original tenants were and who lives there now.   Any conflicts with the statements and records of the owner and the tenant should be resolved before the close of escrow.

Now while I’d love to have copies of the current tenant leases and service agrements, the income and expense statements, it’s  not a deal killer if you can’t get them.

Why…?   Because when we obtain “Tenant Estoppel Certificates”, these will sufice for a short time as enough information to allow you to take over the property until you get the tenants to sign a new lease/rental agreement,     Since we can’t get the Income and Expense statements, we’ll still get copies of all of the existing, water, sewer/storm drainage and garbage bills so we can have an idea of what our “fixed expenses” will be.   We will be able to figure out what the Real Estate Taxes will be (approximately 1.25% of the sales price) and we’ll obtain a quote from your Insurance Agent to find out what your annual Hazard Insurance will be.

What we won’t know will be the variable costs associated with maintenance and repairs.   To avoide unforseen issues, you should obtain a Termite Inspection, a Roof Inspection and Certification.  If the property is currently occupied the Tenants will tell us what doesn’t work.

With all that information, you should wind up with a good idea of what the condition of the property is.

Finally, I will say that even with all that information, something may come up that was unforseen inspite of your due diligence.  Hopefully, because you did exercise your “due diligence”, you will mitigate most problems so that they are small ones.

Make it a Great Day…!!!

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Fixer Upper Duplexes Profiled Here

Come and Get ’em – They probably won’t last long….

I was out and about yesterday for the first time in a while looking at property.   If you follow this blog on a regular basis you know I haven’t been posting for about two weeks.   The reason is not that there haven’t been good deals out there, it’s just that I have been busy writing up proposals and Realty World Capital Trade Group, of which I am a member,  had a Trade Booth at the California State Fair that I committed to to attending.

In the process I met a lot of nice folks and got more of a feel for what is happening in the economy.   While some folks were complaining about their houses being “upside down” we did meet some folks that were looking to get into the market not only as first time buyers but investors as well.

So here are two great prospects, one of which I know has been part of the “shadow inventory” that I’ve talked about before.

Prospect #1

10152-10154 Crawford Way, Sacramento, Ca 95827 – Listed at $113,850.   While I didn’t go inside this property, I do have an idea of what it’s going to take to fix this one up.  It’s  boarded up which makes it look nasty… it does have a partial new fence on the side street (this is a corner lot), the landscaping is well… pictures say a lot.  The listing doesn’t show Central Heat and Air so the “fix up” costs I’m projecting would include adding this and the “usual re-hab” costs. 

When it’s all done, you’d have one nice piece of investment real estate.   There have been several foreclosures in this neighborhood that have been picked up and rehabbed, one is just across the street.

Prospect #2

3425 Viking Drive, Sacramento, Ca 95827 – Listed at $186,900.   This one has been sitting on the market since August 19th.   The duplex on the right of this property is also in bad shape.  I haven’t checked but I think it’s bank owned as well.   There are some nice properties just across the street and around the neighborhood.

The prices on these Duplexes are cheap enough now that you can do the fix up and still make $$$.   After this kind of investment in “fix up”, you’d only be doing the “normal maintenance” that is associated with any kind of rental real estate.

If any of these properties pique your interst drop an email my way at:   favinger@rwnetwork.com or call me at 916-203-1260.

In the mean time…?

 

MAKE IT A GREAT DAY….

A Flip That Might Be a Win-Win….IF…?

A Win-Win Means There Must Be a Profit for Buyer & Seller.

I profiled this property back in May when it first hit the market..   Click here for the Cash Flow I projected back then.

I even have Video:

Right Side Video of 10414 South White Rock

Left Side Video of 10414 South White Rock

Now They Want to “Flip It”.

The folks that got this Ranchor Cordova Duplex put it back on the market on July 7th or so.  I watched this property because I knew they had made a “smokin buy” at $127,000.  But…..at their new “asking price” of $229,000 I thought they were really going over the “Hog Line”.

So after a couple of price changes, they’ve lowered the asking price south of $200,000 to $195,000…  still what I consider to be a little high.

Here’s what I think should be a “win-win” for the investor who only paid about $127,000 for this around  May 20th of this year.  Click Here for what I think the sales price and cash flow would be and then you tell me if the Seller makes money and the Buyer has a good deal too – A Win-Win….

 

Maket it a great day…!

Duplex Sales Data – As of August 15th, 2009

 

Duplexes Are Selling Fast – Lately….

For those of you that follow this blog, I’ve just put together the Comparable Sales Data for Citrus Heights, Rancho Cordova, Carmichael, Folsom, Fair Oaks, Orangevale, North Highlands and the Foothill Farms area of Sacramento County.

The Closed Sales section consists of Sales that have closed escrow on or after May 1, 2009.   I think you will notice that there has been a flurry of recent sales.  Time on the market has dropped.   I am posting this now so you can see what has been happening in the market within the last 2 or 3 months.

I will post later more statistics.   One of the problems in trying to analyze these properties, is the fact that many are vacant, so their incomes have to be “projected”.

Fix Up should be factored in.

Don’t forget that many of these duplexes, if they have gone back to the Bank, will need work because they have been neglected.l

The reason for the neglect is that many of these properties were sold at such a high price back in the “go-go” days, the investor had to take money out of pocket to maintain loan servicing and “defer” needed maintenance.   However, some of these properties were purchased by investors who had hoped to “flip” them and therefore did spend a lot of money with some new kitchens and bathrooms.  I’ve seen some of these where one unit would be rent ready with not too much more invested beyond new paint and carpet.

In other cases, well.. let’s just say they’ve got a lot of “deferred maintenance”.   Our experience has been that on just about any of these, you’ll need something in the neighborhood of $5,000 – $10,000 extra “per unit” to get these duplexes back into a decent condition.   This would be enough most of the time to have new carpet, paint… and some landscaping to enhance the curb appeal.

CLICK HERE FOR A COPY OF THE PDF FILE – COMPARABLE SALES AS OF 8-15-2009.

If you have any questions, please drop me a note at favinger@rwnetwork.com or call me at 916-203-1260.

 

Make it a great day…!!!

Getting Out Bid for the Duplex you want…?

I know what you thnk… “What’s the deal here…?”

According to my partner Carl Cooley, Broker, we’ve had about 4 months of increasing prices.   You know… I don’t know what to tell you except the following and you come to your own conclusion.

Last weekend I wrote.. I think 8 offers… Only one of that group was accepted and that was a short sale on a condo for about $45,000.00.

The other offers were for properties that I have posted on this site before.  On every occasion I was given the  usual “bring your highest and best offer” verbage from the listing agent.  I found out that several of these offers were “all cash” including the ones that I presented.

Folks.. you have to be careful here because I think the Banks are holding several more of these back, because they want to keep the prices up.

The economy in improving.. and yea I know we’ve got about 11% unemployement here in the Sacramento Area, but you see signs everywhere that it’s not “dead”.   Take a drive anywhere around this region and you are going to see construction sites working.

The Builders haven’t realy gotten back in the market here to build new inventory, although there are projects working.   So while we have some high unemployment numbers there is a lot of money looking for a home now.

Be carefull that you don’t get caught up in the frenzy because these things have to pencil out to make them attractive.  On just about every deal we do, I tell prospective Buyers to be prepared to invest another $10,000 to $20,000 in “fix ups and upgrades” to get the rents you’ll need.

Make it a great day

There is a lot of Competition for Bank Owned Duplexes….!

SO MAYBE YOU SHOULD “FISH WHERE THEY AIN’T”

“Fish where they ain’t” is a slogan I got from Ed Keller, another long time Real Estate Broker from one our Realty World offices in Amador County.   I have his link on my side bar if you want to check that area.

So with those words in mind I’ve been scouting out potential cash flow opportunities besides those that are Bank Owned/REO type of situations.

I came across two duplexes that are side by side on the corner of Gibbons and Walnut – 3852 through 3858 Walnut Avenue.  CLICK HERE FOR A CASH FLOW ANALYSIS

These properties have been on the market for over 90 days.  Rents vary from $700 to $900 per month.   I based my market analysis on $900 per month.  You can go and get a rent comparison to see that $900 is possible.

I think these could be a good deal if you can buy these right.   My cash flow figures were based upon sales prices of $200,000, but these should sell for a lower amount based upon the rents that they are getting now.

However when you are a landlord that prices your units below the market, you will then make it difficult to sell at top dollar, which I think is the case here.   But… these duplexes have a good location in my opinion.  They do need some curb appeal updates and probably will need some interior work as well to get that top dollar income.

In other words, since no one else is bidding on these as far as I know, maybe if you “fish where they ain’t” you might get a decent catch.

Make it a Great Day….