Hot Bargain Property May 22nd, 2008

By Dan Melson on May 22, 2008 3:45 PM | Permalink | Comments (0)

Cheap Fixer with WOW! Potential!

General: La Mesa, 2 Bedroom 1.75 Bathroom 3 Optional rooms

Con:

What's Wrong With It: Floor plan all Chopped up to allow two families to live here. Pretty much all the fixtures are 1970s vintage. Original hallway walled off. Addition was probably unpermitted.

Why It Hasn't Sold: Very uncomfortable to live in either half - but restore the original hallway and it would become a spacious house for a large family!

Who it's Not Appropriate For: Someone not willing to take the risk of unpermitted additions. Someone who needs a "turnkey" property.

Pro:

Selling Points: Large back yard with decent sized pool. Fenced are could be separate dog run. Restore the hallway, and you've got a very comfortable home for a larger than average family, and it's extremely close to very desirable schools. It would be relatively easy to make the extra rooms legal bedrooms, if desired. Kitchen has good light and plenty of room to cook. Back yard has place to park RV if desired, and garage has direct access to kitchen

Who Should be Interested: If you're looking to house a large family in a great neighborhood for a reasonable price, this is it!

Why it's a Bargain: It looks a lot worse than it really is. Re-connecting the two halves would be as simple as removing one non-structural wall, and everything else is cosmetic. I don't see major issues with getting the addition a retroactive permit.

Financial:

What I think I can get it for: $300,000.

Monthly Payment examples: I've currently got a thirty year fixed rate loan available for qualified buyers at 5.75% with one point, or 100% VA financing at 5.75% for the same cost.

With no down payment: VA 30 year fixed rate loan at 5.75% (FHA 97% financing) payment $1750, (APR 5.946)

With 20% down: Fully amortized payment of $1401 (APR 5.913).

Other financing options are available, potentially lowering the payments, but I'm quoting real loans that real people can get, that will stay exactly the same until you pay it off.

Investment potential: If you keep it ten years and it averages only 5% annual average appreciation per year: Based upon a purchase price of $300,000 the property would be worth approximately $490,000. If you held it those ten years before selling, you would net about $240,000 in your pocket (not including increased value from updates!), assuming zero down payment. As opposed to renting the $1700 per month most comparable currently available rental and investing the difference at 10% per year tax free, you would be approximately $200,000 ahead of the renter, after the expenses of selling.

To learn more: Agree that you'll use me as a buyer's agent if you buy it. If you don't like it or don't buy it, no obligation is incurred. If you're not working with someone who will go out and find properties like this, maybe you should consider working with me instead!

Contact Information:

Dan Melson, Buyer's Agent
Action Realty Inc
9143 Mission Gorge Road, Suite A
Santee, CA 92071
619-449-0723 X 116

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