Looking Out From the Garage

This is the final part of this grouping.  We started with an entry level fixer-upper, priced at just under $100k.  We moved up a little to a property in the mid-high $100s.  The third property was priced in the low $200s.  This final property is the one that may actually be the best deal… and it is the most expensive, listed in the low $300s.

The reason it is the best deal comes down to the numbers.  It is priced at least easily $50k below the current market.  How can I say that? There is a house with a very similar floor plan that sold in the last two weeks for $40k more.  Except that house didn’t have the basement.  Basement lots add around $25k-$35k to these house.  So, even with a distressed sale, this house is well below market.  Other homes in the subdivision have sold in the high $300k to the low-mid $400s.  In fact, this very home sold for $410k just 18 months ago.  Now it is almost $100k less!

This house is just about ready to go.  It does need paint in some places (entry area and upstairs bedrooms).  The carpet looks excellent (it is only 2years old!).  The appliances are VERY nice… except for the fridge which isn’t in the house.  Granite counter tops, beautiful cabinetry, tile backsplashes, wood flooring…  These are the right upgrades, and they are there and in great shape.

The back yard is a little smaller than I’d like, but it isn’t terrible.  At least there is a privacy fence at the back property line.

The final little extra here that I really like (being a garage guy) is that the garage is HUGE.  It is listed as a two car, but it is seriously deep.  At the very least, a car could be turned sideways in the rear of the garage and there would still be storage for tools and two other cars.  It is possible that the carage could hold four cars (2 wide by 2 deep) depending on the cars.

If the real estate market was more solid right now (in the sales realm) I would buy this house myself.  I see it as an EXCELLENT deal even at full list price.

The second to last stop on the survey is a house in the low $200k range.  Comps are varied for the neighborhood, but the most recent sale was over $300k… but it was a bigger house.  Other recent sales were in the low to mid $200k range.  This home is priced at the bottom end of the range.  More interestingly is the sales price history for this home.  It sold for over $300k just this summer.  Previously it sold in the very high $200s and the mid $200s in 2002 and 1999.  In the current market I would say that this property has between $10k and $15k in equity.

The property is in pretty good condition, and is very close to move-in ready.  That isn’t to say that it couldn’t use some updating, but all of the appliances are there and appear serviceable.  It could use painting, but that is more because of decorator issues rather than condition.  The carpets should be cleaned as well, but don’t look like they need to be replaced.

Another big plus is that this house has a full and finished basement.  There is a LOT of space down there, and there could be additional bedrooms added or other value adding space like a home theater.  One of the rooms would make a very nice workshop.

There is a full width deck on the back of the house that is accessible from the kitchen, living room and master suite.  Speaking of the master suite, it has a wonderful bathroom with a jetted tub and separate shower.  A couple of the bedrooms, including the master, feature window seats.

Vaulted ceiling and fireplace in the living room, kitchen island and giant pantry in the kitchen and a three season breakfast room are also here.

Overall, this is a nice house, although I would like to see the price a bit closer to $200k for an investor.  For a primary residence, it isn’t a bad price… not a great price, but better than average.

The next stop on the Deal Train was at a slightly bigger and more expensive home.  Instead of a 3 bedroom, 2 bath ranch, this is a 4 bedroom, 2½ bath traditional with a front porch. If you didn’t hit part I, you might want to check it out.

It has a giant yard, coming in around 2/3 acre.  There is even an outbuilding for the inevitable yard tools.  The exterior is in pretty good shape, but as with most vacant properties that haven’t been occupied for a while, there are some items that could use attention.

In this property, the stove and the fridge are both missing, but everything else looks to be in reasonable shape.  In fact, the main level is pretty serviceable as it is… carpet could use a cleaning, but may not need replacement.  While a little dated, the treatments aren’t too bad.  Upstairs is a different story.  The paint is seriously in need.  Of course, that is cheap and easy.  The carpet is marginal at best.  But again, the bones are good.  There is a lot of natural wood on the lower level, including very nice built-ins around the brick fireplace.

This property is far from being a “handyman special” or fixer-upper.  In fact, aside from a few small things, it is renter-ready, or could be a great primary residence.  It is priced accordingly.  The ARV (After Repair Value) in the current market is likely in the $180k-$190k range.  In a strong market, I would look toward the low $200k range.  But on the flip side, we are talking about a property that is ready to roll with a couple of gallons of paint and a carpet cleaning.

To be a deal, this property needs to drop another $10k.  With the current price of $170k, it is just not screaming “deal” yet.  However, as time goes on, that price will need to drop as the condition deteriorates.  Condition of vacant properties almost always deteriorates over time.  Of course, don’t think that means that it would go down $10k/month or something.  But, by the time spring rolls around if it is unsold, this will be a $150k property unless the market is showing serious recovery signs.

I took the opportunity to visit a couple of area deals.  Before I talk about the properties, I should take a moment to describe how I got here...

Currently there are a bit over 450 properties on the market in the area.  From this, I looked for those that were most likely to be at an exceptional price for the value.  I narrowed it down to 4 candidates that looked really promising. None of these are my listings.  If you are interested in one of these properties, feel free to contact me.

The first property is a "handyman special."  It is priced well, but I think needs to drop just a little bit more to be where it really needs to be.  On paper, it looks good, priced slightly below $100k.  Neighborhood comps point to ARV (After Repair Value) in the $140k-$150k range, with the appropriate upgrades and changes.  And that would be in the current market, not the fantasy land of 2005.  If the market were to come back to those levels, the value should be in the $170k-$180k range.

What the property needs to be top notch would be carpet, interior paint, some gutter repair and handy type work and possibly returning the garage to garage usage (it had been converted to a family room).  It could also use some exterior maintenance.  Most of it is deferred maintenance and the issues that come from foreclosure and being vacant.  If one were doing all of the work themselves, it would take about $10k... if it was hired out, it might be $15k.

The appliances are dated and some of the previous work is less than adequate.  The paint had been done sloppily in the past.  But as real estate agents like to say...  It has good bones. There is a partially unfinished basement, and the yard is fairly generous, especially for the price.  There is already a slab laid next to the house if one were to want to build a detached garage in the back yard.  There is also a nice little stream on one side of the property.

All in all, it could be a pretty good investment for someone looking for an entry level property.  It would take a month to get ready, but should be able to cashflow immediately, as well as provide long-term appreciation opportunities.