December 6, 2010

Black Friday Sale: Cheapest House in Gilroy!

DEALS DEALS DEALS!  How would you like to buy an actual house – NOT A CONDO, NOT A TOWNHOUSE, NOT A HALF-SIZED LOT – for less than a hundred grand?  Not convinced?  What if this house was worth almost half a million dollars?

7001 Rosanna Street, Gilroy, CA 95020
$98,000

image

Beds: 3
Baths: 1
Sq. Ft.: 1,205
$/Sq. Ft.: $81
Lot Size: 7,000 Sq. Ft.
Property Type: Detached Single Family
Stories: 1
Year Built: 1954
Community: Morgan Hill/Gilroy/San Martin
County: Santa Clara
MLS#: 81029638
Source: MLSListings
Status: Active
On Redfin: 172 days

Lowest 3 bedroom on market. Open House Saturday 12/04/10 2:00-4:00PM and Sunday 12/05/10 2:00-4:00PM. Must sell 12/05/10.

Whoops, looks like you’re a day too late!  Well, that’s a Black Friday sale for you, quantities are limited to stock on hand!  Then again, this $81 a square foot beauty has been on the market for almost half a year.  Let’s see if it’s really going to be selling shortly.

image

Yes indeed, this house not only went for $490K in the glory days of 2005, it went for twice the current asking price twelve years ago!  You know that rule about property doubling every ten years?  That third bedroom must have a flux capacitor, because time is obviously running backwards at this address! 

So sell some Apple stock, buy some Netscape and Sun, and move into this house, You’ll be looking younger, fitter and richer before you know it!

Comments (38) -- Posted by: madhaus @ 5:06 am

38 Responses to “Black Friday Sale: Cheapest House in Gilroy!”

  1. waiting_for_the_fall Says:

    It was pending twice something really bad must have happened in this place.
    Meth house? Black mold? Did someone die there?
    Always have a home inspected, no matter how low the price.

  2. SEA Says:

    Let’s review:

    Probably “the rock bottom price for the location.”

    After translation: “When you try and sell a property, there are bills even if you don’t sell it.” In this case the ‘owner’ is probably paying interest on a $450k loan, but interest rates are low, low, low! Oh, and by ‘paying’ I really mean has a loan. The ‘owner’ probably isn’t paying anything.

    Maybe the ‘over-bidding will bring the price right up to where it needs to be?’

    “nice to know that prices are holding up somewhere! that house may be cheap, but pretty small and not especially attractive. the land is probably worth quite a bit though.”

    Of course the value is in the land! As madhaus points out, “If the value is in the land, then the land in this part of San Jose is worth 2.7 million an acre! Seriously?”

    It was almost like GilroyAlex predicted yesterday $10M loss:

    “Take your 11% depreciation for a few years then get foreclosed, have a story to tell in the soup line about losing your lovely pastel-colored house in San Jose (and your cool little black car).”

    And when today’s featured place eventually sells, at some so-called ‘low’ price, clearly the next lowest-priced place is priced higher, but for how long?

    And when I read waiting_for_the_fall (#1), all I can wonder is whether the place needs light bulbs or Drano, or possibly both in this case. I know there’s a light bulb joke, or two, in here somewhere… How many light bulbs can you buy for $400k?

    Maybe, just maybe, this requires some sort of linear algebra that’s too difficult for the prospects to compute… We need to assume that the cost of light bulbs (L) and Drano (D) is the same per unit no matter how many units are purchased. Assuming this place is not the RBA, now it’s pretty clear as to what’s going on:

    Lx + Dy = $400,000(1.072)^5

    All we need is the ‘correct’ balance of x and y for this particular place. That’s probably the mystery.

    The 1.072^5 is for the standard RBA housing price appreciation, as I pretty sure some professionals sought to live there. Although I mentioned that the $400k should be increased by 7.2% per year, I’d also like to remind you that the RBA “does not change based on market conditions at all.”

    In the end, it is possible that the ‘lowest priced house’ can be overpriced, even if the ‘value is in the land.’ But in this case, instead of losing millions, the losses are likely to be less, unless, of course, the next ‘owner’ dumps Dumpsters full of cash trying to increase the value of the land…

    Maybe Monty Python can help: “Every RBA house is special; every RBA house is great. If an RBA house gets wasted, God gets quite irate.”

  3. Pralay Says:

    Wow! Even in my idlest day or most boring day I couldn’t provided so many links in a post!

  4. Mh for Movoto Says:

    okay, that’s a smoking deal, but come on, something’s got to be wrong with the place. right?

  5. Tuno Says:

    what a crappy photo. The house is on Rosanna Street, which is a residential street, and they *show* Rosanna Street, but they manage to make it look like a major road.

    the house actually *is* (on its other side) on a busy street.

    one of the other listing sites said that there are three houses on Rosanna for sale. since this house is at the busy intersection, people who want to buy on that street (hmmm….) would no doubt go for the other options. of which there are plenty, and there will be more.

    so, maybe it wasn’t a meth house. maybe it’s just the least desirable house in the neighborhood.

  6. Real Estater Says:

    I’ll just say this: Any property that is cash flow positive is a good property.

  7. Real Estater Says:

    This is the ultimate property:

    http://www.movoto.com/real-estate/homes-for-sale/CA/Modesto/3025-Coffee-Rd-102_10092251.htm

  8. Real Estater Says:

    Wow, central valley is real estate heaven. I wonder if they take trade-ins on a car?

    http://www.movoto.com/real-estate/homes-for-sale/CA/Modesto/1217-Pelton-Ave-102_10002946.htm

  9. Real Estater Says:

    It seems that the perfect job for house wives (especially those who follow real estate) is to buy up some of these cheap, cash flow positive properties to manage. There is little risk other than some time that need to spent on repair trips. Again, that’s why this is perfect for house wives, who got nothing but time. If you live in the Bay Area, it’s not really practical to buy out of state…but, Central Valley seems ripe for colonization. Any place that can be reached in a day trip is really not that far.

  10. SEA Says:

    Real Estater- “I’ll just say this: Any property that is cash flow positive is a good property.”

    With so many so-called short sales, will there be any good properties left? That “ultimate property” is a short sale too.

    It’s really tough to be cash flow positive when you owe more than the place is worth…

  11. SEA Says:

    And for anyone who’s actually fooled by Real Estater, please take a look at the $400k loss on today’s featured property.

    Rather than overstate the loss per year, I’ll just round up to six years. $400k/6 years = $67k per year, or $5,500 per month. Yes, that’s right, if this place was about $5,500 “cash flow positive” every month for the last ~72 months, then it’d be a break-even deal for the landlord (undiscounted).

    What do you think this fine place commanded in rent over the last 6 years?

  12. Real Estater Says:

    SEA,

    The loss has already been taken, either by the previous owner or the bank. One party’s loss is another person’s gain. You are buying these properties at a discount, and setting yourself up for positively cash flow as well as future appreciation. Why are you dwelling on the bank’s loss? That’s none of your business. Your business is how to profit from these low prices.

  13. SEA Says:

    You remind me of the teenager who just delivered my pizza. I saw a brand new vehicle, and asked him about it. He suggested he was “cash flow positive.”

    Beyond that, in the RBA prices only go up, up, up. So if you want guaranteed returns, you buy in the RBA, not in areas where prices go down. I’ve already asked the question as to whether or not it is a good idea to buy low and sell high, and that simply is not the RBA way, where you always buy high and sell higher.

    It seems there is some shift in your thinking. Now you seem to be suggest to pay as little as possible.

    As far as that whole, “That’s none of your business.” As long as prices only go up after I buy, you’re right, that past loss would not be part of my business, but if prices continue to go down, then losses quickly become part of my business, and that’s something I seek to avoid.

    Can you please remind me when it’s a bad time to buy?

  14. Real Estater Says:

    SEA,

    How much do you think a sub-$100K property will go down? This is not a trick question. Besides, this is not like a stock where value can go down to zero. At a very minimum, you have a house that can be lived in and land to stand on.

  15. Real Estater Says:

    >>It seems there is some shift in your thinking. Now you seem to be suggest to pay as little as possible.

    There are many ways to skin a cat. You always think in terms of why you cannot do something, rather than how to make money.

  16. Real Estater Says:

    Another way to say it: As long as you can make money, it doesn’t matter how you do it. In some cases you buy low sell high; in other cases you buy high sell higher. Business is an art. If there’s one way to do something, then everyone will do it; the opportunity will be gone at that moment.

  17. waiting_for_the_fall Says:

    In other words: it’s always a good time to buy, even at the top of the bubble. It’s good for the realtor that gets the commission.
    Who cares if you end up defaulting, as long as that commission check gets cashed.

  18. anon Says:

    “How much do you think a sub-$100K property will go down? This is not a trick question. Besides, this is not like a stock where value can go down to zero. At a very minimum, you have a house that can be lived in and land to stand on.”

    Wrong. The reason such houses are so cheap is because it costs so much to fix up a property.

    Stocks are better investments than homes because their value doesn’t go negative. Real Estate, on the other hand, can.

  19. nomadic Says:

    Stocks are better investments than homes because their value doesn’t go negative. Real Estate, on the other hand, can.

    How’s that? Buy a stock on margin and you can go negative. Just ask Mr. Martin from last weekend’s article.

    Heh, exercise and hold options on the “wrong” stock whose value plummets. You’re negative after taxes then too.

  20. Real Estater Says:

    Stock investment has its place, but real estate is the destination investment. Whether you’ve made money from stocks, bonds, or gold, the job is not finished until you’ve converted the funds into real estate.

  21. Pralay Says:

    Whether you’ve made money from stocks, bonds, or gold, the job is not finished until you’ve converted the funds into real estate.

    What a dumb Warren Buffett is!

  22. Pralay Says:

    Stock investment has its place, but real estate is the destination investment.
    —-

    Using our real estate expert’s logic, boat, single engine aircraft, diamond, fine paintings, or even charity – all are destination investments.

  23. SEA Says:

    Real Estater- Regarding the maximum loss, did you read my message above? “But in this case, instead of losing millions, the losses are likely to be less, unless, of course, the next ‘owner’ dumps Dumpsters full of cash trying to increase the value of the land…”

  24. Tuno Says:

    “The reason such houses are so cheap is because it costs so much to fix up a property.”

    no, that’s not the problem. the reason these houses are cheap is that this is a POVERTY STRICKEN AREA with a VERY HIGH CRIME RATE.

    it wouldn’t cost much to fix these places up – I’d imagine labor in Modesto is extremely cheap, and there would be loads of folks happy to sell you inexpensive materials (which were stolen from some other house).

    Any PA housewife would drive up to the edge of a neighborhood like this, gulp in terror, and make an emergency U-turn in her monster SUV to escape.

    I am very confident that there are many, many fine people who live in these neighborhoods, who do not commit crimes. However the crime rate for Modesto is really high, so there must be a fair number who do, and who prey on those nice people.

  25. Tuno Says:

    per Sperling’s “Best Places,” Modesto has a higher crime rate than EPA

  26. Real Estater Says:

    Tuno,

    Where do you get that data? Even if that were true, you can always hire a company to manage it for you. The few times that you have to go out there, I don’t think you’ll get shot.

  27. Real Estater Says:

    SEA says,
    >>Real Estater- Regarding the maximum loss, did you read my message above?

    Yes, another excuse not to take action. There are all kinds of properties out there. All of them can be inspected. You can do a lot to verify the condition of the property so that you don’t get into the maximum loss situation.

  28. Real Estater Says:

    Tuno,

    Please show us the link to the crime data.

  29. Pralay Says:

    Please show us the link to the crime data.
    —-

    Poor “average tech guy”. Can’t even google Sperling’s Best Places.

  30. Real Estater Says:

    Stupid Pralay. Why bother to write up a line of crap instead of simply showing us the link?

  31. madhaus Says:

    Gosh, nobody gives #28 any links. I can’t imagine why there isn’t anyone who is “here to help” #28. With the Bay Area Spirit shown in #30, I would think people would be crawling out of the ductwork in their eagerness to tell #28 exactly where he can go.

  32. Pralay Says:

    Gosh, nobody gives #28 any links. I can’t imagine why there isn’t anyone who is “here to help” #28.
    —–

    “Average tech guy” needs “most help”. Real Estater, meet “average tech guy”. Please help him to google three words.

  33. Tuno Says:

    I have no idea how to post links; sometimes I manage to, usually not. Just google “Sperling’s Best Places.” they have a “compare” feature; you can compare two cities on a variety of statistical measures. I did a “compare” of Modesto and EPA crime rates (not “West Modesto”, which seems to be fancier).

    per Sperling, property crime is worse in Modesto than in EPA. Violent crime rates are the same.

    if you are keen on real estate, you really ought to know about the Sperling site.

    It’s also kind of strange to ask “where did you get that data,” when I had just *said* where the data was from.

  34. DreamT Says:

    Tuno – there is a breed of people who will only make an effort if they get paid for it. Yes, even a comprehension effort.

  35. Tuno Says:

    DreamT – wow. hard to picture. most people I know put huge amounts of effort into things they don’t get paid for – and have a lot of fun thereby. But I’m sure you’re right. I just hope I don’t run into the sort of people you’re describing.

  36. nomadic Says:

    hehe, Tuno – you just “met” your first one in post #28. I’d describe him as willfully ignorant.

  37. DreamT Says:

    Tuno – not hard to picture, as long as the financial incentives are structured accordingly. As in, if you paid me more, I would perform less sloppily. You’re lucky to have avoided that type so far, their mentality can be corrosive so they’re best kept at arms length.

  38. madhaus Says:

    Dead woods are everywhere.


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