11586 Linnet Court, 3/2 ranch style bank owner home for $239,000

This home is a real diamond in the rough! The single story ranch floor plan with a standard proportion to the rooms, and a two car finished garage on drive-in flat lot makes this 1368 square foot home typically priced up around $300,000 when it’s a regular equity sale. The banks wants this one sold, and they are not afraid to cut the price to let the buyer clean it up and reap some sweat equity. You never know what might be wrong in terms of the expensive systems, heat and air, possible roof, or appliances might all be bad, but even if you had to put $50,000 in, and I doubt it would take that much, this home would still be a decent buy.

If you are looking for a rental, or you want to live in Lake Wildwood, I give this one a strong recommendation.

12975 Gaston Drive, A Cascades Shores 2 and 1, move-in ready listed for $229,000

12975 Gaston Drive Property Questions
Click on the call to action button, and look at the raw data sheet I keep on every home I video.

This home is similar to many of the smaller 2 bedroom and one bathroom homes I have been looking at in Grass Valley, and, by proximity, the homes in Cascade Shores. By triangulating between similar homes in Grass Valley, and accounting for the differences in general valuation between Cascade Shores and Grass Valley, a sense of “value” can be obtained regarding the asking price and the market. There are very similar homes to this home in Grass Valley, and we know that Grass Valley homes are generally a bit more expensive than Cascade Shores, so how does this home, at $229,000 compare? If this home were in Grass Valley, it would probably sell in $250,000 range. Subtracting 10% for difference in market value for a home in Cascade Shores, and the list price comes pretty close to what buyers might expect to pay.

10822 Alta Sierra Drive, Older Manufactured, listed for $229,000. No conventional financing for manufactured homes of this era.

Great location, smaller lot, but very convenient in terms of access to the highway. The challenge here is the age of the manufactured home. Installed in 1975, regardless of the condition, lenders do not like to provide financing on manufactured homes this old. Looking around with a careful eye for deferred maintenance, I notice first and foremost, the roof appears to be leaking, and it appears from the ground spotting I could do, that it is over 20 years old, and might even be the original roof! Siding is also an issue. Some dry rot is evident around the front of the home. The garage looks equally shabby. Overall, this home, even though it is clean, really just needs carpets and paint and a bit of updating, isn’t structurally worth making the repairs. The highest use, would be to remove the existing home and repurpose the foundation for a new modular. This is a very common practice with these older manufactured homes, and lenders are open to this kind of improvement. Then it just becomes a question of the valuation of the lot. The lot, even with the driveway, septic, and foundation, is not worth $229,000. The lot and improvements is probably not worth more than $100,000. That means you would paying a premium for over $100,000 for the privilege of tearing down the existing home! Now, maybe if you were going to live in it for five years, not spend any money on fixing it up, and then tear it down replace it, that might justify spending, say $200,000 for the home “AS IS” But you would really have to live in without spending any more money on it for a few years to recoup some of your investment costs in the structure. That’s why I looked at the condition, and seeing that it needs a new roof immediately, the idea of buying it and living it, is not appealing. OK, all for now.

Price Trends

Found this interesting graphic. An average price per square foot is not an indication of the value of any one home. Homes vary greatly in their individual pricing. But, on average, if we assume that in the market place over all, month over month and year over year, there are about the same number of homes of all kinds sold in any given month, then the average price per square foot, averaged over the entire market, gives and idea of the trending prices. As the price goes up or down, consumer sentiment about the value of homes rises and falls proportionally. If the general rise in the price per square foot is up on average 2% over the course of a quarter, then any given home is probably worth about 2% over the same time period.

So, take a look at this graph and you will something quite interesting, and perhaps unexpected if you do not follow home prices closely. In the late summer of last year home prices slowly rose till they reached their highest level of the year in September. Then the market suddenly declined in October, and remained stuck in that range until May of this year when prices suddenly broke out of the range with a sudden leap higher. In July of this year prices backed off a little. August number are not in yet, but the indications is we have seen the high water mark for the year and prices will decline back into the range that was establish last year or the rest of this year.

Call me if you want to understand more about this!
530 263-0644

Neighborhoods of Grass Valley where Homes are Priced from $99,900 to $250,000

In my continuing effort to explore the entry level home market and the investment potential of fixers and smaller homes today’s search takes us to two neighborhoods, one is the East Colfax neighborhood in Grass Valley, and the other in North Church Street. In the first video I look at 102 Kendall, a 1 bedroom and 1 bathroom home, just 472 square feet, with one car garage on a about .10 acre. The home has no foundation and lots of deferred maintenance. I shot the video before the listing agent even had a lock box on the house or a sign up, so the video is mostly of the exterior.
In the second video I hop on over to the North Church Street neighborhood to look at 239 June Drive.

Land Value Only

Land Value Only

This link will take you to a page called “CALL TO ACTION”
Click on the button, and it will link to a download of Excel spreadsheet with seven properties located around the geographic are that have or had homes that had such sever structural damage the best use would be tear the home down and repurpose the land and remaining improvements for a new home.

When a home cannot be renovated and must be torn down and it is located in a neighborhood that is already completely built out it gives a rare glimpse into the value of the undeveloped property. In neighborhoods where new homes are rare, knowing what the price a spec builder or developer will pay for the land gives a window in to the what that developer expects the value of homes in that neighborhood will be when they finish their project in the coming year.

If you are thinking of buying a fixer or a home that needs major structural renovation, and there are no other vacant lots to for a comparative price analysis, this spreadsheet gives you a way of looking at land values that spans a wide range of geographic locations and neighborhoods. The answer to the question that every investor needs to know is what is the value of the lot? This gives you a chance to see that buyers are paying for lots and land.

12797 Greenbrook Loop, another Wildwood Upslope, move in ready four bedroom three bathroom home for $292,000

This 1545 square foot home is in very good condition, move in ready, like many Wildwood homes it is on an upslope lot, two story home, not much privacy, and no garage, just a loop driveway that goes up one side of the home, leads to a carport in the back, and then comes back around to the street. We have looked at a lot of fixers in the low and mid two-hundred range in Wildwood, so here is one all fixed up. Can you fix up one of the homes that needs a new deck, new roof, and new fixtures and finishes and do it and sell it for the same price as this one and still make a profit? That’s the real question we are asking here.

Two Grass Valley Cottages, both move in ready with some upgrades, 516 Temby and 10511 C Street, listed at $287,500 and $288,000

These two homes are directly comparable to each other, at almost the same price, and very similar floor plans, only the condition and the neighborhood makes any difference between them. What is important, however, considering all we have been looking at, is a simple fact. We have looked at a large number of fixers and homes that need work before you could move in or rent them. So here is the question, if you can buy a move in ready cottage all fixed up for under $290,000, does it make any sense to pay $260,000 for a home that need $30,000 in repairs? Of course it does not. Every fixer we look at from here on in, needs to be considered in terms of what you would need to pay to buy a completely renovated and move in home with same floor plan. We have looked at a dozen fixer that have this same floor plan and similar neighborhoods all over Grass Valley, some priced as low as $230,000 other up over $250,000. Now you can see what one of these homes would sell for once they are fixed up as cute a bug and ready to move in. What this shows you is there is not a whole lot of margin for buying a fixer and putting in new kitchens and bathrooms, roofs, heating and air condition, not to mention paint, carpets, and structural repairs, all of which, or much of which is required on most of the fixers we have been previewing, and what you end up with is a house very similar to these ready to go homes, all priced under $290,000. Buy a fixer, put in too much money, and you will be upside down in valuation before you are ready move into it. You are better off buying a ready to live in home than buying a fixer, unless the fixer is a really good price, or needs just a few minor repairs.

Grass Valley cottages make up 20% of all the homes listed and sold under $300,000 in Nevada County. If you are looking for a home under $300,000, even if you have no interest in a home like this, you can’t avoid seeing them when you look on line, and the price pay, is directly a function of the cost of larger homes on bigger lots, which all start in a price range just over $300,000.

If you have questions about this, please give me a call. 530 263-0644

Another Multi-family Investment Property, 340 N. Church, this time a duplex listed for $289,000 in Grass Valley

Since we looked at the two small houses on one lot in Nevada City for $259,000 about two weeks ago, I thought it would be good to compare that deal with the a duplex in Grass Valley.

19229 State Hwy 49, Nevada City, 2 small homes on one lot, $259,000 How come so cheap?

The Nevada City duplex properties were both “fixer” homes with obvious dry rot in the decks, as well as known septic issues. But of course, both those units were rented with a combined monthly revenue of $2200, or $26,000 gross for the year. Regardless of the repairs issues, known and unknown deferred maintenance, it is not surprising that 19229 State Hwy 49 went pending in less than 10 days. It is a pending sale now, and I will keep a watch on it to see what the final settlement price is when the escrow closes. In the mean time, 340 N. Church is a duplex, where the two units form an “L” shape sharing just one wall. Both units are about 1000 square feet each. They have the same floor plan, two bedroom and one bathroom, with a living room and a kitchen, with a laundry room on one end. The building was built in 1947, and clearly has deferred maintenance issues, but because they are within the city limits, there is piped treated water and sewer, and there is plenty of flat parking on .27 acre lot. Each unit rents for $1400 per month, or $33,600 gross income for the year.

First Time Home Buyers General Information about Lenders and how they Make Decisions about Who they will Loan Money

Loan companies and banks, the ones who lend the money, look at three things to determine who they will lend money to and under what terms.

1) They look at your income. They determine your income by looking at your tax returns. If you have income that is not reported on your tax returns, then that money is “not counted” by the lenders. Lenders don’t report you to the IRS and they don’t care if you pay taxes or not, what they care about is the “documentation” of your income, because the people who lend the money, the actual investors who provide the funds that you use to purchase your home, want assurance, or a least a high degree of confidence, that the person borrowing the money will be able to pay it back, and the way they make that determination is based on your tax returns for the last two years. They want to see exactly how much money you made and who you worked for, and what sorts of revenue streams you have coming in, and they use that information to determine how likely you are to be able to pay back the mortgage amount, month after month for the for as long as you might own the house. If you get paid “under the table” even if you put the money in your bank account, it makes no difference to the lender, they don’t count it as income unless it shows up on your tax return. If you run a home business and you get paid in cash, you are still expected to file a tax return showing how much money you earn from one quarter to the next. How much you pay in taxes is not what the lenders care about, they look at the total earnings, not how much you pay in taxes to determine how much they will lend you.
2) The second thing lenders look at is your overall money in the bank and how it got there. Lenders want to know how much money you have and where the money you have in the bank came from. If you have been saving it, then lenders want to see the deposit slips showing that you made regular deposits into your account that added up to the amount of the down payment. Let’s say your down payment is 3.5% of the purchase price, and you are buying a $200,000 home. Then your down payment would be about $7000. Lenders want to know, how did you get the $7000 you are using as your down payment. If you saved it up over the course of a year or two years, they want to see deposit slips from your bank showing that made deposits once every two weeks or every month reflecting savings from your income. If you got the money from some other source, like a family member, or even from the sale of a car or some personal property, then they want to see the receipts showing when you received the money and how much of it you put in the bank. What the lender wants to know, is, of course, that you acquired the money legally, and don’t owe the IRS money. Also, the lender wants to make sure that where ever you got the money, from a friend or family member, that person does not have some sort of extra-legal relationship with you. For example, if you borrowed the money for a down payment from a family member and the family member expects you to pay them back, then of course, you would be expected to pay them back in addition to the loan payment, and that might be more than you can afford, and the lenders know, family always get paid back first. If things get difficult, you will stop paying the bank before you stop paying back a family member, and for that reason, your lender will not allow you get the down payment from family members unless it is certified by that family member to be a “gift” which means you are not expected to ever pay it back. The lender will seek documentation to prove exactly how you came about having the money for you down payment.

3) The lender will look at your credit score. A credit score is a compilation of all the things you do that don’t involve cash transactions. It includes you credit cards and car loans, any other loans you might have, and how much money you earn and spend every month that can be tracked from debit cards to lease information regarding any items you pay off over time. It can even include your PGE bill or telephone records. If there have been late payments or delinquencies, or a financial judgment against you from a court and that is on your record, the credit service has that information and they use that information to come up with a “credit score” which is just a number that tells the lender how well you have done in the past in paying off any debts you might have incurred, as well as keeping a record of any debts you might being paying off in addition to the new debt you are applying for with loan.

The lender looks at all three of these measures of your credit worthiness before they make the decision to lend or not lend you the money.

I have a lender that could assist you in navigating this terrain. She is very helpful and can guide you to the right decision regarding ways to improve your credit worthiness. Her name is Schan Delle Nettles and her phone number is 530 271-3748. Give her a call, mention my name. She will help you out.