The Broker's Record

The Fixer Revisited

February 27, 2006

And now…the rest of the story!

To get the lot split that I wanted, it was known that I’d have to get an easement granted from the neighbors.  Rumor had it that at least one of the neighbors was interested in doing something along those lines.  So, I called that neighbor first..and he claimed to be interested in no such thing.  Then, I asked, “So you’re not interested,  not for love or money?” Ahh, well – for money?  How much money?  Let me get back to you on that one, I told him.

I contacted the other neighbor, and asked if she’d be interested in doing some kind of easement…it turned out, she had lived in her property for 50 years, and had no interest whatsoever in seeing the adjacent parcel, the one I wanted to buy, split up.  She was pretty adamant about it, and I completely understood where she was coming from.

So what did that leave?  It left the possibility of doing just a two-way split:  split off the back portion of the property, but do it in such a way as to facilitate a further split some years down the line, were something to change with the neighbors.  Enter the land use planner.

A land use planner is a professional consultant who helps people plan the development of property.  If you want to build a house on a piece of land, you need to present a plan to the county.  A fairly extensive plan:  where the house will go, what the house will look like, the driveway, where the well will be in relation to the septic system if needed, etc.  This is no small piece of work, and it’s a good idea to hire a professional to help you come up with a plan that will meet all the county’s requirements.

Similarly, if you are interested in doing a lot split, a land use planner can help you with that, too.  I met out at the property with a land use planner, and spent over an hour with him talking over the options.  In his opinion, it was very probable that the county would grant a two-way split, but…it was going to take a while!  And cost a pretty penny.  Here is what I was looking at:

Fire Hydrant: $7-10k
Soil Reports: $5-7k
Engineering: $15-20k (improvement plan, includes survey)
Utilities (water, sewer, power): $10,000
Paving $8/sf – 5,000 square feet:  $40,000 (includes “hammerhead” for fire truck turn-around)
Permit cost: $13-15k
Water main tie-in:  $5K
Land use planner’s fees: $12,000

Total estimate:  $114,000

The land use planner estimated that the whole process would take approximately 24 months to complete.  The holding costs (interest on the loan, taxes, insurance, etc.) for the property would be around $96,000 for two years, assuming the existing house could be rented, that entire time, for $2,000 a month.

The total came to around $220,000, barring any unforeseen expenses.  The split-off lot could probably be sold for around $300-$350K.  However, the remaining part of the lot which the house sits on would have been devalued somewhat, probably by $150K or so.  So where did that leave me?

It left me with, probably, $0 profit after two years of work and a lot of risk.  The deal only penciled out if the property could be split 3 or 4 ways.  It is obvious that, some day, probably in the next five years or so, this parcel will be split and more houses built on the back portion – the same would likely happen to the neighboring parcels that were not inclined to cooperate vis a vis the easements.

Unfortunately, I was not prepared to hang on to the property until that day arrived.  There are other opportunities out there that offer better return on investment, faster, and with less risk.  So, with a heavy heart, I withdrew from the transaction in the 14 day inspection period that the contract gave me.

But I’ll keep looking…and I’ll tell you what happens the next time around!

Posted by Administrator at 11:26pm
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I saw a fixer I liked…

February 22, 2006

For those of you who haven’t yet heard, I have a Santa Cruz Fixer-Upper e-mail list.  People who are looking for fixer-upper properties here in Santa Cruz County can subscribe to this list, and every week or so they’ll receive a group of listings via e-mail that look to me like they have good upside potential – that is, the buyer can quickly add value to the property by making repairs and other improvements.  All kinds of properties go out on this list – condos, multi-residential properties, single-family residences…anything except for raw land.  I have a separate list – Hot Land Deals in Santa Cruz – for that.

A couple of weeks ago, I put out a property on the fixer upper list that seemed like an incredible deal (aren’t they all? 🙂 ).  I was working some floor shifts after I sent the listing out, and I was getting a lot of calls on this property.  Again, I was struck by what an awesome value proposition the property had.

The property in question was a 3 bedroom, 3 bathroom house on a 34,000 square foot lot.  The exciting part is that the area is zoned for 6,000 square foot parcels.  In theory, this one property could be split into 4 separate properties.  If a build-able lot in that part of Santa Cruz county is worth somewhere between $300K and $350K…that’s $1 million or so for the three other lots, plus you can sell off the original house for pretty close to what you would pay for it.

And of course, once the lots were split, there were more possibilities:  build houses on them, then sell the houses?  Or, build houses with “granny units” on them, and sell them for much more?  Add on a granny unit to the original house?  This parcel presented tremendous opportunity for some lucky buyer!

A few days after I put notice about this property out on the fixer-upper list, I couldn’t stand it anymore – this one was just too good to let is pass by.  I put in an offer on this property with a business partner, and it was accepted!  That was a couple of weeks ago.  Interested to hear what happened?  Stay tuned to the blog…I’ll tell you more about it in the next posting!

Posted by Administrator at 1:59pm
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Featured Listings RSS!

February 17, 2006

Well you know it’s 2006 when even here in quaint, out-of-the-way Santa Cruz County there’s a Realtor whose web site has an RSS Feed of property listings! As I mentioned in an earlier entry, I have added a Featured Santa Cruz Real Estate Listings section to the site. Yesterday, I sent out an e-mail to my clients telling them about this kewl blog and how reading it’ll change their lives in limitless unforseen ways…and I also mentioned that getting an RSS News Reader is a great way to read a blog or other RSS/Atom feeds…and then I remembered hearing about how some Realtors (none of them, apparently, in Santa Cruz!) have begun marketing properties via RSS Feeds on their web sites…

And, you know, it ocurred to me: hey, I can do that – I’m an e-PRO for heaven’s sake! Oh, sure – your average e-PRO probably has no clue what an RSS News Feed is – it’s not something they covered in class! But I’m the e-PRO’s e-PRO, so I got to tinkering around this morning, and…! Voila! RSS = “Really Simple Syndication” and it turns out that it is, in fact, really simple! Now I have my listings showing up in my RSS News Reader and I couldn’t be happier!

OK so it’s not the world’s most complete set of listings. It pales in comparison to the MLS, so why bother? Because these listings, my friends…these listings are featured listings. Why wade through the hundreds – maybe thousands – of MLS listings to find the gems? That’s what I’m here for! I’ll find some great listings to feature…those listings where, when I see them, I draw my breath and say, “Wow check THIS place out!”

Of course, there’s no accounting for taste! You may look at one of these listings and wonder, “What’s so darn special about this??”. If that ever happens (and I’m sure it will!) I invite you to contact me and ask what makes the property a winner! You might be glad you did!

Posted by Administrator at 9:38pm
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Foreclosure Auction Movie!

February 15, 2006

I get a lot of questions about buying foreclosure properties – it seems everyone is looking to get a big discount on Santa Cruz Real Estate!  So yesterday I went down to the Santa Cruz County courthouse to watch a real live auction!  The property auctioned off was a little house in Boulder Creek…nobody ended up bidding on it, except for Countrywide Home Loans who was the holder on the second deed of trust.  The opening bid started at $254,000 or so (the amount owed on the property) and Countrywide ended up buying it for $1 more than that.

I was there with my Olympus digital camera, which also has the ability to take video!  So I took a little video of the auction, and a little Q&A (Question and Answer) session with the auctioneer.  I have put this up on my web site, you can view it by clicking on the link below.  It is 98 megabytes in size so you’ll want a fast connection to view it…you will also need QuickTime to see it…it starts out a little slow, action-wise, but I think it is worth the time to see the whole video, it gets pretty amusing towards the end!

The link to the video is:

http://santacruzhomebroker.com/foreclosures/foreclosure_auction_movie.html

Posted by Administrator at 5:09pm
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Santa Cruz Real Estate Listings

February 10, 2006

I have finally gotten around to doing something I should have done a long time ago – this web site now sports a Featured Santa Cruz Real Estate Listings section!  In this section you will find listings that I find to be of particular interest for one reason or another.  I encourage you to check out the featured listings and let me know if you have any questions about any of them…

At this point, I am particularly curious if you have any comments about the Featured Listing pages – what information would you like to see that is missing, etc.  Any and all input is welcome!

Posted by Administrator at 6:21pm
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