Missouri Ave South Gate: A Quadplex

Quadplex available in South Gate, CA for $360,000.  This price includes a two-bedroom and 3 one-bedrooms.  The cost of this property is approximately $2,225 a month (assuming 25% down, 4.5% interest on loan – which covers mortgage payment and accounts for maintenance and vacancy) and the South Gate rents will produce approximately $3,300 a month conservatively.  All in all, you are looking at an investment that can produce a return greater than 10% a year.  Find out further details… let me know and contact me here.


E. 9th Street Downtown Long Beach- Like in the Middle

This property is up for grabs, and it is in the middle of downtown.  Rents in this area are insane, but any beach commuter would know that it is worth the cost.  Plus, this area is an up-and-comer area for newly independent professionals and students alike (two colleges are in the vicinity).  The listing price is $329,000, for a two-bedroom unit and a one-bedroom unit.  An average investor is looking at roughly $1625/mo mortgage payment (assuming a 25% down payment and 4.5% interest on the loan).  As mentioned, the rents more than cover the cost (see rates) with the average of a one-bedroom and a two-bedroom being $1300 and $1700 respectively.  The rents almost double the mortgage. With taking into account a vacancy rate and maintenance, the rate of return on this property is greater than 10% a year.  For more accurate accounts… find me.


How Can I Still Be Positive On Housing…

Average Home Prices

Current economic sentiment is negative, and the recession predictions are rampant.  According to Recovery-or Recession? (Bloomberg Businessweek, July 23-29 2012), jobs are down, growth forecasts are being reduced, and manufacturing has declined.  These outcomes are already reflected in the stock market. Some of the researchers, noted in Bloomberg, believe our economy is already in a recession.  Considering the economic slump with all the possible outcomes, there is still a bright spot for our economic future- housing.  Bloomberg states the “S&P/Case-Shiller Home Price Index showed that average home prices rose 1.3 percent in April, ending seven consecutive months of declines”.  In my opinion, smart money has moved away from the stock market.  More recently, the Federal Housing Finance Agency reported home prices rising 0.8 percent in May on a seasonally adjusted basis, and rising 0.7 percent in April.  Overall, from May 2011 to May 2012, housing is up 3.7 percent (FHFA).  Even Zillow reported that home prices have increased year-over-year for the first time since 2007 (Marketwatch.com).  So I’m positive on housing because prices are down, interest is extremely low, and I know investors are making cash deals.  Housing will not stay down, though, especially is Southern California.  Looks at the trends… comment and you know how to reach me.

p.s.  Sorry for the break in my posts.  More to follow…

Housing Supply… What Am I Waiting For

St. Louis Federal Reserve

You are looking at the long-term monthly statistic of the housing supply in the U.S. market.  This statistic is presented as a ratio of homes for sale divided by homes sold.  The last record for this statistic shows that there are 4.7 houses actively for sale compared to every one sold.  The peaks in this chart coincide with periods of saturation where good times and feelings ended and the oversupply drove down the housing market.  Note, one would think that increasing supply would drive prices down (this statistic is counter-intuitive).  However, the reality is that EXPECTATIONS are what drive markets (i.e. housing) higher and SPECULATION is what drives markets even higher.  So, the sharp increases leading to the peaks on this chart can be seen as individuals jumping on the expectations bandwagon… until the last one is left out to dry.

An important aspect of this statistic to remember is that it represents the supply of homes across the U.S.  In my opinion, it is safe to say that the Southern California market is not equivalent to other regions except for the obvious New York, Chicago, etc…  However, this statistic is still important to keep in mind as it represents the sentiment of U.S. homeowners, and homeowners have not been feeling good for the past 5 years.  Taking a simplistic view, it is an investors market as the chart shows the supply decreasing.

Now let’s think about the next 5 years… here are three reasons that I believe good feelings will return for the housing market: (1) a new generation of tech savvy individuals and entrepreneurs (with high expected incomes) that were in college since 2008 are finally graduating, or already working, and have good credit, (2) the supply of houses is about to dry up faster as expectations drop that more people will lose their homes (the homeowners bill of rights PASSED!), and (3) as investors continue to buy up the inventory… they will be forced to pay higher prices due to competition, and the renovated homes will go back on sale for higher prices to cover the increased expenditure of the purchases, and so on… we are creatures of habit <–Check it out.

These are just 3 reasons I had in mind that I could write about immediately.  I’m sure there are many more… so share a comment about the housing market expectations for the next 5 years.

W Washington Blvd., Pasadena

Pasadena is a highly prized city in terms of real estate, considering the high prices and high rents.  There is an opportunity to own a nice chunk of land, and for the list price of $279,000 you get two units (both units are two-bedrooms) and a lot size greater than 13,000 sqft.  The rents in Pasadena for two-bedrooms, conservatively, range from $1,200-$1,800 depending how close to Downtown Pasadena (see rates).  Considering the standard purchase requirements for an investor of a 25% down payment and assuming a 4.5% interest rate on a 30-year fixed mortgage, the mortgage payment would be approximately $1,400 a month or $16,800 a year and the down payment would be $70,000.  The rental income would approximately be, on the low end of scale, $2,400 a month or $28,800 a year.  Therefore, the approximate net income of this property would be $12,000 a year (28,800 – 16,800) and the return on investment would approximately be 17% a year (12,000/70,000).  For more details, you know how to reach us…

17th Street Long Beach, CA

This is a premium area of Long Beach, CA.  Being close to two colleges- Long Beach City College and Cal State Long Beach- this property commands high rents (see rates).  The price of $279,900, gets you two units (a one-bedroom and a two-bedroom) which combined bring in approximately $1800 – $2000 per month or a gross schedule income of $21,600 – $24,000 a year conservatively.  The numbers speak for themselves, and this investment is safer than the stock market today.  At list price the approximate investor down payment of 25% would be $70,000 and the approximate 30 year mortgage payment at 4.5% would be $1400 or $16,800 a year.  The difference of rental income and mortgage payments at the low end of range produces $4800 per year (21,600 – 16,800).  That is an approximate 6.8% (4,800/70,000) return on investment per year.