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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Carlsbad
(760) 434-5000

Carmel Valley
(858) 560-7700
jim@jimklinge.com


Posted by on Jun 28, 2012 in Bubbleinfo TV | 11 comments | Print Print

San Marcos Gem

For those looking for a good investment property, how about my new listing of this newer 2,259sf low-maintenance house that is walking distance to Cal State San Marcos?

It should rent for $2,300 to $2,500 per month – a smaller house that backs to the hillside is being offered for $2,850/month.

The HOA is $130/month (for a gated community!), and the Mello-Roos is $42/month. Redfin link.

Simple math:
$400,000 purchase price with 20% down payment.
$320,000 loan amount at 3.75% = $1,482 per month.

$1,482 P&I
$363 property taxes
$215 HOA+MR
$2,060 Total

$2,500 per month potential rent.

$440 per month positive cash flow potential with 20% down.

11 Comments

  1. Jim, can you show the numbers when you factor in commissions when buying the home that way I can figure out how many years or months my breakeven point will be after factoring in commissions again when selling the investment.

  2. The floorplan looks good. They seemed to use the space well.

  3. Most buyers pay about 1% of the sales price for lender, title, and escrow fees.

    When selling, figure 6% for commissions, title, and escrow fees.

    Merry Larry Yun thinks we could see 10% appreciation in the next year, but let’s say we sell in five years, and get $500,000 for it.

    (there were seven sales of this floor plan at $570,000 and higher during the peak era)

    $500,000 gross sales price
    -$30,000 selling costs and commissions
    -$20,000 buying costs and repairs/improvements

    $450,000 net sales price
    $400,000 purchase price

    $50,000 gain
    $23,760 rental cash flow ($440/mo. – 10% vacancy)

    $73,760/100,000 invested (down pmt plus costs) = 74% return over five years or 14.8% per year.

    A simplified example with no taxes considered, but if you 1031 exchange into the next property the capital gains are deferred. You would be paying annual taxes on any net positive gains for each year.

    Use your own figuring, and check with a tax expert!

  4. This isn’t directed at you Jim, but generally speaking what is the big marketing push to sell people (typically non-investment savvy) on real estate as an investment? Obviously real estate should or needs to be a long term investment especially when you factor in all the cost and legal issues that can arise. If you compared real estate to paper investments such as stocks, bonds, reits, etc., as a long term investment then stocks have been better performing. Real estate is less diversed, higher cost up front and on-going, poor liquidity, and the tax benefits are in jeopardy. In my opinion, if I had $80,000 to start an investment it would not be real estate. Sounds to me that there is a glut of homes for sale and will continue to be that are directed for the investor and not the typical family.

  5. Good looking place and well priced…should sell quick!

  6. Thanks Jim for putting those number together.

  7. Very cute house, they appear to be a pretty fun family.

    Really small yard but the bright side is they only have two neighbors and this house is set back further on the lot than one of them.

    You’d think that after having bought before the big run up in prices they’d get to leave with a little cash in their pockets. :( I hope they get multiple offers and get the price bid up a bit. Work your magic, Klingemeister!

  8. Stocks and bonds yield better than RE? Not since the 90s. I’ve been throwing tons of money into both (well managed Vanguard funds) since getting my first full time job in 2000, and it hasn’t even kept up with inflation. This isn’t the 80s anymore…traditional investments are not yielding.

    My RE investments on the other hand are paying nicely…each of my four rental properties in the IE (where I live) yields around 10% per year disregarding any possible appreciation. I do buy well and get good tenants.

    Where would you put $80k if you had it?

  9. JTR#5

    You have no idea how sexy $1 000 000 worth of real estate makes you in South Africa!

  10. Where would you put $80k if you had it?
    —————————————-

    Been in physical gold and silver since 2001. Loving every minute of it.

    All asset classes have their cycles. Gotta know how to indentify bottoms and tops. I’m not a gold or silver bug, just a asset cycles guy.

    If I had another 80k, I’d put it into more gold. Precious metals are in a consolidation phase and are setting up for another big move upward very soon.

    Look at a chart of the S&P 500. Traditional retirement funds (401k’s and IRA’s) have basically done nothing in 12 years. When you factor in taxes and inflation (ie. dollar debasement), you’ve lost around 30%.

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