Cash Flow Machine – 3 New Properties

Cash Flow Machine

I have three new Cash Flow Machine properties this week for investors with a range of investment size from $65k to $210k.    I also have one in North County that doesn’t meet the 10% cash-on-cash requirement but does hit 8%, which is good for North County.

North Park (sort of) – This property is just north of El Cajon Blvd, so it doesn’t truly qualify as North Park, but it’s close.  A 4-plex with 3 long term tenants and the owner.  This is a short sale and we estimate it could be purchased for $425k with another $20k for repairs.  Rents should exceed $4,500/mo (owner pays water) providing a Cash-on-Cash return of 13%.

Spring Valley – This is another excellent opportunity but requires a larger investment. 8 units that are fully rented.  Cost will be in the $700k range and you will need about $30k for repairs/reserves.  Rent comes in at just under $8k a month providing almost $30k of annual cash flow and a Cash-on-Cash return of 14%.

Lemon Grove – This duplex is a great opportunity for an investor with a little less cash.  At just over $210k, this will require about $65k to get into and allocate repairs/reserves.  Rents from 2 long term tenants run $2,200 a month giving this property a 11.8% Cash-on-Cash return.

Our registered investors will be getting specifics on these properties by close of business today.

Cash Flow Machine – 2 More Properties

2 San Diego Properties with 10% Cash-on-Cash Returns

I have 2 more properties showing in excess of 10% Cash-on-Cash returns. 

The first is in Logan Heights and is being offered at just under $350k.  It has 3 units and all have been upgraded recently so the cash outflow is low after closing.  This will take about $90k to close (25% down) and yield 10.6% cash-on-cash.  Cap rate if you manage it yourself is 7.5%.

If you would like to subscribe to our Cash Flow Machine mailing list to receive these notifications in your inbox.  Register HERE.

The second is in El Cajon and is a four-plex that needs a little work.  The investment is larger at about $145k and the cash-on-cash return is between 9.5 and 10.5%.  Cap Rate is 7.45%.

Cash Flow Machine – Imperial Beach

Imperial Beach 4-Plex

12.7% Cash-on-Cash

This is one of the better ones I have seen in awhile.  It’s a 4 plex with 3 units currently rented.  Rents are $1,150 on each of the 4 2-bedroom units.   I am allowing $25k for rehab, although that will be spread out over time (increasing the return) as three units are rented and likely do not need much.   Owner pays water, and we have allocated $230 a month for that.  Total deductions for vacancies and expenses are pegged at 33%.

Shoot me an email for the financial sheet and listing so you can do a drive-by.  

If you are not on the email distribution to receive these updates daily, let me know and I would be happy to add you.

Monday Morning Coffee – More Investment Opportunities

Monday Morning Coffee

Cash Flow Investments

Monday Morning Coffee – Dec. 19th

Monday Morning Coffee

Christmas Shopping isn’t Done Yet

Good morning,

I hope your shopping is finished (or at least more finished than mine is!)  I guess we can’t complain too much about one week a year of bad weather, but wouldn’t you know it would be the week we all are running in and out of malls – take your vitamin C and Chicken Soup.

We are continuing to make changes to our systems at year end to provide better service next year.  Of course, we wanted to be done December 1, but are now hoping to beat January 1.  One of the biggest changes is in staffing.  My assistant, Tanya, has left to take a job with the Department of the Navy.  It is a great job and they are paying for her to get an MBA – I wish her the best of luck, she was a great asset and this new position offers her great opportunities.  We are very fortunate to have found a replacement for her quickly.  Elidie joined our team on Wednesday and is quickly getting up to speed.  She comes from a strong real estate background and has been an office manager (those of you who know me know that I need someone to manage me).  I am looking forward to continuing our growth path with Elidie on the team. (more…)

San Diego Real Estate Cash Flow Opportunities – Dec 15

Four Properties Qualify as Cash Flow Machines

We have currently identified four properties that meet our criteria as Cash Flow Machines for small investors ($100k).  These are not our listings, but rather opportunities for our investors to profit long term.  Since they are not our listings, we cannot publish their addresses.  We do have a client only site that we can provide access to for clients (must have a buyer-broker agreement) that has photos as well as our write up and financial analysis of each property.  Here is the basic information on each property:

(more…)

Monday Morning Coffee

Monday Morning Coffee

Stupid Peppers!

Good morning,
I hope you had a great weekend. I had another interesting (and humorous for you) event in the garden. Cori and I were cleaning up some tomato plants that were way past their prime and decided to sample a lone bell pepper from a sickly looking plant. It was ok, so we decided to try a sample of the smaller sweet peppers we are growing. The timing went something like:

• Scott takes a small bite and the taste is neutral.
• Scott pops the small pepper into his mouth, chews 3 times and swallows.
• Cori says, “Hey, didn’t you plant some habaneros back here”
• OMG!!!!
That was painful.

Real estate was not quite as bad, but it is definitely slow. It is too early to look at the October numbers, but I will have them here next week and on the radio show Wednesday (AM 1000 at 7:30am). I expect sales numbers to be down more than 20% from last year. (more…)

Inflation, Deflation, and Investing in Real Estate

Real Estate for Cash Flow Rather than Appreciation

It seems like the experts can’t decide if we are going to have inflation or deflation.  If you’re a real estate investor, you need to figure which is more likely, and then decide what it means for your investment goals.   My belief is that the answer is fairly complicated and that many people need to look at real estate as a good investment, but for a different reason and with different goals than in the immediate past.

It is my opinion that we have been and currently are in a deflationary period.  Home prices are down, rents are down, milk and eggs are cheaper.  Even if an item itself has not gone down in price, the consumer has shifted to less expensive alternatives (when was the last time you saw a new Hummer on the road?)  We are in an unusual period where consumers are deleveraging.  Most people I talk to say if you gave them an extra $10k, they would use it to pay off a credit card, not buy more “stuff”.   We are all busy paying for the fun toys we bought and trips we took several years ago.  At least the fortunate are, there are close to 20% of us that are unemployed or underemployed.  So, I think that right now, we are in a deflationary period, but what happens next?

I believe that the current period of deflationary prices and low interest rates will be replaced in several years by higher inflation and higher interest rates.  If you agree, you can skip to the end of this post to the real estate analysis, if you are not sure, you can read the next couple sections to see if it makes sense. (more…)

Monday Morning Coffee

Monday Morning Coffee

Importance of Title Insurance

Good morning,

I hope you had a great weekend.  Zach and I took our stab at clothes shopping.  Bought him some size 4 pants that looked a “little” large.  Once we got them home, I was informed that the correct size was “4T”.  Ah well, back to Target. 

Things are getting interesting with foreclosures as the number of banks with “issues” with their foreclosure process is growing.  In several states the Attorney General is stepping in and of course, politicians all over are jumping on the issue.  The timing of this is fortuitous if your goal is higher home prices because although demand has slumped after the tax credit,  if the banks have to delay foreclosures again for a couple of months to sort his out, it will keep inventory from growing too quickly and help prop up prices.  However, it does point out a very large concern all buyers should have, and that is Title Insurance. 

Typically, the seller’s agent picks a title company and it just happens that they have a friend selling the policy.  As a buyer, you need to make sure your agent is making sure you have a title policy from a company that is financially able to withstand the potential issues.  Espcially if you are purchasing a home that has recently been foreclosed on.  You do not want to have your ownership challenged only to find that the company insuring your purchase has gone out of business.  A few companies that are likely to survive any crisis would be Chicago Title, Fidelity Title and First American Title.   As a bare minimum, make sure they are publicly traded so you can look at their financial strength. (more…)

Inside the Numbers

New Home Sales and Case-Shiller Numbers Easily Misunderstood

This week, two important real estate numbers were reported that had a positive spin put on them that wasn’t really warranted. 

First, New Home Sales were announced for the Month of June by the Census Bureau.  Last month, the May number was reported at 300,000 homes (on an annualized basis) and the forecast was for the sales rate to be at 310,000 homes (annualized) in June, providing an average for the two months of a 305,000 sales rate.  The June number surprised to the high side, coming in at 330,000 which helped spark the market on Monday.  The problem?  The May number was revised downward to 267,000 to provide an average for the two months of 298,000 homes, LOWER than the forecast.  I don’t know why the initial forecast was off by 11% for May.  It could be that since new home sales are calculated when the contract is signed and not when the sale closes, many of the sales cancelled.  If that’s the case,  I would think that the Census Bureau would have allowed for that.  It’s a pretty big mistake, and hopefully we don’t see it again next month.  I like the fact that the government was able to put a positive spin on a negative number, but surprised that the press didn’t question it at all.

The second number was the Case-Shiller Home Prices Index that was released on Wednesday.  The 10 city composite was up 5.4% and the 20 city composite was up 4.6% compared to a year ago.  Case-Shiller is a great index and tool for tracking the real estate market and I know a lot of large banks and investors rely on it because it actually looks at sales of the same home over different periods rather than a median which changes as the size and type of home change.  This makes it a very reliable number.  The weakness is that it is not able to track recent trends.  The reason is that it is a 3 month moving average with a 2 month lag.  In other words, the numbers that were reported up on July 27th were the months of March, April and May – the end of the tax credit when people were paying more than homes were worth to capture the tax credit.  We won’t see the result of the end of the tax credit until the July, August, and September numbers come out in late November. 

So, while I welcome the good press for the real estate market, tread carefully; there was more to the story.