the mesh network | northern california real estate

[Deal of the week] Home Business Opportunity

Here is an opportunity you need to see if you have (or are thinking of starting) your own home-based business.  It’s on Meridian Ave in Willow Glen San Jose, a pretty busy street and easy to advertise your business/service to thousands of cars that go by each day.  It was basically a single family home that was converted into a 1- bedroom home with the rest used for the home-business -- but it was completely remodeled!  New kitchen, floors, recessed lighting, stamped concrete walkway and driveway, landscaping with sprinklers -- it’s all brand new and ready to go.

Details:

1260 Meridian Ave, San Jose, CA 95125

MLS #80955769

1 Bedrooms, 2 Bathrooms

1688sf living space

7200 sf lot

List Price: $549,000

Why is it a good deal?

It was bought for $1.07M just 2 years ago, now it is a foreclosure.  It is an undiscovered listing because it is shows up as a 1 bedroom 2 bath home in almost 1700sf.  Most buyer and agent search patterns will overlook this kind of home.  It needs a special buyer willing to live on a busy street and if it fits your needs, you will get a great deal.

What is the risk?

It may be hard to resell in the future as it will need another special buyer.  However, maybe you can sell it with your business once a name is established.  If you can get it re-zoned for retail/commercial it may increase the value as well.

Who is the best buyer?

Daycare center would be perfect -- easy drop off and pickup right at the sidewalk, yoga instructor, dentist, chiropractor, insurance agent, healthcare professional working in connection to the Indian Wellness Center across the street.  What else can you think of?

Call me if you are looking for this kind of space to run or start your home-based business.

-Mark

[Deal of the week] Santana Row Foreclosure

If you have been waiting for the opportunity to live the Santana Row lifestyle, here is the most affordable entry point we have seen.  Here is a 2 bedroom 2 bathroom unit overlooking the main street, with an outdoor patio, just above the new LB Steakhouse.

Details:

334 Santana Row #201, San Jose, CA 95128

MLS #80954192

2 Bedrooms, 2 Bathrooms

7 years old

1179sf living space

435sf lot

Why is it a good deal?

It is the lowest priced 2 bedroom unit we have seen come on the secondary market in Santana Row since these were originally built in 2002.  These condos are always in high demand and sure to grow in value over the long term.

What is the risk?

Competition.  Actually, the listing agent tells me they already have 4 offers and it’s just the first day on the market today!  The price is likely to go into the high $500k or low $600k range.

Who is the best buyer?

Santana Row is a lifestyle.  You need to want to live the active, small-condo kind of lifestyle.  A young and active couple, 2 roommates looking to get started, an older couple downsizing into the simple-life, all these are good buyer candidates.  I also believe an all-cash investor is in a strong position to use the power of cash to negotiate a successful acceptance from the asset manager since there is heavy competition at this price.

-mark

[Deal of the Week] Eichler Townhouse Flip

As you know, each week I’m out seeing dozens of properties and always looking for great opportunities.  Many people say that in today’s market there are no “flipping” opportunities to be had -- well I’m here to show you that I’ve found one.

There is an Eichler townhome complex in Santa Clara that recently has seen many units turnover so we know pretty accurately what buyers are willing to pay in this market (very valid comparable sales).  One now Pending was listed at $489k and sold in 10 days so let’s assume that’s where it closes.  The Flip unit I propose is listed at $405k but it’s been on the market for 200 days so we know that must be too high (and it needs some major work that may scare most DIY homeowners.  I’m assuming we can get in at $360k.

Here is my quick take on the math:
Purchase price:    $360,000
Cash down:         $ 90,000
Cash for rehab:    $ 50,000
Holding costs:      $   6,500
Cost of sale:        $  30,000

Sale price:        $489,000
Profit:               $ 43,000
Cash on Cash:    ~30%
Duration:        3 months total

By my calculation, for a 3 month investment of $146k, the projected return would be $42k.  Several sales support this sales price if not higher providing the rehab selections are done well.

Risks:
1) Obtaining reasonable financing so carrying costs are within budget
2) Completing the project and back on-market within 6 weeks; 4-6 week escrow for sale to new buyer
3) Keeping rehab materials and contractor on budget of $50k
4) Overall market risks of price and financing fluctuations

Who wants to give it a try?
-Mark

[Deal of the week] Willow Glen Flip, 3/1.5 under $500K

Have you ever seen these TV shows where someone buys a fixer-upper home that needs work, they go in and fix it up, and then they flip it for a quick sale?  A lot of people say those days are over but we’re always looking for new opportunities.  If you want to do a successful flip today you need to make your money going IN, and make sure you have reduced all the variables.

We’ve found a house that is flip-worthy.  Here is a 3 bedroom 1 and ½ bathroom foreclosure home on the Willow Glen / Cambrian border just waiting for a remodel.  There is equity to be made on this deal.

Details:
1871 Potrero Dr, San Jose CA  95124
MLS #80903690
3 Bedrooms, 1.5 Bathrooms
56 years old
1050sf living space
7200sf lot

Why is it a good deal?
A similar home was listed just 4 houses away on the same street for $575,000 in great condition and it sold in 7 days.  So, we know the market is there.  This house is right down the street from Fammatre Elementary School and Ida Price Middle so the family who buys it will be walking distance to school for up to 8 years.  It has a big lot so there may even be a possibility of expanding.

Here is what you need to do:
Turning the ½ bath into a full bathroom in the master suite will add huge value (it now becomes a 3/2).  The existing layout makes this easy because you can reposition some closet space to make room for a shower so it really isn’t that much work.  It needs new hardwood floors (and maybe some sub-flooring) since I can see termite damage in the floors.  It needs 2 bathrooms remodeled.  It needs a kitchen makeover as well, but now is the time since there are no appliances at all (it’s a foreclosure, remember).  I say you offer $400k for it, plan to put $75k into it and go to market at $559k.  You’ll make $45k after transaction costs.  The question is - How fast can you get it done because springtime is coming!

Estimated Makeover:
$10k master bath
$6k hall bath
$30k Ikea kitchen and appliances
$15k for nice new hardwood floors throughout

What is the risk?
Maybe you can’t get it for $400k, and that certainly is a challenge here.  It has just been on the market for 2 weeks so maybe let the bank get a little more “flexible” the longer it stays on the market.  Do inspections ahead of time (roof, chimney, furnace) just to make sure there are no surprises.  There is a risk that your flip takes too long and too much money of course which will eat any chance of profits.

Who is the best buyer?
This could be a first-time flipper because the work is mostly cosmetic and not very structural.  It may be possible for someone who wants to live in it as you go through the remodeling however you need to find a way to survive without a kitchen.  To have your best shot at the highest return, you need to be on the market for the summer selling season in June.

[Deal of the week] Palo Alto 2/2 Condo for $519k!

Call me crazy, but this is one deal I would not pass up.  Here is a rare opportunity for an Eicher Condo in downtown Palo Alto.  This place shouts mid-century modern!  This has the original kitchen cabinets, the original closet door sliders, the mahogany wood paneling is still in good shape, and the baths are also untouched.  A retro-cool experience!  Ok, so it needs some modern appliances (cooktop, stove, dishwasher, and washer/dryer), and it could use a flooring update as well.  I don’t know about you, but I can see the vision for this place.  Spend about $15k for some light remodeling and you have a really great place in downtown Palo Alto for under $550k.

 
Details:
455 Grant Ave #3, Palo Alto CA 94306
MLS #80844247
2 Bedrooms, 2 Bathrooms
46 years old
906sf living space
943sf lot

Why is it a good deal?
This is an affordable entry point into Palo Alto, centrally and conveniently located with California St. restaurants and weekend farmers market only a block away.  In addition, 2 bedroom units are more desirable so in the long run this will be a better investment for resale than if you went for a 1 bedroom.  Since it looks very original and needs updating you’re not buying a place that has someone else’s tastes that you will just have to remodel anyway.

What is the risk?
Most people will be scared (or shocked) at the HOA being just over $500 per month.  When you find out this includes your gas heat, earthquake insurance, pool, and other typical costs it is not far out of line with other Palo Alto communities.  I have not checked the CC+R’s yet but I would not be surprised if this is a cooperative ownership, which means each unit must be owner-occupied so don’t think about renting it out as an investment property.

Who is the best buyer?
You need to like modern and minimalism and it would be a bonus if you like mid-century retro.  I see this place going to a move up buyer who is looking to move out of San Jose and get further up mid-peninsula; or even a first-time buyer who wants to take their first step on the property ladder.  This is a buyer who would like the challenge of redesigning something while still being able to live in the home, maybe someone up for a little DIY (do-it-yourself) or who wants to go on an Ikea decorating spree?!  If you put a little time into updating the major necessities, I think you will find you have put your own personal touches on a bright and fun place to enjoy for many years to come.

-mark

ps. The same complex also has another condo that has been remodeled.  It listed at $569K, MLS#80832437.  Here are some photos for you to compare.