I've been feeling energized lately. Everything is going very well personally and professionaly, and i am very excited about the new venture. After two or three years of the red-ink recession, I am back in the black. It's not just financial, its feeling useful, needed, and productive again. Long periods of professional inactivity dulls the mind and the senses. That's a hidden toll the recession exacts on people, even those who don't experience the full brunt of unemployment.
I have been reluctant to write much about the new venture. There are some business secrets I have an obligation to keep. I have been obtaining very good margins, but I don't want to broadcast it too loudly and bring in competitors. The blog has a loud voice at times.
I will start writing some posts about these Las Vegas properties, but I need to think through what I should and should not reveal as my greater duty is to the interests of my investors. If i spent a week documenting the details of each of the seven properties I have purchased, I would likely see a number of new competitors show up at the auction site. There is a balance, and I will find it.
Las Vegas
Las Vegas is an interesting town to travel to for business. Since I am there when the tourists are not, the rooms are much cheaper, and all the activities are less expensive and less crowded.
I have my own barometer of the financial health of Las Vegas. I am still driving to Las Vegas each week. As I go through Victorville and reach the edge of civilization before heading across the high desert, there is a Motel 6. Lately, the rate has been $44.95 per night on Sunday when I drive past. I have been staying at the Sahara for $30 per night. There are often rooms available for less than $20 per night in Las Vegas. When the Motel 6 on the fringe charges more than a big casino hotel on Las Vegas Boulevard, times are tough in Las Vegas. Maybe I am wrong, and perhaps fringe motel rooms always carry a premiium, but the Las Vegas casino hotel is a billion times more fun and interesting.
When I go out in Las Vegas (I like to throw dice), it still feels alive and vibrant. Fremont street is often packed with people, and the strip casinos have a lot of activity. The problem with Las Vegas isn't a decline in the traffic of people (there has been some of that too). The problem is that visitors are not losing or spending as much money as they used to. And while about 50% of the construction industry remains unemployed, those idle workers are not earning money and contributing to the economy. The lack of a viable housing market and its associated labor market is what makes this recession go on and on.
I have always liked Las Vegas for a variety of reasons. And going there every week is a responsibility I enjoy.
If you manage to time the real estate cycle in California, the return on investment can be enormous. All the speculators who used 100% financing and either HELOCed or sold at the peak obtained an infinite return because their investment was zero. But even the FHA buyers who put 3% down obtained returns on their investment that in many cases is measured in triple digits. The owner of today's featured property invested $4,500 when he purchased, and when he refinanced at the peak, he sold it to the bank (in a nefarious way) and made $169,500. That is approximately 38 times what he invested. The bank is left holding a $262,500 mortgage on a tiny old condo worth about $200,000 in today's still-inflated market.
Home Purchase Price … $97,500 Home Purchase Date .... 3/10/1999
Net Gain (Loss) .......... $98,772 Percent Change .......... 101.3% Annual Appreciation … 6.6%
Cost of Ownership ------------------------------------------------- $208,800 .......... Asking Price $7,308 .......... 3.5% Down FHA Financing 4.23% ............... Mortgage Interest Rate $201,492 .......... 30-Year Mortgage $39,525 .......... Income Requirement
$0,989 .......... Monthly Mortgage Payment
$181 .......... Property Tax $0 .......... Special Taxes and Levies (Mello Roos) $17 .......... Homeowners Insurance $250 .......... Homeowners Association Fees ============================================ $1,437 .......... Monthly Cash Outlays
-$89 .......... Tax Savings (% of Interest and Property Tax) -$279 .......... Equity Hidden in Payment $11 .......... Lost Income to Down Payment (net of taxes) $26 .......... Maintenance and Replacement Reserves ============================================ $1,107 .......... Monthly Cost of Ownership
Cash Acquisition Demands ------------------------------------------------------------------------------ $2,088 .......... Furnishing and Move In @1% $2,088 .......... Closing Costs @1% $2,015 ............ Interest Points @1% of Loan $7,308 .......... Down Payment ============================================ $13,499 .......... Total Cash Costs $16,900 ............ Emergency Cash Reserves ============================================ $30,399 .......... Total Savings Needed
Property Details for 325 TANGELO 324 Irvine, CA 92618 ------------------------------------------------------------------------------ Beds: 1 Baths: 1 bath Home size: 819 sq ft ($255 / sq ft) Lot Size: n/a Year Built: 1979 Days on Market: 218 Listing Updated: 40362 MLS Number: S611090 Property Type: Condominium, Residential Community: Orangetree Tract: Othr ------------------------------------------------------------------------------ According to the listing agent, this listing may be a pre-foreclosure or short sale.
Looking for Investor or solid owner occupant transaction to stay the course with the short sale process.
Good luck with that.
I find that the cumbersome nature of the short sale process makes is easier for flippers to sell houses. Buyers don't have the patience to wait forever for a short sale. There are many buyers who have offers on several short sales, and they sit and wait for one of them to pop. When a filpper puts a property on the market, it gets attention because a prospective buyer does not have to wait for a bank to make up its mind. Both short sales and REO are bank decisions. Third party trustee flips pair serious sellers and impatient buyers. If the property is priced right, it quickens the pace of sales significantly.
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