Hot Bargain Property July 19th, 2006

By Dan Melson on July 19, 2006 1:00 PM | Permalink | Comments (0)

General: La Mesa, 3 Bedroom 1 bath, asking price range in range of $475,000 to $500,000.

Why you should be interested: This property is vacant and Downtown is about 20 minutes, Mission Valley about the same, and Sorrento Valley not much more. On market five months. Nice hardwood floors, thirties styling, master bedroom has a retreat, almost a second family room you can 'retreat' to.

Selling Points: Corner lot. Place has a low maintenance yard, but no significant grass. Windows everywhere and lots of light. Hardwood floors except for kitchen and bathrooms. Kitchen appears to be original counters and cabinets, but in excellent shape.

Why I think it's a potential bargain: Vacant and been on the market over five months. Nothing stated, but I see some things that have me believing it is an estate sale or something similar. Still got a full house full of furniture in it, for one thing. No private bath for the master suite, which is a real stumbling point with many buyers.

Obvious caveats: Fronts on a street that gets significant traffic at certain times. There is no place for young children to really play. Within a quarter mile of a large school. I'll bet that master bedroom gets significant traffic noise. Finally, if there's air conditioning, I can't find evidence.

Why it hasn't sold already: This is not your standard home with a lawn and white picket fence. Difficult to sell, but for folks whose children are older or busy empty nesters, this would be a good property.

IF put zero down and if you pay full asking price (which you won't), your payments (Principal & Interest) would be $3045 with a fully amortized loan (Assumptions: $393,600 1st at 6.00% 30 year amortization fixed for 10 years APR 6.233, 2nd mortgage $98,400 at 8.35% Home Equity Line of Credit APR 8.435, on approved credit, not all borrowers will qualify.)

With a 20% down payment, even if you pay full asking price, payment drops to $2360. ($393,600 1st mortgage at 6.00% rate 30 year amortization fixed for 10 years, APR 6.233, no second. Also available: thirty year fixed rate loan at 6.25% APR 6.484 payment $2423. On approved credit, not all borrowers will qualify)

If you keep it ten years and it averages only 5% annual average appreciation per year: It would be worth approximately $800,000. Your equity, using the zero down payment scenario described above, would be approximately $385,000. As opposed to a $1700 per month comparable current rental and investing the difference at 10% per year tax free, you would be approximately $91,000 ahead of the renter, after the expenses of selling.

Fact you should be aware of: Older home built about seventy years ago.

Call me. Action Realty 619-449-0723, ask for Dan.

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