This post first appeared in the March edition of: Cirios Trends: In Search of Real Estate Opportunities.

Opportunity Overview:2730 Sherwood Dr., San Bruno, CA 94066
For many people familiar with the Bay Area, the Peninsula is a place where only the wealthy can afford to live. And while this holds true for most areas, there remain some desirable areas that still afford first-time buyers a place to call home. One of these towns is San Bruno. Known more for its poor weather than affordable homes, San Bruno often gets a bad rap: There are plenty of neighborhoods that aren’t buried within the fog belt. San Francisco International airport is close (although in some cases too close), and job centers are a short drive North or South. Homes frequently sell for less than $600,000 which, on the Peninsula, is downright cheap.

Property Details
Bedrooms: 3
Bathrooms: 2
Living Area: 1,140 square feet
Lot Size: 5,432 square feet
List Price: $549,000
Sale Price: IN ESCROW (8 days on market)
List Date: 2/12/2010

This property was purchased at Trustee Sale on January 4, 2010 for $444,000. In just over 30 days, the buyer was able to relist the property for more than $100,000 above acquisition cost. The quick turnaround indicates that improvements were more than likely cosmetic in nature. Given the lack of equivalent homes on the market, it ‘s safe to assume this property will sell at or above its asking price.

Here is one potential scenario of how an investor would make out:

(Note that the cost figures below are estimates)

$444,000: Purchase price
$30,000: Repairs and remodel
$1,520: Taxes
$3,500: Insurance
$5,000: Escrow costs
$484,020 Total Investment

Although a $30,000 budget is not especially large, given the small size of the home, many high quality improvements could have been made. The final numbers in our scenario look like this:

$570,000: Sale price (estimated)
$28,500: Less Real Estate Commissions
$484,020: Less Total Investment
$57,480: Profit
11.9% ROI

A return of 11.9% is not as high as other deals we have seen come across the steps, but escrow is scheduled to close on March 11th, so the deal took just under 70 days from purchase to eventual resale. The annualized return on this deal was meaningful, indeed.

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.