Cirios Opportunities: Sweet Salvation in South City
This post first appeared in the February edition of: Cirios Trends: In Search of Real Estate Opportunities.
Opportunity Overview:
Of the many profitable real estate investment opportunities available in the Bay Area, one which has recently received attention in the media is buying foreclosed homes directly at the public auctions held on the courthouse steps. These deals are not for the faint at heart. For example, the property below required the buyer to saunter up to the San Mateo County courthouse with over half a million dollars in cash (cashiers checks of course, not a stack of Benjamins). Read on to see how the numbers for such a deal break down.
Property Details
Address: 605 Lassen St., South San Francisco, CA
Bedrooms: 4
Bathrooms: 3.5
Living Area: 2,240 square feet
Lot Size: 4,998 square feet
List Price: $799,500
Sale Price: $780,000
Sale Date: 12/30/2009
This property was purchased at the steps on August 4th, 2009 for $527,124. In a matter of 5 months, it sold on the open market for $780,000. The difference between the sale price and the purchases price of $252,876, however, doesn’t represent the profit on the deal since the investors incurred a number of expenses from purchase to sale.
While we don’t know for sure just how much the buyer put into the property, based on the listing photos to the right, it looks like the investor spent quite a bit on high end upgrades. Here is one potential scenario and how the investor made out:
(Note that the cost figures below are estimates)
$60,000: Repairs and remodel
$2,635: Taxes
$4,000: Insurance
$39,000: Real Estate Commissions
$6,000: Escrow costs
$111,635 Total
When you add the purchase price of $527,124 to these expenses, the total investment under this scenario was $638,759. The final numbers in our scenario look like this:
$780,000: Sale Price
$638,759: Less Total Investment
$141,240: Profit
22.1% ROI
Many people would consider this a staggering sum to put down on a property South San Francisco, which is far from the Bay Area’s most desirable locale. But as this month’s zip code spotlight illustrates, the housing market South City presents some attractive investment opportunities due to current market conditions and the area’s economic outlook.
Tags: 605 lassen st south san francisco, courthouse steps, real estate investment, trustee sales