Results tagged “multi-family” from Knife Catchers
Miraculously, 1201 Peach Street just dropped its price by $50,000 today. It now sits at $949,000, and is no longer FSBO--José Cerda-Zein is now representing the property.
It's also spamming Craigslist considerably less these days. It used to pop up almost every weekend, twice (until Craigslist viewers flagged it down), and return the following weekend, twice, like clockwork.
One particularly charming feature of this property, in addition to the wood paneling inside, is the daring blend of fish scale siding on top and tan stucco on the bottom.
More details at the original post from September 2008.
It's also spamming Craigslist considerably less these days. It used to pop up almost every weekend, twice (until Craigslist viewers flagged it down), and return the following weekend, twice, like clockwork.One particularly charming feature of this property, in addition to the wood paneling inside, is the daring blend of fish scale siding on top and tan stucco on the bottom.
More details at the original post from September 2008.
The recent bump in home prices has some sellers seeing dollar bills again, as evidenced by a large number of new listings in January and February and some truly silly prices.
Today's inflated asking price belongs to 847 Santa Clara Avenue, a pretty Victorian triplex with the following specs:
I saw this property when it was on the market in late 2006, and can confirm it is very pretty on the outside, but the lot is minuscule, the inside was less than inspiring at the time (it may have been improved), and the property is wedged between its two neighbors, one of which is a church.
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I don't remember there being any deeded parking or garage, either, which is somewhat of a problem for a triplex.
The property last sold for $700,000 in late 2006, and given what's been going on in the real estate market, you wouldn't necessarily expect to see it again for... $850,000. Yet that's exactly what the sellers are asking as of February 28. I'd wish them luck, but that would be disingenuous.
Today's inflated asking price belongs to 847 Santa Clara Avenue, a pretty Victorian triplex with the following specs:
3 units (studio + 1-br + 2-br), 2,230 sqft, MLS(r) #40452574 (Redfin doesn't have the active listing yet)
Queen Anne cottage residence [...] great conditiion with lots of amenities everyone loves. Hardwood floors in lower units. Studio with large kitchen & spacious bath. Upper unit w foyer, high ceilings, quait balcony off bedrm, [...] Close to school, libra. shopping
I saw this property when it was on the market in late 2006, and can confirm it is very pretty on the outside, but the lot is minuscule, the inside was less than inspiring at the time (it may have been improved), and the property is wedged between its two neighbors, one of which is a church.View Larger Map
I don't remember there being any deeded parking or garage, either, which is somewhat of a problem for a triplex.
The property last sold for $700,000 in late 2006, and given what's been going on in the real estate market, you wouldn't necessarily expect to see it again for... $850,000. Yet that's exactly what the sellers are asking as of February 28. I'd wish them luck, but that would be disingenuous.
There's been a fair amount of activity lately, what with the renewal of the irresponsible tax credit and idiot agents cheering for the second coming. Here's a messy summary of interesting happenings in our little town.
A glance at Zip Realty will indicate the market is still littered with listings in various stages of foreclosures, and the market appears to be poised for a second wild ride starting early next year with tens of billions of dollars in bad loans coming home to roost (notice the inverse shape of the graph below and the Case-Shiller home price index):
Yes, I did use the word "idiot" an inordinate number of times in this post.
- 452 Santa Clara: here's a bank that's not messing around. 31 photos, nice property, 2,800+sqft Victorian fourplex, REO, listed super aggressively for $400,000. It'll be gone for way over asking in just a few days.
- 2267 Clinton is back, yet again, with a puny price drop (now down to $1,369,000). The idiot perma-sellers will never get their asking price and are wasting everybody's time. Remember this is the listing that claimed rents were rising just a year ago in spite of a mountain of evidence to the contrary.
- 3246 Liberty is a very pretty, large bungalow in a part of town that has people go ga-ga and overpay on a regular basis. This is one of the larger houses on that block, and it's priced comparably to what smaller bungalows were listed for this year ($599,000). Still too much, but some idiot buyer will probably pay that much.
- 1312 San Antonio is an expensive Tudor on a tiny lot in an excellent Gold Coast location. A short sale at $819,000 (previous transaction $869,000 in late 2005), it's unlikely to sell for over $800,000.
- A cute little Victorian 891 Oak Street just dropped its price from $575,000 to $475,000 in one fell swoop after remaining unsold for over a year. It's now a short sale.
- The unsellable duplex at 1626 Alameda Avenue dropped its price by a whole $1,000, to $942,000. Lovely price history:
03/24/09 -- $1,145,000 to $1,095,000
05/12/09 -- $1,095,000 to $1,049,000
06/23/09 -- $1,049,000 to $999,000
07/23/09 -- $999,000 to $950,000
08/25/09 -- $950,000 to $945,000
09/21/09 -- $945,000 to $943,000
10/25/09 -- $943,000 to $942,000
- 1304 Morton is finally pending! What price did the stubborn kitchen-pimping sellers accept? We shall see.
A glance at Zip Realty will indicate the market is still littered with listings in various stages of foreclosures, and the market appears to be poised for a second wild ride starting early next year with tens of billions of dollars in bad loans coming home to roost (notice the inverse shape of the graph below and the Case-Shiller home price index):
(source: Doctor Housing Bubble)
Yes, I did use the word "idiot" an inordinate number of times in this post.
Briefer posts than usual this week. 1224 Chestnut is back on the market after a long absence. The specs:
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This property was on the market back in early 2008, listed for an obscene $799,000.
(emphasis added).
3 units, 3 bedrooms, 3 bathrooms, 2,334 sqft, 3,500-sqft lot. MLS(r) #40435063, $615,000 ($263 / sqft)
[...] Strides to St. Josephs, shopping and public transport.
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This property was on the market back in early 2008, listed for an obscene $799,000.
Open Homes for March 22-23
[...]
166 Oak Park Drive $630,000 Sunday 2-4 1350 Broadway $649,500 Sat. & Sun. 2-4 1616 A Fernside Blvd. $649,950 Sat. & Sun. 2-4 880 Portola Ave. $699,999 Sunday 2-4 423 McDonnel Road $745,000 Sunday 2-4 1224 Chestnut St. $799,000 Saturday 2-4 2718 Bayview Drive $759,000 Sat. & Sun. 2-4:30 15 Sea Bridge $905,000 Sat. & Sun. 2-4 26 Gonsalves Court $1,380,000 Sat. & Sun. 2-4
(emphasis added).
You'd think agents selling houses in Alameda would know the difference between the many architectural styles that grace our little town. Heck, in any town I'd expect a Real Estate Professional (tm), someone who makes a living helping people buy and sell houses, to have a modicum of sensitivity to building styles, or at least some knowledge of chronology. But that's not the way Marcus and Millichap rolls, evidently.
Today's property at 1012 Walnut Street has the following specs:
The one part of the listing I can't argue with, though, is the "perfect for owner-occupant" bit. That's because the only owner for whom this property makes sense is the owner who lives on the premises and doesn't mind paying twice the market rate for the privilege of enjoying one fourth of their house and sharing the yard with a handful of strangers; because this house sure doesn't make any sense as an investment property. Take a look at these numbers, provided by the owner:
"But what if you're living in the property?" you ask. Let's see.
Assuming the 2-bedroom unit is the "owner's unit", the numbers come out to ~$42,000 gross / $20,000 net income (remember you lost $1,200 a month by kicking one tenant out). This means you're paying $2,400 / month ($49,000 mortgage - $20,000 net income, divided by 12) to live in a 2-bedroom unit in a shared house (with shared yard) that normally rents for $1,200 / month.
What an incredible deal!
"But rents aren't always going to be this low!" you retort.
Maybe not, but they're not exactly going up either.
"But real estate doubles in value every 10 years!" you persist.
I suppose it all depends which 10 years you're looking at:
Today's property at 1012 Walnut Street has the following specs:
5 bedrooms, 4 bathrooms (4 units), 5,001 sqft, 3,132-sqft lot, built in 1896, MLS(r) #40434353, $849,000First off, as far as I can tell, the agent screwed up the details in the MLS(r) listing; the lot is ~5,000 sqft and the house is 3,132 sqft, not the other way around, at least according to Zillow and Trulia. This ain't Bayport, thank you very much. Second, if we are to believe the agent, this property is a rare example of a 1896 Craftsman, complete with bay windows and a second story like so many Craftsman houses of the era.
Detailed & well-maintained Craftsman with significant renovation-new roof, siding, paint, electrical, plumbing. [...] Large renovated Owner's Unit w/ 2 car garage & storage. All units sep metered/sep hot water heaters. Coin-op W/ D owned by landlord. [...] Perfect for Owner-occupant. Large backyard. [...]
The one part of the listing I can't argue with, though, is the "perfect for owner-occupant" bit. That's because the only owner for whom this property makes sense is the owner who lives on the premises and doesn't mind paying twice the market rate for the privilege of enjoying one fourth of their house and sharing the yard with a handful of strangers; because this house sure doesn't make any sense as an investment property. Take a look at these numbers, provided by the owner:
Unit 1: 1+1, $1,495 / moA 6% fixed mortgage on a $849,000 property with 20% down comes out to about $49,000 / year. So you're $15,000 in the red every year from the get-go.
Unit 2: 1+1, $1,050 / mo
Unit 3: 1+1, $1,000 / mo
Unit 4: 2+1, $1,200 / mo
Gross rent income: ~$56,000
Expenses (repairs, taxes, vacancy, etc): ~$22,000
Net income: ~$34,000
"But what if you're living in the property?" you ask. Let's see.
Assuming the 2-bedroom unit is the "owner's unit", the numbers come out to ~$42,000 gross / $20,000 net income (remember you lost $1,200 a month by kicking one tenant out). This means you're paying $2,400 / month ($49,000 mortgage - $20,000 net income, divided by 12) to live in a 2-bedroom unit in a shared house (with shared yard) that normally rents for $1,200 / month.
What an incredible deal!
"But rents aren't always going to be this low!" you retort.
Maybe not, but they're not exactly going up either.
"But real estate doubles in value every 10 years!" you persist.
I suppose it all depends which 10 years you're looking at:
If this property is supposed to double in value by 2015, it might want to get started soon.ZESTIMATE®: $873,50
- Value Range: $515,365 - $952,115
- 30-day change: -$2,000
Last sale and tax info
- Sold 06/17/2005: $856,000
- 2009 Property Tax: $11,866
Look who's back! Lagoon-access Victorian triplex 1904 Clinton has been relisted at a lower price ($899,000 down from $949,000, or $351 / sqft; MLS(r) #40431282) with a new agent, our good buddy Jose Cerda-Zein. Please refer to the original post for specs.
One factor that might be contributing to this property not selling is the fact it's been chopped up into three small units--neither of its two buyer pools can possibly be interested. Investment property buyers don't really want a luxury home in a prime location with three small units in it, because it doesn't make sense to pay a large location and architectural premium for three little apartments. And well-heeled Victorian aficionados interested in a lagoon property don't want a triplex; they want a large single-family home that's ready to move in as is.
So much for my prediction this thing would sell quickly.
One factor that might be contributing to this property not selling is the fact it's been chopped up into three small units--neither of its two buyer pools can possibly be interested. Investment property buyers don't really want a luxury home in a prime location with three small units in it, because it doesn't make sense to pay a large location and architectural premium for three little apartments. And well-heeled Victorian aficionados interested in a lagoon property don't want a triplex; they want a large single-family home that's ready to move in as is.So much for my prediction this thing would sell quickly.
1836 8th Street came on the market a few days ago with an amusing description. The specs:
$525,000 ($412 / sqft) is way too high, given how awful 1947-vintage houses are in this town and its très subprime location. Each minuscule unit can't bring in much more than $800 a month, if that, and even with 20% down and a 5% fixed rate, the mortgage and property taxes amount to something like $2,700 a month. This is a great investment if you enjoy burning 14,000 dollar bills every year.
The only way this property makes sense is if you cut the price in half, which, incidentally, is roughly its previous sale price:
Duplex, 2 units with 1 br, 1 ba each, 1275 sqft (total), 4,290-sqft lot, built in 1947, MLS(r) #40406102, $525,000I'm not sure which park and beaches they're referring to--certainly not any I'd go willingly. But what's really important here is that this property is being sold by a real person.
Not A Short Sale, Not Bank Owned!! An Actual Person Selling a Home! Each Unit Has 1 Bedroom, 1 Bathroom, Apprx. 650 Square Feet, [...] Close to Marina Village Shopping, Parks & Beaches!!
$525,000 ($412 / sqft) is way too high, given how awful 1947-vintage houses are in this town and its très subprime location. Each minuscule unit can't bring in much more than $800 a month, if that, and even with 20% down and a 5% fixed rate, the mortgage and property taxes amount to something like $2,700 a month. This is a great investment if you enjoy burning 14,000 dollar bills every year.
The only way this property makes sense is if you cut the price in half, which, incidentally, is roughly its previous sale price:
Our actual person is in a bit of a pickle if s/he borrowed against their property--I honestly can't imagine what kind of an imbecile would pay more than $250,000 for this thing. But real estate mania is alive and well in our little town, so who knows?Last sale and tax info
- Sold 06/30/2000: $250,000
- 2008 Property Tax: $4,281
While we're on the topic of successful real estate investments, the little big Victorian at 2117 Encinal comes to mind.
The address sounded mighty familiar, and sure enough a little poking around reveals a tumultuous and recent history:
So we know this house was on the market at some point in 2008 for $1,000 over its previous sale price in 2004. If the basement is fully built-out, I'd guess it's on the order of 2,200-2,500 sqft based on many similar high-basement Victorians I've seen, and so at just under $580,000 this property is now priced around $230-$265 / sqft, which means it'll likely sell quickly, especially if the inside is in good shape. Looks like the banks are finally getting it.
Update: After a little more checking, I found this house is 2,400 sqft (not bad for an armchair guesstimate) and the inside was "completely renovated," including a foundation job. This one won't last long, in spite of its small lot and its location on a busy (but not awful) stretch of Encinal.
5* bedrooms, 3 bathrooms, 3,500-sqft lot, MLS(r) #40405054, $579,900
* or 4, depending on where you look
Bank owned Victorian with lots of upgrades. Property [...] including a large master suite on a main level. Full basement [...] 3 bedrooms and 1 bath. A must see!
The address sounded mighty familiar, and sure enough a little poking around reveals a tumultuous and recent history:Ah, the fabled MLS rules, as truthful as Правда, as transparent as Гла́сность, as friendly as a Стул ведьмы. But thankfully we have them internets to help us out. It's not perfect, but it's something:Property History for 2117 Encinal
Date Event Price Apr 15, 2009 Listed $579,900 Aug 30, 2008 Off Redfin * Jul 22, 2008 Price Changed * Jun 14, 2008 Listed * Jun 14, 2008 Off Redfin * Mar 14, 2008 Listed * Jan 12, 2004 Sold $648,000 Jun 12, 2002 Sold $340,000
*Per MLS rules, we cannot display prices from inactive listings.
So we know this house was on the market at some point in 2008 for $1,000 over its previous sale price in 2004. If the basement is fully built-out, I'd guess it's on the order of 2,200-2,500 sqft based on many similar high-basement Victorians I've seen, and so at just under $580,000 this property is now priced around $230-$265 / sqft, which means it'll likely sell quickly, especially if the inside is in good shape. Looks like the banks are finally getting it.Update: After a little more checking, I found this house is 2,400 sqft (not bad for an armchair guesstimate) and the inside was "completely renovated," including a foundation job. This one won't last long, in spite of its small lot and its location on a busy (but not awful) stretch of Encinal.
A reader kindly provided photos of the new listing at 1902 Chestnut, which is an interesting hotchpotch indeed. Here are the specs:
The ranch house in back was built in 1967 and looks respectable, if not attractive:
The shingles look as though they could use a little help:
The property is said to need some work, and is sold "in its present condition" according to the OMM flyer. Other than the new roof and back stairs, it's not clear how much you'd have to spend for the unspecified "work" required by the property. The back stairs were permitted and completed about a year ago:
The property's last recorded sale happened over 20 years ago:
The flyer mentions an actual rental income of about $63,000 for 2008, and a projected $77,400 for 2009 (it's not clear how they justify a 23% income increase when one of the units is vacant, two are month-to-month, and one is Section 8). Trulia's handy mortgage calculator comes up with a monthly payment around $4,300 assuming 10% down, 6.25% interest rate (jumbos are still somewhat expensive), and $7,000 yearly property tax. Add another $500 a month for maintenance and a little extra padding for unexpected issues (or the shortfall from spending your down payment rather than investing it), and we're looking at about $5,000 in fixed monthly costs.
Assuming last year's $63,000 rental income, this a barely a break-even proposition, which is better than what passes for "investment properties" in Alameda these days, but hardly a screaming deal. Add in one or two big-ticket items like a new foundation, a plumbing or electrical redo, or window replacement, insulation or other "green" type of jobs to make the house appealing to the next buyer (or to attract the kind of well-paid tenants who care about those things), and you're set to be in the red for several years.
It'll be interesting to see what kind of action this property gets. Please do post any observations in the comments if you attend an open house. And please don't disturb the occupants.
2 houses on one lot: one large triplex + one ranch houseHere's what the structures look like (thanks for the photos!):
Triplex has 3 + 1 + 2 bedrooms, 1 + 1 + 1 1/4 bathrooms
Rancher has 3 bedrooms, 1 bathroom
3,121 total sqft per Zillow public records, 6,975-sqft lot, MLS(r) #40400263, $658,000
Unique [..] Victorian Triplex + a ranch style 3 bedroom house. [...] New roofs, back stairs 2008, # 2003 is fixed up & ready to rent! Interesting architecture & details. This property needs work [...]
The ranch house in back was built in 1967 and looks respectable, if not attractive:The shingles look as though they could use a little help:The property is said to need some work, and is sold "in its present condition" according to the OMM flyer. Other than the new roof and back stairs, it's not clear how much you'd have to spend for the unspecified "work" required by the property. The back stairs were permitted and completed about a year ago:Assuming the units referred to as "2001" and "2003" in the flyer are on Eagle Ave, there's also some permit history available for at least one of those:
Case / Application / Permit Number B08-0461 Type / Classification Building Building Permit Residential / Over the Counter Address 1902 CHESTNUT ST
ALAMEDA, CA 94501Parcel Number 071-0256-021-00 File Date 4/24/2008 Status B_OTC - Finaled Status Date 8/28/2008 8:38:22 AM Valuation $0.00 Fees $1,793.78 Payments $1,793.78 Balance $0.00 Description DEMO & REBUILD SECOND STORY DECK, STAIR & SIDING (LIKE FOR LIKE)
| Case / Application / Permit Number | B08-0966 | ||
| Type / Classification | Building | ||
| Building Permit | |||
| Residential / Over the Counter | |||
| Address |
2001 EAGLE AVE ALAMEDA, CA 94501 |
||
| Parcel Number | 071-0256-021-00 | ||
| File Date | 8/7/2008 | ||
| Status | B_OTC - Finaled | ||
| Status Date | 8/21/2008 8:14:33 AM | ||
| Valuation | $0.00 | ||
| Fees | $471.80 | ||
| Payments | $471.80 | ||
| Balance | $0.00 | ||
| Description | TEAR OFF AND RE-ROOF W/SHEATHING (CLASS 'A') INSTALL SPARK ARRESTER IF NEEDED; REPAIR 3 DRYROTTED CHIMNEY CHASES |
The property's last recorded sale happened over 20 years ago:
While $658,000 ($211 / sqft) for two respectably-sized houses might sound like a good deal, I wouldn't jump on it just yet--the location is hardly prime (although it's on a non-hideous stretch of Eagle Avenue, unlike some other homes), and the amount of work that might be needed makes me suspicious.Last sale and tax info
- Sold 12/10/1986: $97,000
- 2008 Property Tax: $7,857
The flyer mentions an actual rental income of about $63,000 for 2008, and a projected $77,400 for 2009 (it's not clear how they justify a 23% income increase when one of the units is vacant, two are month-to-month, and one is Section 8). Trulia's handy mortgage calculator comes up with a monthly payment around $4,300 assuming 10% down, 6.25% interest rate (jumbos are still somewhat expensive), and $7,000 yearly property tax. Add another $500 a month for maintenance and a little extra padding for unexpected issues (or the shortfall from spending your down payment rather than investing it), and we're looking at about $5,000 in fixed monthly costs.
Assuming last year's $63,000 rental income, this a barely a break-even proposition, which is better than what passes for "investment properties" in Alameda these days, but hardly a screaming deal. Add in one or two big-ticket items like a new foundation, a plumbing or electrical redo, or window replacement, insulation or other "green" type of jobs to make the house appealing to the next buyer (or to attract the kind of well-paid tenants who care about those things), and you're set to be in the red for several years.
It'll be interesting to see what kind of action this property gets. Please do post any observations in the comments if you attend an open house. And please don't disturb the occupants.
Right next door to a duplex covered twice on this blog stands the sad Victorian at 1813 Sherman, which just came on the market as MLS(r) #40397301, although you'll have to hand over your registration information to an MLS site, or just pay attention (check out Redfin's URL) if you want to know where exactly it is. The specs:
low traffic, very little noise, and a lovely view to the owner and tenants:
Never mind that $599,000 for a small house that was never really intended to be a duplex might not be cash-flow positive for, what, 15 years, if that: the location alone should be enough to deter all but the dumbest savviest investor from purchasing this poor old thing.
It certainly was a great investment for the current owner:
duplex, 3 bedrooms, 2 bathrooms, 1,784 sqft, 3,125-sqft lot, MLS(r) #, $599,000 ($336 / sqft)The lot is tiny, and as you can see in the photo it seems to be all length. The Avocato trees must be hiding from the former fruit processing plant right across the street, which guarantees
Super clean, no defered maintenence. [...] top unit has access to finished attic. newer concrete foundation. [...] individually metered, and have washer and dryers in unit. [...] low maintanance building. Large back yard with mature Avocato trees.
Never mind that $599,000 for a small house that was never really intended to be a duplex might not be cash-flow positive for, what, 15 years, if that: the location alone should be enough to deter all but the It certainly was a great investment for the current owner:
I shudder at the thought they may have finished the attic to squeeze more rental income from their miniature Avocato plantation.Sales History
Sale History & Tax Info Sale History 09/22/2006: $570,000 10/20/1987: $66,000 * No other sale data is available * Transaction not included in Zestimate.
Just as I was looking forward to writing a post lauding a seller for their realistic pricing, reality hit under the guise of a a truthful MLS(r) description. Rats.
Today's "major fixer" is a huge Dutch colonial house near the lagoon at 855 Cedar, with the following appetizing specs:
I was excited about this listing, because at $935,000 for 3 units in a 4,810-sqft building ($194 / sqft), it almost actually makes sense financially as an income-generating property, unlike other properties covered on this blog: you could probably rent the two smaller units for a combined $2,700 a month or so, leaving you with a manageable payment for the big 4-bedroom owner's unit.
Little did I know this house was a...
Today's "major fixer" is a huge Dutch colonial house near the lagoon at 855 Cedar, with the following appetizing specs:
8 bedrooms (3 units: 4BA, 3BA, 1BA), 2 bathrooms, 4,810 sqft (!!!!), MLS(r) #40395456, $935,000
I was excited about this listing, because at $935,000 for 3 units in a 4,810-sqft building ($194 / sqft), it almost actually makes sense financially as an income-generating property, unlike other properties covered on this blog: you could probably rent the two smaller units for a combined $2,700 a month or so, leaving you with a manageable payment for the big 4-bedroom owner's unit. Little did I know this house was a...
MAJOR fixer from top to bottom but this Historic Victorian Triplex has huge potential! [...] Great for owner to live in 1 unit and rent out 2nd & 3rd unit. Prime Location, near Park St dining, transportation, Alameda Towne Center shopping, schools & Hospital. [...] property is on the Historic list. Needs everything it has been vacant for many yearsI wouldn't be surprised if you had to put in $75-$100 / sqft to make the place livable, which of course blows the reasonable price concept to smithereens.
It's not often that a building from 1940 makes me smile, but I have to say I was very impressed with the spectacular meltdown of 537 Central, which just came on the market. The specs:
It doesn't look like much from the street view, and the agent herself says it needs work (which usually means it needs a lot of work), but I'm not actually certain that's the right property, so I'll probably post one of my own pictures soon (that is the right house). At any rate, $211 / sqft is getting pretty close to a sensible price, assuming the house is actually livable and liberating its "potential" doesn't require another $200,000.
The sale history from Redfin, Zillow and Trulia suggests this property was a cross between a hot potato and a holiday fruitcake during the real estate boom (the September 2008 sale looks a lot like a foreclosure sale):
The funny thing is that even at the current list price, the property is still not cashflow-positive, even with generous assumptions (21% down to get to a conforming 5.5% fixed-rate loan). Including property tax and 1% in maintenance per year (just in case), we're looking at $3,200 a month or so in fixed costs; and there's no way anyone should pay more than $800 a month for a 1+1 rental in that house in that location.
So in the absolute best-case scenario, with zero vacancy and a move-in condition property, this building barely breaks even. Add in taxes on the rental income and you get a property that's still overpriced, even after a 34% drop since the last sale. Add in the cost of whatever work needs to be done to rehab the house, and you're better off burning dollar bills to heat your apartment (it's COLD out there this week) than buying this place.
Every once in a while, readers of this blog ask me what price per square foot Alameda properties should be. I'm not a financial planner or advisor, so you have to do your homework, but as far as I'm concerned, if you can't break even renting a property at $211 / sqft, then a reasonable, sustainable price per sqft for someone looking to buy has to be... less than $211.
It's really not that complicated.
And it's true whether the market is going down, up, or sideways: you never know when you might need to move (layoff, illness, transfer, retirement, new baby, divorce, sick relative) and rent out your house for a while (you may not be able or willing to sell for whatever reason). Moving in difficult circumstances is hard enough without bleeding money on a house you're no longer living in because your rental income doesn't cover your mortgage.
And to the mathematically inept who claim that we're just never going to see $175 / sqft in Alameda: this property has potentially dropped 34% in 2 1/2 years, still doesn't pencil out as an investment, and only the lunatic fringe at NAR still claims the market will bottom out real soon, any day now, really, so we're probably in for another year or two of real price declines. It was $127 / sqft twenty years ago, presumably in better shape than it is now, and (surprise!) at a time when prices were also too high and headed for a crash:
Adjust $127 / sqft down for 1988 bubbliness, add a couple decades' worth of inflation, subtract 20 years' worth ofneglect deferred maintenance, throw in some price pressure from actual investors who won't buy unless there's an actual return on their investment, and $175 / sqft suddenly doesn't sound so kooky anymore.
Watch for more of those brilliant "Alameda investment opportunit[ies]" go back on the market as the economy continues its epic performance of the past few months. In fact, it might be entertaining to make it a game--look for some egregious transaction prices in the past 5 years of old issues of SFGate's Alameda home sales and predict when they'll come back on the market. Whoever guesses the next sale price gets a cupcake.
Postlude: After writing this post and reflecting on earlier writeups on other "investment properties", it struck me once again how absurd it is that a blogger with absolutely zero interest in any of these transactions would spend more time doing basic arithmetic than the irresponsible, innumerate, improvidentidiots investors who put themselves on the hook for $45K a year in mortgage payments on properties that bring in $2,500 a month in gross rental income. Sigh.
4 units (1+1 each), 2,487 sqft, MLS(r) #40395338, $525,000
Potential says it all! Needs work - take advantage of this Alameda investment opportunity. [...] Unit 1 & 2 have been converted to large unit - easily converted back. [...] Come see!
It doesn't look like much from the street view, and the agent herself says it needs work (which usually means it needs a lot of work)The sale history from Redfin, Zillow and Trulia suggests this property was a cross between a hot potato and a holiday fruitcake during the real estate boom (the September 2008 sale looks a lot like a foreclosure sale):
Property History for 537 CENTRAL Ave
Redfin doesn't compute the potential appreciation rate for currently for-sale listings for obvious reasons (we don't know what the final sale price will be); but assuming a full-price transaction, we're looking at a 34% drop in "value" in just 2 1/2 years.
Date Event Price Appreciation Source Feb 13, 2009 Listed $525,000 -- Sep 23, 2008 Sold $702,473 -5.8%/yr Public Records Jul 25, 2006 Sold $800,000 1.8%/yr Public Records Mar 01, 2005 Sold $780,000 5.4%/yr Public Records Jan 27, 1988 Sold $317,000 -- Public Records
The funny thing is that even at the current list price, the property is still not cashflow-positive, even with generous assumptions (21% down to get to a conforming 5.5% fixed-rate loan). Including property tax and 1% in maintenance per year (just in case), we're looking at $3,200 a month or so in fixed costs; and there's no way anyone should pay more than $800 a month for a 1+1 rental in that house in that location.
So in the absolute best-case scenario, with zero vacancy and a move-in condition property, this building barely breaks even. Add in taxes on the rental income and you get a property that's still overpriced, even after a 34% drop since the last sale. Add in the cost of whatever work needs to be done to rehab the house, and you're better off burning dollar bills to heat your apartment (it's COLD out there this week) than buying this place.
Every once in a while, readers of this blog ask me what price per square foot Alameda properties should be. I'm not a financial planner or advisor, so you have to do your homework, but as far as I'm concerned, if you can't break even renting a property at $211 / sqft, then a reasonable, sustainable price per sqft for someone looking to buy has to be... less than $211.
It's really not that complicated.
And it's true whether the market is going down, up, or sideways: you never know when you might need to move (layoff, illness, transfer, retirement, new baby, divorce, sick relative) and rent out your house for a while (you may not be able or willing to sell for whatever reason). Moving in difficult circumstances is hard enough without bleeding money on a house you're no longer living in because your rental income doesn't cover your mortgage.
And to the mathematically inept who claim that we're just never going to see $175 / sqft in Alameda: this property has potentially dropped 34% in 2 1/2 years, still doesn't pencil out as an investment, and only the lunatic fringe at NAR still claims the market will bottom out real soon, any day now, really, so we're probably in for another year or two of real price declines. It was $127 / sqft twenty years ago, presumably in better shape than it is now, and (surprise!) at a time when prices were also too high and headed for a crash:
(source)
Adjust $127 / sqft down for 1988 bubbliness, add a couple decades' worth of inflation, subtract 20 years' worth of
Watch for more of those brilliant "Alameda investment opportunit[ies]" go back on the market as the economy continues its epic performance of the past few months. In fact, it might be entertaining to make it a game--look for some egregious transaction prices in the past 5 years of old issues of SFGate's Alameda home sales and predict when they'll come back on the market. Whoever guesses the next sale price gets a cupcake.
Postlude: After writing this post and reflecting on earlier writeups on other "investment properties", it struck me once again how absurd it is that a blogger with absolutely zero interest in any of these transactions would spend more time doing basic arithmetic than the irresponsible, innumerate, improvident
Another day, another pretty, old West end 2-story house going back to the bank. 452 Santa Clara joins 450 Taylor in our rogues' gallery of failed real estate experiments. Here are the specs:
Oh and by the way, $699,900 is still nowhere near cash-flow positive, either, so anyone buying at today's price is just as much of an idiot as the current owner. But I suppose they may have felt they were getting a great deal then too, since it was apparently listed at $895,000. Interestingly the agent's trophy page for the last sale mentions greater square footage, an owner's unit, and a sale price of $820,500.
It's not clear why the public records would show a considerably lower sale price, although it hardly makes a difference since this property doesn't begin to make sense until the price drops to about $450,000-$475,000 ($2,300 monthly mortgage payment with the same assumptions as above). Incidentally, that happens to be exactly the price at which the property sold back in 1999. Imagine that.
4 units (3x1BR 1BA, 1x2BR 1BA), 2,836 sqft, 7,810-sqft lot, MLS(r) #351187, $699,900The property has a long history of multiple sales in the past 20 years, courtesy of Redfin for a change:
Large 4 plex in the heart of Alameda. Victorian Home built in 1900 converted to 4 units. Garage parking in the rear. Separate Meters. Short Sale! Grab this great deal!
Whoever bought it last for $738,454 didn't appear to mind the 11% annual appreciation since the previous sale or the fact that the rental income doesn't come close to covering the costs:Property History for 452 SANTA CLARA Ave
Date Event Price Appreciation Source Jan 15, 2009 Listed $699,900 -- San Francisco MLS #351187 Jan 15, 2009 Listed $699,900 -- MLSListings #80902277 Sep 09, 2004 Sold $738,454 11.1%/yr Public Records Dec 30, 1999 Sold $450,000 51.5%/yr Public Records Sep 15, 1994 Sold $50,000 -36.7%/yr Public Records Oct 26, 1993 Sold $75,000 -24.2%/yr Public Records Dec 18, 1992 Sold $95,000 -30.5%/yr Public Records Jan 31, 1989 Sold $390,000 -- Public Records
Financial Information(for reference, a 6.5%-interest, 80%-LTV loan for a $740,000 house comes out to about $3,700 a month exclusive of property tax).
- Tax Amount: $11,074.70
- Gross Rent Multiplier: 26.51
- Rental Income: $26,400
- Net Income: $6,381
- Gross Scheduled Income: $26,400
- Gross Annual Income: $26,400
Oh and by the way, $699,900 is still nowhere near cash-flow positive, either, so anyone buying at today's price is just as much of an idiot as the current owner. But I suppose they may have felt they were getting a great deal then too, since it was apparently listed at $895,000. Interestingly the agent's trophy page for the last sale mentions greater square footage, an owner's unit, and a sale price of $820,500.
It's not clear why the public records would show a considerably lower sale price, although it hardly makes a difference since this property doesn't begin to make sense until the price drops to about $450,000-$475,000 ($2,300 monthly mortgage payment with the same assumptions as above). Incidentally, that happens to be exactly the price at which the property sold back in 1999. Imagine that.
Today's new listing is a pretty Victorian on the lagoon on the 1900 block of Clinton. Handy if you need to run to the hospital. The specs:
4 bedrooms, 3 bathrooms, 2,563 sqft, 7,420-sqft lot, triplex, MLS(r) #40389387, $949,000
Gorgeous "turn of the century" victorian on lagoon on gold coast [...] Owners unit is 2 bedr/1 bath w/formal dr, sunporch,etc. All units have access to backyard, deck and lagoon. Updated triplex with original charm. [...] One of a kind! Must see
It's certainly pretty, although I'm not sure I like the siding. It's also across the street from a large, formerly gorgeous white Victorian on a corner lot that's falling to bits slowly but surely:
I haven't seen the inside, so I can't vouch for its condition, but the outside is nice, it has direct lagoon access and a big lot, and it's fairly large, so $949,000 ($370 / sqft) is probably enough to make it move quickly. I don't know if they're going to get it, though, since the house sold for "only" $700,000 in late 2007, near the peak of the market, at a time when house prices were actually higher than they are now; this suggests there might be something funny going on with the property. But again, I haven't seen it (or the disclosures), so it's hard to tell.
Whatever the case may be, though, I suspect the owners realized you can't make a $700,000 triplex cash-flow-positive no matter how you slice it, especially if you've added the mortgage by upgrading a bunch of things (emphasis added):
At any rate, their expectations have dropped a hair, as evidenced by their sub-$1M list price. It'll be interesting to see what happens.
Whatever the case may be, though, I suspect the owners realized you can't make a $700,000 triplex cash-flow-positive no matter how you slice it, especially if you've added the mortgage by upgrading a bunch of things (emphasis added):
The owners also appear to have set a "Make me move" price on Zillow (a cool million, natch), and put it up as a FSBO on Zillow as well, which suggests they may have wanted to bail very shortly after they bought the house.Home Description
Triplex with 2 1 Bedroom units on the 1st floor and a 2 Bedroom on the upper floor. Located directly on the lagoon with its own pier and deck on the water. Great Views. New roof & double-pane windows, oak floors refinished, upgraded electrical, freshly repainted, insulated.
Provided by the owner
At any rate, their expectations have dropped a hair, as evidenced by their sub-$1M list price. It'll be interesting to see what happens.
This week's Victorian made me laugh.
more like a high-basement cottage whose lower half was put to use. I'm happy to be corrected if that is indeed one big Victorian with 2,494 sqft of above-ground living space (thanks to reader T. Fergusen for the tip; I might verify it if the agent holds an open house).
What made me laugh, exactly?
They're asking $1,150,000 ($461 / sqft). Assuming 6.5% interest and 10% down, we're looking at a $6,500 mortgage, with another $1,000 for property tax. How exactly do you expect to cover that with 2 1-bedroom and 1 2-bedroom units' rents?
What is it about big lots and "magical gardens" in the west end that causes owners to lose their minds over the value of their properties? What is it about the current market that leads people to believe they'll be able to unload their houses at these delusional prices, especially considering many of the comps haven't exactly set the market on fire?
This property has no business being priced in the seven digits.
Update 12/28/08: Price dropped to a still-too-high $1,095,000 two weeks ago.
4 bedrooms, 3 bathrooms, 2,494 sqft, ~6,000-sqft lot, 3 units (2x 1BR, 1x2BR), MLS(r) #40380511It certainly doesn't look like a house that started out as a triplex--
Darling Victorian Triplex [...] Magical garden w/ space galore! [...] units all with large kitchens and lots of original details. A must see!
What made me laugh, exactly?
They're asking $1,150,000 ($461 / sqft). Assuming 6.5% interest and 10% down, we're looking at a $6,500 mortgage, with another $1,000 for property tax. How exactly do you expect to cover that with 2 1-bedroom and 1 2-bedroom units' rents?
What is it about big lots and "magical gardens" in the west end that causes owners to lose their minds over the value of their properties? What is it about the current market that leads people to believe they'll be able to unload their houses at these delusional prices, especially considering many of the comps haven't exactly set the market on fire?
This property has no business being priced in the seven digits.
Update 12/28/08: Price dropped to a still-too-high $1,095,000 two weeks ago.
Today's newest Victorian has a mysterious obsession with water.
The sale history suggests an intra-family transfer of some kind--a plot of land that size, with lagoon access, was worth far more than $56,500, even without a beautiful Victorian sitting on it.
Update 4/25/09: Price dropped to $995,000 several weeks ago.
6 bathrooms, 4,501 sqft, 12,660-sqft lot (!), MLS(r) #40378361, $1,150,000
Great water income property. [...] victorian w/full basement and finished attic, 3 story water tower for future use, 6 off street parkings, 2 newer units in back [...] on lagoon. Approx. 300' deep [...]The public records say nothing about bedrooms; only bathrooms matter in this "water income property" with a "water tower for future use" (is that when the aliens have invaded Earth and turned all our water into liquid hydrogen?) "on lagoon." Regardless, it is a striking building:
(note the model in front demonstrating one of the "6 off street parkings." in her spiffy new white Dodge)
The sale history suggests an intra-family transfer of some kind--a plot of land that size, with lagoon access, was worth far more than $56,500, even without a beautiful Victorian sitting on it.
Without any information about the layout, it's hard to even guess at what kind of income the property might bring in, but at $255 / sqft in that location, it's a steal and should go in a heartbeat, assuming the property's inside matches its exterior. And guess who's not too happy about this listing?Last sale and tax info
- Sold 03/21/1997: $56,500
- 2008 Property Tax: $5,218
Update 4/25/09: Price dropped to $995,000 several weeks ago.
An adorable Victorian at 1514 Minturn showed up in my email box today courtesy of Trulia. It's a pretty "duplex", which really means "high-basement conversion" based on the square footage and the high-basement look of it (photo below) with the following specs:
Listed at $599,000 ($461 / sqft), it's probably going to sell reasonably quickly, although the current credit contraction + holiday season combo is not exactly playing in its favor. It's also not clear how it would be cash-flow-positive as an investment property, given that a 6.5%-interest mortgage assuming 20% down is at least $3,000 / month, not counting maintenance or property tax, and I have a hard time imagining either unit in this house renting for much more than$1,500 $750 a month (turns out each unit is about 650 sqft).
It certainly hasn't been a terribly cash-flow-positive investment for the current owners:
Update 11/3/08: Here's a bank that doesn't mess around. Priced at $420,000 today.
Update 11/20/08: A reader reported this property sold for $476,000, a 34% drop in value from its previous transaction just three years ago. Yay (and thanks for the tip)!
Update 11/25/08: Back/still on the market?
Update 1/2/09: Still on the market.
Update 1/11/09: Back on the market with new agent, new price ($380,000), and old musty smells. Thanks to the commenters who pointed this out.
4 bedrooms, 2 bathrooms, 1,300 sqft, MLS(r) #, $599,000The location is great if you like peace and quiet--it's at the end of a cul-de-sac--but less so if you like large lots. I couldn't find the lot's square footage anywhere, but judging by the Google map's aerial view, it doesn't look too big. The property (or part thereof) appears to have been used as the headquarters for a painting business named Grand Finishes.
Victorian Duplex Pride of Ownership , 2 floors, harwood floors
Listed at $599,000 ($461 / sqft), it's probably going to sell reasonably quickly, although the current credit contraction + holiday season combo is not exactly playing in its favor. It's also not clear how it would be cash-flow-positive as an investment property, given that a 6.5%-interest mortgage assuming 20% down is at least $3,000 / month, not counting maintenance or property tax, and I have a hard time imagining either unit in this house renting for much more than
It certainly hasn't been a terribly cash-flow-positive investment for the current owners:
Who exactly thought this little house justified paying almost three quarters of a million?Last sale and tax info
- Sold 09/30/2005: $720,000
- 2007 Property Tax: $9,404
Update 11/3/08: Here's a bank that doesn't mess around. Priced at $420,000 today.
Update 11/20/08: A reader reported this property sold for $476,000, a 34% drop in value from its previous transaction just three years ago. Yay (and thanks for the tip)!
Update 11/25/08: Back/still on the market?
Update 1/2/09: Still on the market.
Update 1/11/09: Back on the market with new agent, new price ($380,000), and old musty smells. Thanks to the commenters who pointed this out.
The art of flipping is still alive and well, in spite of the market's current malaise. Today's flip is a large Victorian in an area noted for its small lots and tiny homes, the 400-500 blocks of Santa Clara. First, the specs:
I can't vouch for this, but this property doesn't look like it was born a multi-family residence. I'd bet it was raised and chopped up into two units at some point in its long history, and as a result it looks just wrong, especially when you compare it to real two-story Victorians on the island.
The sale history reveals truly inspired financial reasoning on the owner's part:
Except there are a lot of other pretty Victorian MFHs, some with 4 units (and therefore much better rental upside potential; at least you're not losing 50% of your revenue when one tenant moves out), many in better areas, most about the same size, that just aren't selling, even when listed for a lot less than this property's delusional $819,000 asking price.
Did anyone do a cash flow analysis of this beast? A quick back-of-the-envelope calculation puts the mortgage alone at $4,700 / month (assuming 10% down and 6.5% loan); add $700 for property tax and $500 for maintenance (a low estimate to reflect the fact the house was just renovated) and you need $5,900 / month in rent just to break even. I don't know about you, but I ain't paying $3,000 a month to live in a Vic basement in that part of town, even if I can use the long driveway to practice my bowling skills all day. And if all you want is a big house to live in for yourself, you can rent one just 5 sqft smaller for $3,500 a month. That's close to $30,000 savings every year, or tuition and board at any good 4-year public college in California.
Restoring old homes is a wonderful, laudable enterprise. Expecting to flip them for a massive profit is not. I just hope this doesn't cost these idiots' kids a chance to get the good education their parents obviously didn't get. Or maybe they skipped the intro math classes.
Update 10/31/08: It didn't take long for the first price drop. We're down to a still excessive $780,000. I'm almost ready to bet there's going to be another one before the end of November.
Update 9/30/09: I missed the sale--evidently this property sold in May, 2009 for... $500,000. REO? Distress sale?
4 bedrooms, 2 bathrooms, 2,366 sqft, 7,120-sqft lot, 1x2BR, 1x3BR units, MLS(r) #40374744, $819,000I don't know about gorgeous, but there's photographic evidence it was being worked on not terribly long ago, thanks to Google's ruthless street view camera:
Gorgeous Victorian on a huge lot. Totally remodeled from top to bottom with permits. New appliances, flooring, granite counter tops, cabinets, fresh paint in and out, etc. [...] Long driveway parks many cars.
I can't vouch for this, but this property doesn't look like it was born a multi-family residence. I'd bet it was raised and chopped up into two units at some point in its long history, and as a result it looks just wrong, especially when you compare it to real two-story Victorians on the island.The sale history reveals truly inspired financial reasoning on the owner's part:
I suspect it went something like this: "Let's buy this place, spend a hundred K fixing it up, and flip it! We're gonna be RICH! MUAHAHAHAHAHHAAHAHAAAA!"Last sale and tax info
- Sold 11/15/2006: $560,000
- 2007 Property Tax: $2,023
Except there are a lot of other pretty Victorian MFHs, some with 4 units (and therefore much better rental upside potential; at least you're not losing 50% of your revenue when one tenant moves out), many in better areas, most about the same size, that just aren't selling, even when listed for a lot less than this property's delusional $819,000 asking price.
Did anyone do a cash flow analysis of this beast? A quick back-of-the-envelope calculation puts the mortgage alone at $4,700 / month (assuming 10% down and 6.5% loan); add $700 for property tax and $500 for maintenance (a low estimate to reflect the fact the house was just renovated) and you need $5,900 / month in rent just to break even. I don't know about you, but I ain't paying $3,000 a month to live in a Vic basement in that part of town, even if I can use the long driveway to practice my bowling skills all day. And if all you want is a big house to live in for yourself, you can rent one just 5 sqft smaller for $3,500 a month. That's close to $30,000 savings every year, or tuition and board at any good 4-year public college in California.
Restoring old homes is a wonderful, laudable enterprise. Expecting to flip them for a massive profit is not. I just hope this doesn't cost these idiots' kids a chance to get the good education their parents obviously didn't get. Or maybe they skipped the intro math classes.
Update 10/31/08: It didn't take long for the first price drop. We're down to a still excessive $780,000. I'm almost ready to bet there's going to be another one before the end of November.
Update 9/30/09: I missed the sale--evidently this property sold in May, 2009 for... $500,000. REO? Distress sale?
Smaller multi-family homes are always a risky bet: they're harder to sell than single-family residences, and any vacancy can mean a 50% drop in your monthly rental income. That's why it's really, really important for any such investment to be cashflow-positive from the get-go, especially in a market with negative appreciation.
Today's "exceptional duplex" is an interesting investment opportunity (postlet is here).
Check out theawful vintage paneling job cool tree house apartment:
But what is truly exceptional about this property is that it flaunts how cashflow-negative it is on the mother of all real estate sites, the big kahuna, Realtard dot com hisself (screenshot resized and mangled to protect the innocent):
Let's summarize:
Grand total, before insurance, utilities and income tax on the rent = $4,161 / month in the red.
There's no sale history on Zillow, and the property tax is listed at $1,697 / year, so one assumes this is a fully-owned, paid-off house that's a good 90% profit for the current owners. Maybe somebody should tell them that they're not going to get a million bucks for their treehouse because it DOES NOT MAKE ANY FINANCIAL SENSE.
Update 1/3/09: Still for sale (gee, I wonder why). Seller says:
Update 3/14/2010: Miraculously, a price drop!
Today's "exceptional duplex" is an interesting investment opportunity (postlet is here).
$999000 Exceptional Duplex on a Large Corner Double Lot (alameda) (map)
Reply to: hous-846571314@craigslist.org [?]
Date: 2008-09-18, 9:52PM PDT
1201 Peach Street, Corner of San Jose Avenue
3 bedroom - 2 bath: 1808sqft lower unit
1 bedroom - 1 bath: 1000sqft upper unit
Amenities: breath taking hardwood floors throughout, a very large one car attached garage, large two car detached garage, off street parking for three additional cars, new appliances, washer and dryer included in both units, large double corner lot, beautiful knotty pine "tree house" apartment, separate utilities and much much more.
Click on this link for more pictures and detailed information: http://www.postlets.com/res/1012455
Priced Reduced to $999,000 or best offer!
For more information or to schedule a private showing please call:
Mary - 510-915-1011
or
Dominic Carrion, Agent - 510-717-5076 Liberate Financial Corp.
Also can be seen on www.realtor.com http://www.realtor.com/realestate/alameda-ca-94501-1101448605/ for additional information.
MLS ID #40356443
Check out the
But what is truly exceptional about this property is that it flaunts how cashflow-negative it is on the mother of all real estate sites, the big kahuna, Realtard dot com hisself (screenshot resized and mangled to protect the innocent):
Let's summarize:Income = $3,600 / month
Mortgage = $5,322 / month
$200,000 sunk as down payment and not invested in a 3% CD = $500 / month (20% down is one of realtard's assumptions)
1% maintenance = $832 / month
Property tax = $957 / month
1 month of rent a year lost due to turnover = $150 / month
Mortgage = $5,322 / month
$200,000 sunk as down payment and not invested in a 3% CD = $500 / month (20% down is one of realtard's assumptions)
1% maintenance = $832 / month
Property tax = $957 / month
1 month of rent a year lost due to turnover = $150 / month
Grand total, before insurance, utilities and income tax on the rent = $4,161 / month in the red.
There's no sale history on Zillow, and the property tax is listed at $1,697 / year, so one assumes this is a fully-owned, paid-off house that's a good 90% profit for the current owners. Maybe somebody should tell them that they're not going to get a million bucks for their treehouse because it DOES NOT MAKE ANY FINANCIAL SENSE.
Update 1/3/09: Still for sale (gee, I wonder why). Seller says:
Mary P
ALL OFFERS CONSIDERED!!
Here's an offer: I will stop being snarky with your listing if you drop the price to a reasonable level. How about $499,000.
Office: 510-915-1011 Email: mslisaj@dslextreme.com
Update 3/14/2010: Miraculously, a price drop!
You know the market is down when you can buy a Victorian duplex for under $500,000. Either that or the house is a wreck. Or maybe both:
It was purchased 15 years ago for a tiny amount, and because it takes a while to ruin a property such that it needs "LOTS of TLC" (not just "TLC" or "lots of TLC"--real estate agents are case-sensitive), I'm wondering if it was already a wreck then and has only been minimally maintained (if at all) since that last purchase:
Opportunity knocks to restore this Victorian duplex [...] The property needs LOTS of TLC. Upstairs unit is 2 bedroom/1 bath, downstairs is 1 bedroom/1 bath. [...]It appears the owners were among many Alameda property owners who had delinquent waste management accounts with the city last summer (pdf). Other than that, there isn't much about this property on the Web.
1538 Schiller Street, 3 bedrooms, 2 bathrooms, 2,078 sqft, 3,538-sqft lot, MLS(r) #40368892, $499,000
It was purchased 15 years ago for a tiny amount, and because it takes a while to ruin a property such that it needs "LOTS of TLC" (not just "TLC" or "lots of TLC"--real estate agents are case-sensitive), I'm wondering if it was already a wreck then and has only been minimally maintained (if at all) since that last purchase:
It's hard to imagine how a property in bad shape that cost $499,000 would cash flow as a duplex with only 3 bedrooms, but the savvy real estate investors in Alameda have proved time and time again that cash flow is totally passé, so I suspect somebody will pick this one up in short order.
Sale History 08/31/1993: $85,500
When you can't come up with anything nice to say, keep your mouth shut. Seems the agent for the ugly box (with awnings for fun) at 2241 Buena Vista took that advice to heart: the MLS(r) description is blank. At least I can quote it in its entirety without catching flak from the fellows at EBRD.
The specs:
Google's Street View van got a lucky shot of an almost period beater parked in front.
My guess is that a 650-sqft 1+1 apartment would rent for about $1,000, if that. The mortgage would be somewhere around $3,200 assuming 20% down and a 6.5% interest rate, to which you might want to add $600 for property tax, $600 set aside for maintenance, plus the $300 or so you could be earning every month on the $125,000 you put down to buy this investment property, adding up to about $56,000 in fixed costs and shortfall per year.
$56,000 out (in the best-case, no-emergency scenario), $24,000 in (in the best-case, full-occupancy scenario). This means you need to pay $2,700 a month for the privilege of owning this truly lovely investment building. And you have to live somewhere else, since both units are spoken for lest you might lose even more money.
What an INCREDIBLE DEAL.
The sale history on Zillow only shows an abnormally low transaction in 1999:
Update 10/12/08: Price dropped to $585,000 a couple of days ago.
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The specs:
2x 1-bedroom, 1-bathroom, 650-sqft units (building total 1,302 sqft), built in cheerful 1947, listed at $625,000 (MLS(r) #40358839)This duplex is a particularly fine example of post-war architectural extravagance (it's the one in the middle):
Google's Street View van got a lucky shot of an almost period beater parked in front.My guess is that a 650-sqft 1+1 apartment would rent for about $1,000, if that. The mortgage would be somewhere around $3,200 assuming 20% down and a 6.5% interest rate, to which you might want to add $600 for property tax, $600 set aside for maintenance, plus the $300 or so you could be earning every month on the $125,000 you put down to buy this investment property, adding up to about $56,000 in fixed costs and shortfall per year.
$56,000 out (in the best-case, no-emergency scenario), $24,000 in (in the best-case, full-occupancy scenario). This means you need to pay $2,700 a month for the privilege of owning this truly lovely investment building. And you have to live somewhere else, since both units are spoken for lest you might lose even more money.
What an INCREDIBLE DEAL.
The sale history on Zillow only shows an abnormally low transaction in 1999:
The price was just dropped from $649,000 to $625,000 a couple of days ago, after 40-some days on the market. At this rate, it'll take a year and a half of price drops before the numbers start making any kind of sense.Last sale and tax info
* Transaction not included in Zestimate.
- Sold 12/29/1999: $57,500 *
- 2007 Property Tax: $3,213
Update 10/12/08: Price dropped to $585,000 a couple of days ago.
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Reader BigDot asked about 728-732 Taylor (MLS(r) #40294693), a duplex that's been on the market so long I never wrote about it. Today is its 365th day on the market in its current incarnation, but I could swear it's been for sale for much longer than that. So happy anniversary-minus-one (damn leap years)! You're now a lifer.
Here are the publicly-available specs:
But frankly I just don't see that happening--how does a tiny duplex cashflow at these kinds of prices (it doesn't)? I'm also not sure how being right next to the Farmer's Market is a plus--traffic and noise are pretty gnarly in those parts, at least by Alameda standards. There's also a large McDonald's in back and the largest concentration of liquor stores in Alameda within walking distance.
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Here are the publicly-available specs:
2 bedrooms, 2 bathrooms, 1,462 sqft, 3,940-sqft lot, $750,000 ($513 / sqft)
Charming [...] duplex each unit has [...] meters, washer & dryer, 1 car garage, 1 bedroom, 1 bath & laundry [...] next to the webster st. Farmers' market (tues am & thurs pm)It did drop its price once from $775,000 to $750,000, on September 12, 2007. Nothing since then. Its sale history points to a need to sell for at least $635,000 or so (what with those pesky commissions):
Last sale and tax info
- Sold 12/02/2004: $593,000
- 2007 Property Tax: $7,857
But frankly I just don't see that happening--how does a tiny duplex cashflow at these kinds of prices (it doesn't)? I'm also not sure how being right next to the Farmer's Market is a plus--traffic and noise are pretty gnarly in those parts, at least by Alameda standards. There's also a large McDonald's in back and the largest concentration of liquor stores in Alameda within walking distance.
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The market runup gave rise to a new class of imbecile, the "weekend real estate investor." Now, real estate investors have been around for millennia, I'm sure, and as a group they're not imbeciles. But the newly-minted, self-appointed investors of recent years are a different breed. Risk isn't really a factor for them--real estate always goes up. Neither is cashflow, because even if you're losing 5 figures because your rents don't pencil out, you'll make a killing selling the place in a couple of years--real estate always goes up.
Today's stellar example of financial savvy is a lovely 2-story Victorian duplex, with two 2-bedroom, 1-bathroom units in a 2,104-sqft building sitting on a 5,250-sqft lot (MLS(r) #40365778; no link until EBRD issues are resolved).
Today's stellar example of financial savvy is a lovely 2-story Victorian duplex, with two 2-bedroom, 1-bathroom units in a 2,104-sqft building sitting on a 5,250-sqft lot (MLS(r) #40365778; no link until EBRD issues are resolved).
Renovated [...] both 2bdrms 1 bath. Separated laundry rooms, & meters. [...] granite countertops, mini golf course in backyard, & fish pond. [...] close to schools, main library, theatre, etc. Move in condition.
My guess based on current rents is that this property might gross $3,000 a month or so. That means your mortgage and property tax should be no more than $3,000 a month (right?), i.e. a purchase price around $500,000 tops. Otherwise you're losing money. And real estate doesn't always go up, actually (shocker!).
(light blue = 94501, dark orange = Alameda, green = California, yellow = US).
The last sale price was already cashflow-negative from the get-go:
So what is the list price, you ask?
A mere $839,000. A 7% interest 80% LTV mortgage costs about $4,500 a month. Add the customary $8,390 a year for maintenance and about $10,000 property tax, and your fixed monthly costs add up to a hair over $6,000. That's twice your monthly gross rental income assuming full occupancy.
This is hardly an isolated case. What is wrong with people?
The good news is that Darwinian forces are hard at work purging the market of any excess real estate investors that have cropped up in recent years.
Update 10/4/08: Price dropped 16%, from $839,000 to $699,000, in one fell swoop on 9/29.
Update 11/2/08: Not only does it not cash flow, it'snot even fully rented it's not rented at all. Both units are looking for tenants. Rents are $2,100 and $1,800, $900 more than my guesstimate, but still too low to cover your fixed costs. Give me an M, give me an O, give me an R, you know the rest.
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The last sale price was already cashflow-negative from the get-go:
And who knows how much was spent to renovate the whole building (how much to minigolf courses cost?)Last sale and tax info
- Sold 11/21/2005: $570,000
- 2007 Property Tax: $7,465
So what is the list price, you ask?
A mere $839,000. A 7% interest 80% LTV mortgage costs about $4,500 a month. Add the customary $8,390 a year for maintenance and about $10,000 property tax, and your fixed monthly costs add up to a hair over $6,000. That's twice your monthly gross rental income assuming full occupancy.
This is hardly an isolated case. What is wrong with people?
The good news is that Darwinian forces are hard at work purging the market of any excess real estate investors that have cropped up in recent years.
Update 10/4/08: Price dropped 16%, from $839,000 to $699,000, in one fell swoop on 9/29.
Update 11/2/08: Not only does it not cash flow, it's
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I vaguely remember this duplex at 1811 Sherman being on the market in the past couple of years (MLS(r) #40365538; no link until EBRD issues are resolved). First the specs:
I'm curious about the sale history:
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2 units, each with 2 bedrooms, 2,320 sqft, $524,900At $226 / sqft it is definitely priced to sell and should go really fast, unless there's something truly egregious about the building. The location isn't great, but at $524,900 it might actually cash-flow.
Bank owned. NOT A SHORT SALE. [...] Plenty of off street parking. No financial data available.
I'm curious about the sale history:
That's two in a row. Hrm...Sales History
Sale History & Tax Info Sale History 03/25/2008: $465,000 * 09/14/2004: $250,000 * 05/22/2001: $300,000 No other sale data is available * This transaction was not used in computing the Zestimate for this house due to anomalies we detected with this transaction. These anomalies can include unusual document or transaction types, sales between possibly related parties, unusually high or low transaction prices, or other data irregularities that might indicate the transaction is not a full-value, arms-length transaction.
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