This home is in very poor condition.
A farm style home, built in the 1950’s, looks like it has not been updated since the 1960’s, lots of differed maintenance, needs a new kitchen, new bathroom, all new fixtures and appliances. How can this seller thing this home is worth $320,000? The fixes and repairs that would make it habitable might be $100,000 or more, and when it is all fixed up, it might be $375,000 home.
This home fits the pattern of bank owned homes. There is a large amount of differed maintenance on the exterior, including decks that have rotted out, bad spots on the siding, and a questionable roof. Inside the home needs a total gut and rehabilitation, carpets and point, new fixtures and appliance, new bathrooms, and doors and windows all need upgrading or repair. With all that damage, what’s the upside? The upside is the size, 2626 square feet, and the floor plan, with three bedrooms and two generous living rooms, and kitchen upstairs, there is a an entire separate unit downstairs, with a kitchen, bar room, bedroom, and two bathrooms. It has the potential to be a completely separate unit. The upstairs could rent for $1600, the downstairs might rent for $1200. for the contractor/investor this home has some real potential. It could easily sell for over $500,000 when it is completed and updated.
So, you ask; where are we at the end of the fourth quarter in 2017?
Have a look, call or email me with your questions.
I have looked at a dozen 2-bedroom and 2-bathroom homes this year priced under $300,000, so what makes this one special? For one thing, it is quite large, 1482 sf, which makes it larger than most of the 3-bedroom homes in this same price range! Second, it is on a pancake flat lot that has a flat driveway and flat area near the house for RV parking. The landscaping is very nice, trees and bushes block the street at the front, and make a ring around the rear yard for privacy. It looks very nice, and very different from the typical home in this price range, where there is often little or no landscaping.
The interior of the home is very well maintained. It has hardwood floors, and window seats, wainscoting and good paint. The down side of this home is the floor plan. The is no master bathroom. One guest bedroom serves both bedrooms in the hallway between them, and a second bathroom is on the far side of the kitchen. The bedrooms are huge, and each one has an office or sitting room, so you can have a desk or exercise area in the bedroom. When I look at a home like this, with all the nice upgrades and good condition, I certainly think it would be a great home for the right person, but in terms of resale, or even renting, this home is not ideal. The floor plan is a tough sell regardless of the price per square foot, or the great condition.
Rare to see a home that is move-in ready condition for under $300,000 within a few blocks of Nevada City. City homes are rare, often in very poor condition, and very expensive. This one sold to a contractor last year for $190,000, he or she came in, put in a new kitchen and bathroom, new roof and windows, new doors, paint floor covering, and got it all fixed up and ready for a new owner, and has it listed for $280,000. It’s a small house, just about 1000 square feet, but it is on city sewer and city water, so you could use the home however you see fit. There is plenty of room in the yard, and single car garage plus a workshop. There is even a chicken coop! About the only thing missing is a few steps from the new French doors that open up from the side of the house to side yard. Metal roof will likely last a lifetime, and the house has lots of charm. Does it still need work? A buyer would need to investigate the plumbing and electrical, but the contractor obviously did a good job on all the finishes, so this one wins a “best of show” for price and condition. Compare this home to the dozens of similar homes in Grass Valley that have roughly the same floor plan and same era construction, and typically they are in much worse condition and in not nearly as desirable neighborhoods as this home for same price or more!
This home/commercial property was first listed on the market back in June, it was listed then for $419,000. The seller lowered the price to $399,000 in July and it went pending in September. But the escrow never closed and the home was taken off the market. Suddenly it come back on the market at $299,900 about a week ago, and it went pending shortly after that.
There are not that many comparable sales. What will determine the value of this property is the income potential. The downstairs and upstairs can be rented separately. I think both top and bottom will rent for between $1200 and $1300, so the income potential is about $2500 per month. I don’t think the garage can be rented separately without making some improvements, and possibly getting a change in the use permit for the property. At $2500 per month, that’s $30,000 per year. At a $300,000 purchase price that gives a CAP rate of 10. That’s a very good CAP rate, and no surprise this property went pending right away.
The question is, how much money will it take to get it fixed up enough to get it rented? If that cost $100,000 then the CAP rate starts to look at less favorable. If the building cost $100,000 to make it rentable, then the CAP rate drops to 7.5. That’s still a decent return on investment.
Bank owned fixers like this come along only once or twice per year so there are no comparable sales for similar homes. The best way to calculate value is to assume the home has no value because the cost of repairing it will be greater than the cost of tearing it down and building a new home. So, what is the land and infrastructure worth? There are some comparable land sales this year. Lots with a bit of infrastructure, maybe $90,000 to $100,000. I think I would value this home in that $100,000 price range. So why did the bank list it for nearly twice that?
Without any comparable homes that have sold, and with the home cleaned up by the bank, they must be thinking some contractor or maybe someone with very low standards will buy this place and live in it. In that case, then yes, that buyer might pay $190,000 for this? I am just saying, I personally think the value is closer to $100,000. Time will tell if the bank asset manager or me is better at guessing what will happen to this home.
This is only the third home all year that has been priced in under $325,000 price range in the Lake of the Pines subdivision. Like the other two homes this one is also a fixer. It is not a bad home. It has a split level two story floor plan with a family room on the lower level with the two car garage, a kitchen and living room on the middle level, and three bedrooms up stairs. The decks are dry rotted, visible damage throughout the interior to walls and floor coverings, needs all new appliances and fixtures, new counters and upgrades in the bathrooms will be necessary. When all done, this home might sell in the high $400K or even low $500K, but it could use $100,000 in repairs, and by the time all the finishes are done, there is not much meet left on the bone here. For a good high end fixer, this one might well be a investment worth looking at. In part, what makes it so interesting is the rarity of these kind of homes. We just don’t see many like this.
We have looked at dozens of homes in Wildwood over the course of the year, ranging from $240,000 to $275,000 in various configurations and an wide range of conditions. This home, listed for under $220,000 is one of the best value priced homes this year. it has three bedrooms, 2 bathrooms, it is clean, has nice carpets and paint, good looking exterior, and the kitchen counters are upgrade to granite. It also has a two car garage and flat backyard. The home is a very plain, but the price is right. There has not been a value priced home like this since last January. That’s right shoppers. About once per year, usually in the winter months, a home like this comes up. Last winter it was the one Silver Pine, after that one sold, there wasn’t another home under $250,000 till right now.
Anyone who thinks the market goes uniformly up or down simply has not been watching what actually happens. Inventory and activity drives prices. Low activity during the winter months means some sellers will drop their prices to get their homes sold. Not every house will be a great value, but if a seller is motivated, then the price will also reflect that motivation. Clearly, this seller knows it takes a great price to tempt winter buyers. This home is a great price.
The 2 and 2 sold for $285,000 and is relisted now for $304,500- this is a smaller unit, with just one bathroom. Very good condition, just have to see if buyers look at a home like this, compare it to what you can purchase in the surrounding neighborhoods, and see if buyers see the value.