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Saturday, April 23, 2011
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22 comments:
a 5 year lookback, this is a chart of the 2006 real estate price prediction for San Diego and what it's really done since.
http://piggington.com/images/Forbes-Sept-2006-SD-Home-Price-Prediction.png
basically out west anybody who bought in the last 10 years is underwater, and anyone who bought near the peak is just hosed.
Hey guys,
Just wondering what you guys thought about this house as a fixer-upper investment.
http://franklymls.com/AR7554697
George-
When you say as an investment are you talking about renting it out, or are you saying will the price go up over time.
Either way I would be careful about putting too much money fixing it up, because most of the value is the land. With a small house the next person to buy it may just tear it down in which case any amount you spent on grades would not get you much value.
If you are talking about renting it out, I imagine you could probably do decently, but have never rented in that area so I am unsure of what the rent would be when the place is fixed up.
Pat-
I would think most people who bought before 2004 would be at least flat if not have a little equity. It looks like prices in the start of 2003 were lower than now, and even by the start of 2004 prices were only 10-15% higher. Assuming that they put ~5% down and have been paying a 30 year mortgage with a 6% rate, they would have paid off 16% of the houses value by now. I agree that people who bought their first house or didn't put much down and bought between 2004-2008 are likely underwater.
GJ, I agree with HB, and would add that you should research that neighborhood. In addition if you drive around you'll see some wonderful, well cared for houses, next to vacant or run down properties. In other 22207 neighborhoods, developers are more likely to be interested, but I'm not sure how much recent development has occurred in HVP.
Ambulance sirens may be an issue too (near hospital).
Haven't seen Reecon post here for awhile, but he knows a ton about Arlington, and rental properties there. Maybe he will chime in.
I should add that the Heidelberg Bakery is within walking distance, which would be a hazard (yum!) for me.
HB,
What i was getting at was essentially pumping anywhere from $200-$350k into the home by building an addition that stretches back from the front facade of the house. Essentially a full-remodel. I would offer ~$380 +- 10k.
How much does a neighborhood really matter when you're talking about 22207?
Thoughts? Any estimates on how much that house would fetch if were to be remodeled in such a way?
ask reecon george but
honestly your plan seems goofy.
drop 50% of CAPEX into improvements?
bad plan to me.
George-
If you are talking of improvements in that price range it may be worth looking at the cost of building an entirely new house. I am not sure that it would cost much more and then it would likely look more cohesive, rather than looking like a bunch of add ons.
Blogger deleted my attempt to respond comprehensively to GJ, so I will truncate this second attempt:
"How much does a neighborhood really matter when you're talking about 22207?"
The fact that you are asking this question rhetorically, rather than looking at data that would answer it--and there is a ton available on the internet, e.g., on franklymls and the Arl. assessment website--says to me that you REALLY need to start doing some research.
Location, location, location.
GJ,
Just as a VERY early research step, how closely does this:
assessed HVP recent sales
resemble this:
ditto, for middle of the road 22207 neighborhood
with respect to median prices, range of prices, foreclosures and distressed sales, etc.?
GJ,
That sounds like a decent plan. So long as you know your renovation costs and you can get it in that purchase range. If you can make that a nice 4/3 or 5/3 with a full addition I would think you could command $580k+. Getting as much as $730k though might be pushing it.
My $0.02
http://www.arlingtonva.us/Departments/RealEstate/reassessments/scripts/Inquiry.asp?action=view&lrsn=44637
your tax dollars hard at work.
Sold for 420K during the bubble,
Deutsche is selling it now for 270K.
33% off.
i'm willing to bet it was a 5 Year Option Arm
VA MLS inventory data has been updated as of 4/22. We still seem to be tracking 2010 numbers.
Something caught my eye the other day and I thought about moving. UC in 3 days. The good stuff continues to sell. Still seeing little inventory on the low end (300K and lower) and hardly anything under 200K in N. Reston.
That e-mail from a couple wanting to buy into the neighborhood resulted in 3 responses. I'd guess there are about 40 or 50 homes.
OK, guys. Call me naive, but doesn't the assessment say that the land value alone is $430k? Doesn't that in and of itself make it at least somewhat compelling?
How much margin is there in a purchase @400k + a $300k investment in an addition?
GJ,
Arlington doesn't consider many factors that add to or subtract from value for a given property, such as how run down it is or whether it has a new kitchen, whether it's on a busy street, etc. So, while patterns across a large # of houses are useful, the assessment for an individual property may be way off, high or low.
Given that the house has been priced at $435K for more than a week (after having been listed longer at higher prices) and does not yet have a contract, I'd say that's pretty good evidence that in today's market, the land is not worth $430K.
GJ,
Here are the properties (in MLS) that sold 2009-2011 in Highview Park:
Highview Solds
George-
First I agree with Ace that the assessment values in Arlington aren't great, because of the flaws she mentioned. Second your comment gets to my original point that it may not be worth rehabbing the house rather than tearing it down. Basically all of the value is in the land, so it is not necessarily worth trying to keep the small amount of value from the house compared to just knocking down the house and building a nicer one. If the neighborhood is not great this could end up being a bad investment.
"HB said...Second your comment gets to my original point that it may not be worth rehabbing the house rather than tearing it down. Basically all of the value is in the land, so it is not necessarily worth trying to keep the small amount of value from the house compared to just knocking down the house and building a nicer one."
My Dad had a similar issue 20 years ago. He bought a large parcel of waterfront property with a small old house in "liveable, but not very nice" condition. He originally looked into sinking a few hundred K into rehabbing it on the assumption it would be more cost effective than demolishing and starting over.
However, nearly every builder he talked to said it would be harder (and more costly) to do that than it would be to simply start fresh with vacant land. To that point, the appraisal report noted the property was worth 10K less with the house still on it than it would be as a vacant lot. The 10K diminution in value was basically the cost of demolition.
Turns out it was much easier to do it this way. Moreover, my dad was now able to build it exactly the way he wanted it versus trying to tie in to the existing structure and working within the limitations of the old place.
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