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Gold Regular Contributor
sheriff
Posts: 2,341
Registered: ‎06-01-2012
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What do you think of this flip?

This house was flipped and the are asking a little more than $418k for it.  They bought it for $305k in october.The inside was nicely done, cosmetically at least, but they have wall furnaces at one side of the house for the living area and eat in kitchen, but no way to heat the 3 bedrooms on the other side of the house.  The garage on the right side of the house is "jeklle and hyde".   It a two car garage that is shared with the neighbor and they fixed up their side of it but the neighbor's side is in terrible shape.

 

  Looking across the street the three houses directly across from it are in a dilapidated state, with one house having garbage in the yard and an old delivery truck with grafitti all over it.  The neighborhood would definitely scare most people off, but it is cheap.

 

http://www.redfin.com/CA/San-Jose/221-Southside-Dr-95111/home/795312

 

I checked it out on google street view and it looks better there than it is now.

Gold Contributor
mediaguru
Posts: 1,896
Registered: ‎03-03-2011
0

Re: What do you think of this flip?

[ Edited ]

I know 418k is not a lot (for the bay area), but sharing a garage?  That sounds like a disaster waiting to happen.

 

I share an opening to my driveway (not the actual driveway, but they merge to one entrance at the bottom) and that has been bad enough...

 

And, I could be wrong, but $388/sq. ft. seems like a lot for that neighborhood

 

(the nearest comp - 513 Southside, which sure as heck looks like it may have been flipped by the exact same seller -- went for only $338/sq. ft)

 

http://www.redfin.com/what-is-your-home-worth?estPropertyId=795312&src=ldp-estimates

Silver Trusted Contributor
Michelle1x
Posts: 1,063
Registered: ‎02-17-2008
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Re: What do you think of this flip?

hard to tell but the new construction LOOKS decent, the bathroom, etc. 

 

After buying an REO that was a complete dump, and having to clean it up myself prior to renting it, I  have more respect for the work done by a flipper than many.

 

But in the end, an in-house remodel is mostly cosmetic.  It can't really compensate for the bones of the house or the neighborhood.  My issues here are,

- flood plane, means you will pay much more for insurance due to the FEMA maps (which many think are obsolete but doesn't matter)

- neighborhood- seven trees.  Not good.

- I personally don't like the look of the house with no eaves and those little vinyl windows.

- the zestimate is in the $300s which is what a house in this area is worth

Gold Super Contributor
Jil
Posts: 3,135
Registered: ‎10-24-2011
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Re: What do you think of this flip?

[ Edited ]

Personally, I do not know this location or area,neighborhood etc. I hope you are looking for a rental (investment home). The home looks at the higher end of redfin comps. Redfin gives max 412k comps and also seems to be a flip recently. If it is rental, as long as your profit/loss with sufficient down payment works out, you can think about it. It is not a great look and feel even after a flip.

 

This is negative for the home ==> "Looking across the street the three houses directly across from it are in a dilapidated state, with one house having garbage in the yard and an old delivery truck with grafitti all over it.  The neighborhood would definitely scare most people off"

 

Platinum Super Contributor
buyinghouse
Posts: 5,879
Registered: ‎04-23-2011
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Re: What do you think of this flip?

  My computer is dying. I swear, I can't see or do anything that fast anymore. A replacement will be on its way:smileyhappy:

 

  It seems they did a hell of a remodel judging for what I see now. I have no if all that expense is going to get the guy big $, unless they are waiting for the mob to come and have a bidding war. Take in account the realtor %, plus the expense of the closing costs and the cost of the remodel. Easy some $50K in expenses plus Uncle Sam cut. Whoever is doing it, must have more than one property to flip because if he is waiting to be rich on this one, I have my doubts he will get anything big.

 

  I agree, the neighborhood is not good. Of all the areas we toured or tried to tour with my wife, that area was the one  not liked by her at all, and, I have a friend from my country living in Rancho Dr. who advised me to never moved there. He said "things grow legs there":smileyhappy:

 

  Again, I would take that tile job in the bathrooms and break in a million pieces the piece of crap of enclosed baths I got and also, I would take that cabinetry job and throw mine to the dumpster:smileyhappy:.

Gold Regular Contributor
sheriff
Posts: 2,341
Registered: ‎06-01-2012
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Re: What do you think of this flip?

I am not an expert but it looks like the flip was done well.  Believe or not, with all the neighborhood problems and no heat in any of the bedrooms, the thing that my wife did not like about the place was the hardwood floors were installed at a 45 degree angle to the walls.  By the way, if you follow the news, that property is just a few blocks away from where the apartment maintenance guy got arrested for murder trying to make a citizen's arrest of a burglar.  Jill, you are right.  I was looking at it as a possible rental unit but I decided against it.

Platinum Regular Contributor
tjh
Posts: 4,939
Registered: ‎01-09-2010
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Re: What do you think of this flip?

Note to realtors:  A, new, mandatory requirement. 

 

If you're going to put  "ss appliances" in the listing description as a sales incentive, please list the brand and model as well.  It's disingenuous to say "ss apppliances" and, upon further inspection, we find Roper branded garbage.  If "ss appliances" are that much of a sales come on, it's because they are a quality, name brand and maybe even, an upscale line within that brand.

 

With the advent of real estate information on the internet, the consumer is much more educated than you are giving them credit for.  The "appliance game" is only one of the areas in which we aren't as dumb as you take us to be.

 

:smileysad: :smileysurprised: :smileytongue: :smileyvery-happy:  

Silver Trusted Contributor
Michelle1x
Posts: 1,063
Registered: ‎02-17-2008
0

Re: What do you think of this flip?


sheriff wrote:

I am not an expert but it looks like the flip was done well.  Believe or not, with all the neighborhood problems and no heat in any of the bedrooms, the thing that my wife did not like about the place was the hardwood floors were installed at a 45 degree angle to the walls.  By the way, if you follow the news, that property is just a few blocks away from where the apartment maintenance guy got arrested for murder trying to make a citizen's arrest of a burglar.  Jill, you are right.  I was looking at it as a possible rental unit but I decided against it.


Well you are on the right track looking for investment properties in neighborhoods like this, though.  You are not looking for Palo Alto, you want appreciation and the sketchy neighborhoods are where to find that.

 

But there are ESJ neighborhoods like that area around Eastridge mall that once were very very bad and now are much better.  So no need to go to Seven Trees.  Eventually seven trees will improve but it will take longer.

 

On the other hand, if I Had an opportunity to buy a dumpy house on an acre lot in seven trees for a reasonable price, I'd jump on it.

Silver Super Contributor
El_Katz
Posts: 1,337
Registered: ‎04-26-2009

Re: What do you think of this flip?

The look of the place is a little weird... there is a garage to the left of the house that appears to be behind the chain link fence for that property (look at street view).  Could it be that there's two garages?  I almost wonder if the garage to the right of the house isn't on both pieces of property as it appears to split the space between the houses. 

 

Stainless steel is only a descriptor of the finish and has nothing to do with the quality of the appliance.  Odds are that it's paper thin anyway so what's the point?  

 

The seller allegedly spent $90k on improvements.... and with what he paid..... less commissions, transfer taxes, etc., he'll blow his brains out - unless he marked up the costs to his own construction company to arrive at the $90k... which then becomes somewhat deceiving.  I'd ask to see the receipts for the $90k.  That could prove witness to be an interesting exercise in obfuscation. 

Gold Super Contributor
Jil
Posts: 3,135
Registered: ‎10-24-2011

Re: What do you think of this flip?

[ Edited ]

Michelle1x wrote:

Sheriff wrote:

I am not an expert but it looks like the flip was done well.  Believe or not, with all the neighborhood problems and no heat in any of the bedrooms, the thing that my wife did not like about the place was the hardwood floors were installed at a 45 degree angle to the walls.  By the way, if you follow the news, that property is just a few blocks away from where the apartment maintenance guy got arrested for murder trying to make a citizen's arrest of a burglar.  Jill, you are right.  I was looking at it as a possible rental unit but I decided against it.


Well you are on the right track looking for investment properties in neighborhoods like this, though.  You are not looking for Palo Alto, you want appreciation and the sketchy neighborhoods are where to find that.

 

But there are ESJ neighborhoods like that area around Eastridge mall that once were very very bad and now are much better.  So no need to go to Seven Trees.  Eventually seven trees will improve but it will take longer.

 

On the other hand, if I Had an opportunity to buy a dumpy house on an acre lot in seven trees for a reasonable price, I'd jump on it.


Low purchase price gives better return and better appreciation, no doubt. For investment, you can not assume all location will come up. Some locations will get faster appreciation and some will be late appreciation. Low cost neighborhood is fine, but low cost crime neighborhood is risky, especially when it involves drugs, human trafficking which is the root cause of illegal money and gun violence. 

 

IIRC, avoid areas with chain link, broken glass on streets,pitbulls,drug, human traffic....It is not easy to turn this area as these are not suitable for living condition and people will not come forward to live there. If people migration stalled, prices won't go up and rental loss occurs as frequent eviction takes place.

 

Investor survives on either rental or capital appreciation. If rental vacancies more than 5%, it is difficult for landlord as you need to cover 5% min on maintenance and 8% on property management (or you need to full time maintenancc and management). Hence, you have to set aside 15% to 20% rent for these expenses other than property tax. A ballpark 30% down payment at this low interest rate 3.75% will give you breakeven and 40% or above give positive cash flow.

 

Hence, look out for areas next to high end or next to peninsula areas which is likely grow. Every city has high end and low end location. As an example, use the http://www.richblockspoorblocks.com/ to identify the low cost green or low cost yellow-green. This gives faster growth areas. Otherwise go to condo or townhomes if not SFH.

 

Bottom line, you need regular monthly rent payer to survive! You will buy max three properties as investment,as loan are normally limited to four homes max, unless you have full cash to pay. http://forums.redfin.com/t5/Mortgages/any-HELOC-without-appraisal/td-p/390259. I would suggest you to drive every weekends and choose the better location homes with issues (fix it, rent it). Look out for real short sales as seller won't have money to make it look good and competition is less.This will avoid competition. This is the same Warren Buffet strategy, gave $5B to BAC at distressed time and his investment return is 100%:smileyvery-happy: Wait for Opportunity and educate yourself on this subject.

 

 

Important, never look around a home where apartments and four plexes are around as your rent may not go up!

 

I burnt my finger on first time over-ruling the advice given by my realtor and somehow recovered. A hard lesson learnt Location, Location and Location (even for investment) for real estate.

 

Take each home as case study and analyze it complelely. Do not attach yourself with property and avoid impulse. Finally, do your math, plan it, execute as per plan. Think at least 10 times with your own profit and loss calculations and review.  You must know the personal finance (tax calculations), current loan financial background, realtor knowledge, understand the home to fix it.

 

Simply you must have combined strength of el_katz+ptiemann+john s.w (mortgage)+buffet(for cash). I understand Giving advice/suggestion is easy, but it is hard in practical.

 

My main purpose is to generate retirement income avoiding social security (if it comes, it is fine). I am almost completed now with my plan to generate constant income from rental. I may know the results, succeeded or not, in four or five years if I hold on to it. I am not an active anymore as I am done if my final one settles. I have just shared my own experience, use your own judgement/decision.