Jan Skrentny

I’ve mentioned in other posts that the motto of Prime Properties is “Transforming Real Estate.” The best example of that catch phrase realized is our Welcome Center / Sales Office – an eye-sore of an old gas station turned into a glorious craftsman style office.

But just recently I had another opportunity to demonstrate the value of that phrase. I was referred the home of two doctors from Redlands. They and their family had owned and enjoyed the lake view home for over 20 years but of late because the boys had grown and moved away, the house was not being used. The interior  was in excellent condition but the exterior had a lot of deferred maintenance that greatly reduced the value of the property – peeling paint, wood rotted decks, a dated feeling. Our agents estimated that in “as is” condition the home would sell for under $300,000.

But we calculated that if the doctors would spend money to fix, repair and repaint we could get them their investment back plus a fair amount more. A designer on our staff consulted with them about new colors for the home. We got bids from several builders and I over saw the repairs. In my next post I will show pictures to prove the point – the house turned out beautifully.

The doctors paid $20,000 for all new decks, paint, termite completion and exterior upgrades and before the house went on the market I got an offer of $365,000 for the property. Their $20,000 investment gained them a $45,000 profit in under one month.

Now not everyone has that kind of disposable funds available. But this is absolutely true – most buyers in this market want well cared for homes. Those sellers who are throwing their homes on the market in “as is” condition are lumping their most precious possession along with the banks repoes — also sold in “as is” condition.

You only get one chance to make a good first impression – use it wisely.

This is remarkable because listings (representing a house for sale) are the lifeblood of real estate agents.

The owner is a woman on social security. She lost her husband to cancer two years ago. She has five dogs (four English bulldogs) that she loves and breeds. Her husband was an avid gardener but since his death she is having a hard time keeping up with the garden, the house, even the animals.

In this market a new listing has to be both well priced and well presented; there is too much competition for buyers to think “okay” is okay. I told the widow to make a plan to have the house and yard fixed up, the interior simplified, and an area developed for the dogs to reside when the house is being shown. I gave her the name of a trusted handyman who could help her do some of these things.

We developed a strategy so that by spring of next year the house will be ready for sale. The seller may have to spend some money to make the changes but it will greatly improve the sales potential of the house and the return on her investment will be rewarded many times over.

You only get one chance to make a good first impression – that’s especially true in this real estate market.

I spent the afternoon looking at “repoes” – bank-owned repossessed homes.

I have several clients who are interested in buying up good homes at very good prices. There is a formula to it: With 20% down the price has to be low enough so that when the house is rented – the rent will cover the mortgage, taxes and insurance. Ideally there should be a little left over to cover repairs.

The point? Say you get a three bedroom two bath for $130,000 (this is possible in the mountains). You put $26,000 down, finance $104,000.  It’s an investment property so the bank rate will be higher than on your home loan, so say 7 ¼%. On a 30 year fixed that is $716.00 a month. Taxes are 1.5% of the purchase price or $1,950/ year – $162.50 a month. Insurance varies but say $800/ year or $67 / month. Total cost: per month: $945.50.

A good house will rent for $1,000 to $1,250 up here.

Four years from now when the market is strong again the home will sell for over $200,000. Your $26,000 investment, after cost of sale (commissions and costs) will net you $52,000 – tripling your money.  Hard to beat at any bank.

The problem? Most repoes are not in good condition. They are troubled, I call it “home-abuse;” technically it is bad or no  deferred maintenance.

That’s why I spent the afternoon looking. Good repoes are hard to find. You have to look hard and act quickly when you find one.

But that’s how money’s made in a bad economy. One Repo at a time.