Sold! $110,000 above asking and that’s not the full story…

Closing my recent listing, the Glendale fourplex (1414 Dixon), at $1,305,000 this week answers the age-old question of “why sell.”

Not only did we negotiate $110,000 above asking, but the property also went into escrow like lightning speed. We had strong interest from several buyers, but ultimately the Seller favored the Buyer with the best financials and was most likely to close. The property went into contract 7 days after it went on the market, and closed in a 47-day escrow.

The hidden story behind this fourplex is that the Seller bought it with me in late 2014 for $860,000 and made $445,000 difference on the sale in less than 18 months time, minus closing costs and improvements on the property. Now we’re targeting two more properties that he can buy with these proceeds in a 1031 exchange (tax free), and hopefully do the same thing again next year.

There was no reason to sell 1414 Dixon, except that the landlord knew that he had maximized the property with the resources he had, and could do the same to a different, under-utilized one with new resources from the sale. If you have a property that you are curious about selling, please get in touch.

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Main StI just closed a property in an area I never expected to work: South Central Los Angeles. I have fearless buyers who are focused on the bottom line, and the bottom line pointed them very far south of the 10 freeway. We closed 8306 S. Main St. at $395,000 with rents at $4,120 per month. That’s a GRM of 7.99! You can’t find that in Echo Park, Highland Park, or even Boyle Heights.

What are the trade-offs here? The plus is you have excellent income with nice tenants. Three out of four tenants have Section 8 help, so the government cuts you a good paycheck every month and stays on top of them. We paid all cash and my clients stand to make 9.6% on their investment per year. If they refinance they’ll make over 17.5% on their cash per year.

The negative is that it’s not a high-growth neighborhood and there’s more crime. However, that doesn’t mean there won’t be appreciation. The previous owners bought the property for $250K in 2010 and just saw a 63% return in two years. That’s not bad.

What’s the lesson here? Do what you’re comfortable with. But if your true focus is the bottom line, a good investment is a good investment.

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Mid-City awesome Fourplex

There’s a huge fourplex that went on the market today in mid-city.  If you know the area, you know Paper or Plastik café.  While it has low-ish rents now, one of the big units is vacant and you could move in and still make cash flow.  If you want to live in a 2.5-bedroom apartment and put down approximately $160,000 to own a gigantic fourplex in an improving neighborhood, let me know! It’s going to get snatched up fast so strategy is key.

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Listing Agents & FHA

I’ve stopped asking agents if they’ll accept FHA loans. I had done that previously so my clients don’t waste time driving to a property they have no chance of buying. (FHA loans are sometimes less desirable because there are a few more steps to closing the deal.) While normally I give agents credit for knowing the difference, last week I actually startled a young agent with the question.

“Yeah, why not. We’ll take whatever the highest offer is.”

This is my kind of agent, I thought. I told my client that we had a good chance to get this place. She went to see it.

Two days later, we came in at the highest offer. The listing agent told me so (are we sensing something amiss?), and that the seller would accept our offer that afternoon.

Several hours of no phone calls later, I get a text saying they’ve countered a lower offer that has a higher down payment.

What could have happened between the morning and late afternoon?  Did this agent Google “FHA loans” and get scared?  I texted back that this property would surely assess (it had in city records already and had the rent roll to boot), but the agent didn’t want to go back to the seller and look silly.

The truth is, agents should favor FHA loans when they are higher offers, especially if the property will most likely assess.  Some agents want cash only if it’s a short sale or the building’s decrepit and they don’t want assessors near the place.  But this listing agent’s first instinct was actually the right one.

Now I refer to my client as “my FHA buyer” once to see if there’s a reaction, and if not, we don’t mention it again until the purchase agreement.

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Boyle Heights 3-plex! Hot!

The best deal on the market right now is a 3-plex in Boyle Heights for only $300K.  Good rents.  Just came on.  Let me know if you’re interested!

UPDATE (3/6/13): This property sold within days at $340K. Also, my broker and I think alike.

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Cheap Baldwin Hills house near Culver City

getmedia-1Cheap single family home near Culver City in Baldwin Hills available now. 2+2, 1600 sqft.  Good flip (or live).  $328K  Let me know –

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