I tell sellers to price their listing aggressively to elicit offers from all the hungry buyers looking for a deal, and start a bidding war. Instead, almost all prefer the old-fashioned way and list with a higher price, expecting to come down later once the listing becomes stale and the buyers have forgotten all about you. Here’s another example of how beautifully the former works.
There were seven all-cash offers submitted on the roach, and there could have been another 4-5 but I was telling agents how high they’d have to come in to win. Bank of America requested the highest-and-best offer from each, which sent the bidding even higher.
Congraulations to Gav, the closest guesser! Hopefully the Padres make the playoffs!
Here’s a link to the list of guesses, and the previous youtube that shows the interior:
https://bubbleinfocom.wpenginepowered.com/2010/09/10/roach-contest/
I’d like to see Diana Olick mention this one in her next double-dip rant!
Congrats Jim. You should get a big bonus from the bank for bringing this one home. What was obviously a blight on the neighborhood will get put into stronger hands. Now if only this could happen another 7 million times (or whatever the current overhang is).
Jim, how do you think this would have played out for a $400k property instead?
Good Job Jim–A year ago I probably would have been one of those cash buyers bidding it up for a rental. However, after getting to know other apratment/rental markets, prices in San Diego really shock me–For example, decent Apartments in Phoenix are now trading at $15-20K per door–I have seen them as cheap as $5K. The roaches/Dogs dont bother me, but for the same price as one attached home with bootlegged add-ons in O-Side, that same buyer could own a real nice 4-plex or 6-8 decent units–probably more headaches too I guess!
Yes more headaches, but your profit margin allows you to pay a property managment service to deal with them for you!
Local Boy,
I think those who are looking to invest in San Diego real estate typically last about 6-8 months.
Remember Joella, from the Nightline show? She actually did good, came in aggressively and flipped four, and kept two others as rentals. But she’s done now – if you could find deals at her same price point from 18 months ago, they’d get bid up another 10-20%.
Over each investor’s 6-8 month period, either they get lucky and find a couple of marginal properties to take a chance on, or burn out from the chase.
The ones they gamble on are iffy at best. The risk is very likely that other nearby subsequent comps will thwart the big kill, the costs of fixing and maintaining end up being overly excessive (more than expected) and the worst part – they are an all-around pain that take a lot of time.
Property managers to smooth out the ride? Great in theory, but they run hot and cold too. I don’t know any who are rock solid over time, usually because staff is poorly paid and have to take a lot of crap.
Think of all the other investors that have been through the SD mill over the last two years and have exited much like you, and the market is STILL HOT!
If there were more opportunities to easily buy investment-grade real estate, I think all of those who have left would be back too, and in a hurry.
We talk about the shadow inventory, I should make a list of all the folks over in the shadow demand.
Congratulations on the sale Jim.
Unfortunately even if the Padres make the playoffs I will not be able to make it sir. So I wanted to give you fair warning of my situation as I am stuck on the other side of the pond.
Take the day off with the wifey-Klinge and hit your favourite place for a chimichanga and have a good time.
Or take out that lady in the rav 4 by 4 for a ice cream and give her instruction on anger management.
Many regards to you and thanks for the past year of laughs and quality entertainment and I am sorry for taking up your time.
Gav.
Shadow DEMAND–I love it! The challenge we are having with other markets, like AZ, are that true effective rents (after vacancy and collection loss) are low–say $5/sf and operations are roughly the same as here–$3-4/sf–not that great of a margin until rents go op and/or vacancy tightens. Right now we have an offer in on 46 decent units in a decent location for $780K on a short sale.
“If there were more opportunities to easily buy investment-grade real estate”
http://www.google.com/finance?&q=NYSE%3AADC
8% dividend yield, you don’t have to deal with tenants, and your investment is liquid.
The fact that only 3 of the 50 or so guesses exceeded the actual sales price speaks volumes. Seems to me the folks that are not being realistic (at least on this blog) are the buyers, not the sellers.
Gav,
Send me your address and I’ll at least send you a bubbleinfo t-shirt!
klingerealty at gmail dot com
I will be the first to admit that I don’t know Jack about real estate, but come to Jim’s blog to learn more in an honest, truthful environment, so rare in any kind of investment “newsletter” for lack of a better term. The peanut gallery makes things even more interesting, and the dialog is respectful, again pretty rare.