It’s a “fixer” without garage. But according to the listing, the sale of 4120 22nd Street includes “approved plans and all [permits] required to reconfigure the existing structure into a 2-level single family home with a legal 1BR/1BA in-law unit and 1-car garage.”
Keep in mind that the clock is ticking (i.e., permits have been issued). And sorry, no word on what happens to the tree.
∙ Listing: 4120 22nd Street (Potential 4/3) – $1,185,000 [MLS] [MapJack]
Has anyone been inside? Is it livable “as is”?
NVJ — if it is, probably would be long gone…
Unless there’s something crazy wrong with this place (not sure what horrors the word “fixer” can include), it’s a fantastic opportunity to someone who knows what they are doing…
Seems a tad overpriced, but this should sell fast. And we’ll see it here in 19 months.
[Editor’s Note: We’ll give eddy the benefit of the doubt and assume it’s just the heat that’s making him cranky this morning. That being said, feel free to plug in this afternoon for yet another roundup of featured property sales (including an apple or two).]
[Editor’s Note (Redux): And now the heat is getting to us. Make that Monday for the roundup.]
My initial reaction was the same: overpriced. But upon further inspection of the listing, it may not be too ambitious. I have seen three (probable tear-down) SFRs in this same vicinity on the market over the last 12 months. All were tiny 2/1 properties with major issues.
Two of them priced in the ~800-900K range and were snapped up very quickly. The third is on Sanchez, priced initially at $1.1m and sat for four months. Still on the market but priced has dropped significantly. That place also comes with plans.
Note that Socketsite says above that this is a “potential 4/3” but that seems to be incorrect, according to the listing. It is currently a 4/3 but has approved plans to be a 4/3 plus garage, plus 1/1 in-law unit…
If it’s a total teardown, $1m or slightly less seems to be the going rate. If it requires mostly cosmetic changes, $1.2m is very possible. The plans seem to leave the facade intact, so I’m guessing that it’s not a teardown.
[Editor’s Note: It’s not currently configured as a 4/3 but rather two 2/1’s.]
There are mitigating factors on this block. There is a school directly across the street. It’s a very good Spanish immersion elementary school, the Alvarado school. But it does have buses twice a day and parents parking in driveways too. (That said, on weekends the block is quiet as kept and if you have friends over at night they will always be able to park directly across the street.)
It also doesn’t really have views. Just maybe a peek a boo at Twin Peaks and then south at some hills. The person who knows what he/she is doing should be able to turn this one around for $2M and not a whole lot more for the reasons I mention. At $1.185M it offers a chance at a very good equity spike for an end user. At this pricepoint it works for developers too. But if it gets bid up at all I doubt most developers would touch it. The margins are a bit thin even though it is ready to go.
Dave,
The Sanchez property may have plans, but plans alone aren’t worth much. This one has permitted plans. Plus Sanchez is an 80 foot lot and the facade is atrocious. It isn’t really the same thing. Sanchez works at 750K or something. This makes fiscal sense for over a million.
Somebody needs to step up and try to lowball 1409 Sanchez. It’s a pretty good deal for about 100K less than they currently are priced at. I wonder if it’s possible. They owe 694K on the first. The second is gonna be pissed, but hey.
The tree is truly awful and because it is a street tree (as opposed to being in the yard) it can’t just be removed and replaced without a lot of hassle. However, an aggressive arborist could probably whip it into shape over a couple of years.
I really like street trees but if they are not maintained they become hazardous eyesores.
“The Sanchez property may have plans, but plans alone aren’t worth much. This one has permitted plans.”
I agree but would go one step further and say permitted plans aren’t worth much either. How about “permitted plans with accurate cost estimates and a total anticipated improved value that is supported by comps.” I’m sure there are many good reasons the seller is leaving an unfinished project but ya gotta say hmmmmm. Why isn’t he/she going ahead with the plans? Moving, ran out of money, growing family…..etc or the numbers just don’t work. Or maybe they just invested $10K with an architect to come up with the plans as a marketing tool.
Maybe the seller is an architect. Who knows? Without plans this isn’t worth 1.185M. It doesn’t have a garage.
I did a project on that block in the recent past. ~850 a foot on the back end is bankable. There are minimal holding costs here. This is pretty good at what they’re listing it for or a little less. If it gets bid up the smart buyer will pass.
the mapjack link takes me to pattya, thailand.
buy @ 1.2, put in 500k in renovations. out at 1.7. end result: a decent sfh in noe worth probably 1.8 to 1.9 max, and a little inlaw, worth 400k? (no pkg.) holding costs and sales commissions are probably ~ 250k. i dunno, i’m not excited about it…
i looked up tax records. it’s been owned since ’89, so not a recent purchase/entitle it/flip it kinda deal.
personally, unless someone finds a hell of an ‘entitlement’ deal, i don’t see how you can buy a POS, get it entitled and make much more than $150-250k profit (unless you find something unusual, with entitlements most people don’t think of, i.e. lot splits, etc.) anyone has comments on this?
“holding costs and sales commissions are probably ~ 250k. i dunno, i’m not excited about it…”
Why 250K?
sales price (both units 2.2-2.3 x 6% (5% for RE agent, 1% transfer tax) = 135k. hold the thing for 10-14 months 1.2 mil purchase price and your 500k construction loan, about 120k is reasonable.
sales price (both units 2.2-2.3 x 6% (5% for RE agent, 1% transfer tax) = 135k. hold the thing for 10-14 months 1.2 mil purchase price and your 500k construction loan, about 120k is reasonable
Exactly. You got it 250K on the hold? The Hold will not be that long. That’s the whole thing with this one. Don’t get me wrong, it ain’t great. But like 40% return in a year or so … somebody’s gonna touch it.
so how fast do you think those irish guys can build this major remodel? 6 mo’s best case? and add2 mo’s to advertise/sell it (again, best case) and you’re still looking at 8 mo’s MINIMUM, IMO.
that’s still ~ 80k holding, with 140k sales cost and it’s sill 220k.
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do you think there is much more than 100k profit on this deal?
what returns do you think builders typically look for on fully entitled deals like this?
also, when calculating returns, ru just looking at the down payment (30% down normally for non owner and/or unihabitable places)? if so, say one puts 350k down for this, and makes 87.5k profit in 1 year; that’s 25% ROI. not bad, i guess, but i still think there is alot of risk for that return.
what return range do you think typical SF builders will go for? is 25% enough? (maybe for the serial buy/build/sell/1031ex club?)
(good discussion, btw)- cheers!
Rule of thumb: Project 100% return or walk away.
Does anyone have data on annual home price appreciation over the last 30 years in SF? How about in District 5g (Corona Heights)?
Doing the rent/buy calculation. Thanks in advance.
the rent/buy decision has nothing to do with the last 30 years. it’s the next 30 years.
Thanks, resp. If you have predictions for the next 30 years, I’ll factor those in. In the meantime, how about the last 30 years?? How about 5g?
[Editor’s Note: CNNMoney calculates the 55 year San Francisco average at 4.2% annually (see: Expectation Setting: San Francisco Appreciation) while Case-Shiller would suggest average annual appreciation of 6.5% over the past twenty years for the larger MSA.]
Is that pre or post inflation?
are you really making the decision for the next 30 years? i might be more inclined to think about what ecnonomic factors are going to dominate the real time frame your’re thinking about. you can always change your mind.
it feels like most people are doing the opposite and extrapolating on the near-term historical numbers and therefore being too bullish. cap rates in SF are much lower and GRM’s are much higher on investment property than they are in most other areas of the country. Buyers of rental buildings have been conditioned to accept these valuations because apprecation has made up for them. Maybe not true going forward in the near-term.
just my 2 cents but I’d guess that renting is better short-term and owning is better if you really have a 30 year time horizon – leverage will get you a much higher rate of return over the long-term by owning.
“Rule of thumb: Project 100% return or walk away.”
100% based on what? only the down payment, or construction cost too? (i.e. sometimes you can’t get reasonable const loan, and need to use equity from other property, etc. to fund constr.)
best case for the noe project, you need to make $350k- and i don’t see it there.
As I said, I doubt this one projects that sort of return on down + holding costs + exit costs.