Sampling a bit of Old Carlsbad, where most homes were built in the 1945-1965 era, and are in the midst of the next generational-turnover stage. There’s not a soundtrack, it was the workshop music that was blaring:
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
- klingerealty@gmail.com
CA DRE #01527365, CA DRE #00873197
I know this is off-topic for the current article, just don’t know where else to post it.
I’ve been watching the number of closed sales pretty closely in 92130 on SDlookup, and I’m only seeing 2 homes (though there a number of condos) that have closed in the past week, which is pretty slow. Is that number right? I can’t tell if this is an SD Lookup thing, or what. Is there a better place to get this info?
You are seeing it right, though a third just got marked as closed.
For 92130 detached listings in August:
28 new listings
23 new pendings
3 closings
The 23 is a shock, but there is a surge happening right now throughout North SD County Coastal.
August detached listings in Carlsbad, 92009:
26 new listings
14 new pendings (not contingents)
8 closings
For Encinitas, 92024:
25 new listings
12 new pendings
8 closings
Both those numbers look like inventory rise to me. net net supply is rising and jim’s numbers codify that.
As for the C’bad homes, that garge music is just the C’bad version of the Carmel Valley backyard fountain used to drown out the street/freeway noise. However, JTR’s tunes were superior.
Since JTR brought it up, investing purely for appreciation is a fools game. If you leverage up to do that, super fools game. Look at any successful real estate investor who has made a career out of it (vs. a lucky one hit wonder) and they all had positive cash flowing rentals (typically commercial, but residential will do) and held long term until the gains were huge.
Even in the stock market, over the long term nearly 50% of the TOTAL RETURN of stocks is the dividend.
ps: unless your rent is 1%+/- of your total cost, don’t kid yourself, its not cash flowing as you’re not setting aside maint/vacancy reserves and paying down the principal on the mtg..and don’t compare a low yield on a home to your savings account of 1% and claim that 3% is better…it isn’t! risk adjusted your 3% leveraged real estate return, if any, is criminally low. Massive downside exposure for a nominal couple extra points of yield is not worth it.
Now I feel better.
N
Thanx for confirming that!
weird at first, but at about 1:15 I just started laughing.
BTW here is an interesting story, be sure to watch the video
http://www.wbtv.com/Global/story.asp?S=12928477
A classic!
It starts off like a horror flick, and then turns into slapstick! A TRIPLEX!!!
BTW, how much would a 3/2 by the “Detroit River” rent for there?
Clearfund – Can you elaborate on your statement “rent is 1%+/- of your total cost”? What is total cost in this case and is rent annual or monthly gross? Thanks!
Was there a price and a phone number on the For Sale sign? That is all I require of a seller if he wants to get my business? I have purchased a lot of properties from a sign just like that one. It seems that in California For Sale by Owner is rare. I guess that anyone selling a $500,000 property is either too busy or too rich to spent the effort to market a property themselves. IMHO “Range Pricing”, listing homes and then not accepting the list price in hopes of starting a bidding war, etc. seem to have served this area well for quite a while. I think that those times they are a changin’.
Travis – If the cost of the house (including repairs, and cap-x to make it rentable) was $500k then you’d roughly want the house to generate about 1% of that amount/mo (i.e. $5k rent).
In reverse if a house can rent for $2,000/mo you could quickly size up that you could roughly pay $200k for it and turn a decent yield.
Obviously san diego type markets do not fit this mold as no one will pay $6,000/mo for the house jim showed. It has been justified as an ‘appreciation’ market.
If you take the $2k/mo example (just kind of guessing at these numbers to make the point):
$24k/rent/yr
($3k) rental/vacancy loss
($4k) taxes, insurance fees, etc at 2% of value
($4k) maint
($2k) maint reserves
———–
$15k NOI
7.5% all cash yield.
(most people don’t include vacancy/maint reserves when calculating their yield, but you will need that money at some point so you had better calculate it in when you value your purchase vs. rent otherwise it’ll come out of your savings and you won’t be happy).
Adding debt will increase your cash yield to the 9% range but increase risk much more than a couple points.
Thus you can see that 1% is a good quick estimate on the rent/value proposition.
Clearfund – That was very helpful. Thank you for the education.
Jim — the FSBO house for which the asking price is $600K — if you were retained to sell that house, what asking price would you recommend? (assuming that they cleaned up the property, removed all the junk, etc)
Because he said that he’s has plenty of time and money, I’d tell him to process a lot-split, and then I’d get him his $600,000 for two lots.
As-is?
$499,000 and hope to get lucky.
Not many buyers for that type of property, in that location. Freeway is too loud, house looked rough from the outside (I didn’t go in), and who is going to spend big money to improve it? Not many of today’s buyers.
Loved the TRIPLEX!