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case study on 4800 Spring Meadow Cove, Austin TX 78744

A case study on 4800 Spring Meadow Cove, Austin TX 78744

                        The Spring Meadow Cove property was purchased on April 22, 2003 from HUD for $54,603.   The property was built in 1984.   The house was a 3 bedroom, 2 bathroom, 2 living areas, a dining area, and a 2 car garage.   The house was immediately rehabbed and listed for sale at $115,000.   It was sold for sale for $116,000.   The repairs were complete by Remar Ministries.   It required approximately $7,500 in repairs.   The list of repairs included:  

  Drywall repair, Paint entire interior of house, Carpet, Rebuilding the kitchen countertops, rebuilding the master bathroom tub surround, new window screens, new ceiling fans, new garage door, new door knobs, and new rain gutters.

 The repairs took approximately 2.5 weeks to complete.   The tax appraisal on the home before the repairs was approximately $94,748.   The after repair value per the appraisal dated April 19, 2003 was $113,000.   The initial loan to value, based upon the appraisal value, was 56% (65K/113K).   Below is a financial break down of the transaction.   There were $2,612 in closing costs associated with the purchase of this property.   Also there were holding costs of $975 per month for 5 months.   The  house was purchased using a “hard money” loan.   The interest rate was 18% the total amount borrowed was $65,000

 

.The Maximum purchase price was determined by using the formula previously outlined   The contingency factor should be added to the profit for this transaction because it is for emergencies or unforeseen repairs.  

                                   

            $Maximum Retail Value $                     $115,000

            (subtract the following) 

                       

            – Purchase Costs                      -$1,000

            – Rehab Costs                          -$7,500

            – Holding Costs                        -$5,000

            – Sales Costs                            -$6,500

            – Contingency Factor                -$5,000

            – Profit                                     -$35,000

            $Maximum Purchase Price   =  $55,000

 

 

If the house was going to be held as a rental then it would need to be refinanced.   If an 80% loan to value loan was used after closing costs and escrows TSG would have received a check for approximately $20,000 after paying off the hard money loan and closing costs.   This property would probably be held for 5 – 7 years and then sold.   If the market appreciates 3% – 5% per year (very reasonable appreciation rates) then this property will be worth between 132,000 to 144,000.

 

If this house were put on the Fast Sell Strategy track instead of the Rehab Strategy track it could have been sold to a rehab investor for $5,000 to $10,000 and the rehab investor would have used a similar formula to determine their profit potential.

 

Pictures before repairs:

 

            

 

          

 

          

 

          

 

          

 

          

 

          

 Pictures after the repairs

 

          

 

          

 We sold the house for 115K to an owner occupant with a 1st and a 2nd to us for 20K.   They ended up losing the house in foreclosure on the 1st and my 20K second was wiped out!   ((That SUCKS)).   We made good profit and learned a good lesson about taking a 2nd behind an institutional 1st.   Don't do it unless the profit that you get from the payoff of the 1st is good and you dont care about the 2nd.   We could have reinstated the 1st but after they were 3k behind then it was not worth our while any longer so we just passed on it and moved on to bigger and better deals.

This was the only deal (1st and last deal) that I ever used hard money on and it was a learning experience as well.   There was a tremendous lesson on who hard money really works in doing the transaction!    For those interested please send me an email and I will lay it out for you.

As an aside the agent who I had worked with to buy the house ended up buying the house from the bank and went out and did the same type of transaction as I did!  Funny how we even recycle houses in Austin!

Post your questions to the REICA board and I will answer some of them if any or send me a private email at Ron@theseaygroup.com.

Case Study on 4-plexes

A case study on three 4-plexes on Wooten Park Dr is a big file so it is a PDF that you need to download to read.   Please click the link above named "4-plexes" and the file will open on your computer using adode.

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10502 Cherry Hollow Xing – SOLD

Picture of the front of property

Sale Price $30,000

 More Pictures of the property

Property description

 This property is a major fixer upper.   It needs everything!   Well just about everything.    A/C work, Doors, Electrical, Flooring, Landscaping, painting Plumbing roof patching, trash removal, tree trimming, Windows.   I am talking A-Z on the list of repairs.    Lots of the jobs appear to be small jobs that someone who has moderate rehab skills could tackle.   But make no mistake about it this is not for the faint at heart!   This is a rehab!!

 The value is in the lot.     The property has the lowest list price in the neighborhood.   Take a look at some of the other properties on the market.   This property could easily be cleaned up and turned into a small rent house or replaced with a home in better condition.    It is on a culdesac so there is no thru traffic and sits at the top of the hill with good views of the surrounding area.   There are beautiful houses going in just off 1431 and the growth is moving toward this property.   The area has been growing tremendously over the past few years.   Please click the following link for a demographics study.

 If the property was closer to my other investments I would consider turning it into a small rent house and renting it out for $500 per month to $650 per month and holding it for a couple of years while the growth continues then selling it for $75K or so.

 

Property History

 The property was purchased as a foreclosure by the current owner and has been sold and repo’d several times and has never received the property attention that it needed to make it a wonderful home.   Now the owners have bigger and better projects to work on and want to find the right person who can love this property back to health and productivity.  

 In the past it has gotten people who have occupied it but never loved it the way it needs and consequently the lack of love has shown!

 If you are the right person and want to make a cash offer the owners are willing to consider taking a discount on the property in order for you to be able to make it work.   Just submit your cash offer and it can be considered!   We are investors and will not be offended by a low offer.

 If you need owner financing we are looking for someone who can put down at least about 10% and who can afford payments of at least $250 per month with a 10% interest loan.   That sounds easy enough but doing the 10% down and 250 a month is the easy part it is the fixing of the property that will require hard work and money to get it done.

 

Repair Analysis

 Our back of the envelope analysis included:

A/C work

1000

 

Doors

500

 

Electrical

1000

 

Flooring

1000

 

Landscaping

1000

 

Painting

500

 

Plumbing

1000

 

roof patching

500

 

trash removal

1000

 

tree trimming

500

 

Windows

500

 

Misc

4000

 

Total

 

$12,500

 

 

 

 

 

 

These figures are only estimates and you should hire a professional to fully investigate.

 

Many of the figures are very rough and include paying professionals to do some if not all of the work.   It may be possible to get the numbers lower but you would need to investigate that possibility on your own.

 

 

Rental Analysis

 

If the property were purchased and repaired and turned into a rental my analysis indicates that the property would generate a 21% average annual cash on cash return and a 30% total return if held for 5 years and sold for $75K.   The rental rate that was used was on $650 per month.   For a three bedroom two bath house that is cheap, but the property is far out and that has to be taken into consideration when factoring the rental amount.   If the sales price could be achieved before the 5 year term the return would rocket skyward!

 

To see the analysis please click for link for the property analysis.

 

Flip Analysis

 

If the property was flipped quickly without doing any repairs just remarketing the property the price could probably be bumped up by $15K for a total of $45K.   If the new seller owner financed the property for $1K and payments of $350 per month and a 15% interest rate then the return on investment would be $1,200/$1,000 = 120% per year!  

 

 

But for analysis purposes lets assume that the initial investment is $3K and then the underlying payment on the first note is $250.   The cash flow generated would be $100 per month or $1,200 per year.   The return on investment would equal $1,200/$3,000 = 40% return per year!

 

 

If the property was given a cleaning and trash removal then the flip price could easily be pushed upward as the property would appeal to a wider range of potential buyers.  

 

 

Owner Financing

If you would like to purchase the property with owner financing I have attached the following documents for you to fill out to submit your information to us as part of the contract.   

Application

I have also attached some examples of the note and deed of trust and other documents that will be a part of the financing package.    If you have any questions about them please don't hesitate to ask, but note that in no way, form, or fashion should any information be construed as legal advise.   If you need legal advise please consult your attorney.

Please click the link for a copy of the sellers disclosure notice

Please click the link for a copy of the Survey

 

If you have any questions about the property please email me at Ron@theseaygroup.com.

 

  Please join our linkedin Network at Linkedin.com www.linkedin.com/in/ronseay

9903 Hansford Dr, Austin TX – SOLD

9903 Hansford Dr, Austin TX

 

          

 

          

 

          

 

          

 

          

 

          

 

          

 

          

 

          

 

          

  $135,000

More pirctures of before the property was repaired are below

This property is a rental and the current rent is $1059 which is probably low by about 150 per month.

The pictures before the property was repaired

Pictures before repairs:

 

       

 

       

 

       

 

       

 

       

 

Pictures of the old roof before it was replace in 2006

After the hail storm that destroyed the outside

A case study on 4800 Spring Meadow Cove, Austin TX 78744

case studyA case study on 4800 Spring Meadow Cove, Austin TX 78744

The Spring Meadow Cove property was purchased on April 22, 2003 from HUD for $54,603.   The property was built in 1984.   The house was a 3 bedroom, 2 bathroom, 2 living areas, a dining area, and a 2 car garage.   The house was immediately rehabbed and listed for sale at $115,000.   It was sold for sale for $116,000.   The repairs were complete by Remar Ministries.   It required approximately $7,500 in repairs.   The list of repairs included:

Continue reading A case study on 4800 Spring Meadow Cove, Austin TX 78744

Have you begun to evaluate the performance of your real estate investments this year?

This is a great time to do a little homework concerning your investments and whether they are meeting the return guidelines that you have determined are appropriate for them.

Why do you need to evaluate real estate investments?

When you are evaluating real estate investments what type of questions should you be asking?

Have you taken on some type of unstated risk and previously undisclosed risks? Continue reading Have you begun to evaluate the performance of your real estate investments this year?

Calpers finally gets it..

The wall street journal has an article about CALPERS changing thier real estate strategy.   From real estate private equity to CASHFLOW.

http://online.wsj.com/article/SB10001424052748704013604576104470130722678.html

Do you have some cashflow in your portfolio?   There certainly is a place for some flips, rehabs, etc but cashflow is where you make money long term in real estate.   Do you need to discuss your real estate goals with a professional real estate investor?   Call me…(512) 782-8982 or email me.

What is a multi leg real estate exchange?

What is a mulit-leg real estate exchange? It is a series of exchanges that allow you to take your real estate from where you are to where you want to go. How do you make something like that happen? With lots of flexibility and patience. You need to be able to move into assets that may not exactly fit your needs at this current time. They may not be the best fit for your long term financial plan. They may not even be in this country! They are simply a way to go from where you are to where you want to be. You need to be able to answer the question, “What else can it look like?” Have you heard the story about 1 red paper clip?

Continue reading What is a multi leg real estate exchange?

Multiple real estate solutions…

Real Estate Investing is just like this blog by Dan Miller about finding multiple solutions to problems.

1. Can you find the solution here… by Dan Miller of 48 Days at http://48daysblog.wordpress.com/
Many years ago in an Indian village, a farmer had the misfortune of owing a large sum of money to the village moneylender. The old and ugly moneylender fancied the farmer’s beautiful daughter, so he proposed a bargain. He would forgive the farmer’s debt if he could marry his daughter. Continue reading Multiple real estate solutions…

Are you growing your business?

One of the things I want to do this year is grow my business. So I began looking for opportunities to invest and to put together another group investment or syndication. I found a small apartment complex in one of the communities close to my home base and decided to go and look at it b/c it was a screaming great deal!

Continue reading Are you growing your business?