November 29, 2011

“SELLER MOTIVATED” in San Jose

Today’s house is a Guest Post by Burbed Reader AstroWallaby!  You know how good things come in small packages?  Well today’s featured listing is only 714 square feet, so it has to be fan-fracking-tastic!  Plus a location, location, location to love, love, love!

Please give AstroWallaby a big, warm, sunny, Real Bay Area welcome as today’s Guest Blogger!


537 JACKSON St, San Jose, CA 95112
$518,000

image

BEDS: 2
BATHS: 1
SQ. FT.: 725
$/SQ. FT.: $714
LOT SIZE: 5,617 Sq. Ft.
PROPERTY TYPE: Detached Single Family
STORIES: 1
VIEW: Neighborhood
YEAR BUILT: 1955
COMMUNITY: Central San Jose
COUNTY: Santa Clara
MLS#: 81129934
SOURCE: MLSListings
STATUS: Active
ON REDFIN: 144 days

R2 Zone. Main house with private 1500sqft warehouse/workshop. Warehouse/workshop built without permit. Tenant occupied. BIG REDUCTION. SELLER MOTIVATED

imageTipping the scales at $714 per (permitted) foot this 725 square bantamweight contender for your investment dollar punches way above its weight class, as it includes a non-permitted twice-the-size-of-the-house attached warehouse!

And you’ll need it, if for no other reason than to store the grossly distended pride of ownership that comes along with buying what has to be the *shortest* house of in the neighborhood.

Short_house

imageAnd with that R2 zoning you’ll be able to share that pride with the tenant that conveniently comes with the property, assuming you can convince the city to let you call whatever space is left over in your permit-impaired palace a second unit.

Listed in July for $590k, now’s your chance to steal it following a "BIG REDUCTION" to $518k. I have no idea why suddenly its "SELLER" is so "MOTIVATED" but don’t miss out on your chance to grab an extra $72k of instant equity. After all, Zillow thinks it might be worth up to $749,840!

(Ignore all the recent comps and those small-minded fools at eppraisal.com, this house is totally worth the extra $200k+. Owning your own illegal warehouse is a privilege reserved for those willing to pay for it.)

Comments (12) -- Posted by: madhaus @ 5:01 am

12 Responses to ““SELLER MOTIVATED” in San Jose”

  1. nomadic Says:

    I’m sure the seller arrived at his new price thinking to himself, I can’t lose money on this place. I have to get $518k to cover the broker’s commission…

  2. SEA Says:

    Lose money? This place is tenant occupied. After all the income tax savings, how could the owner lose?

  3. magdalena Says:

    At least the photos show off all the finer points of the property. They really must have poured money into that fence and garage door.

  4. nomadic Says:

    #2, I guess the seller doesn’t have enough faith that the over-bidding will take care of everything.

    ha

  5. SEA Says:

    #4- Let’s estimate the profit point:

    Amount of home used (assume rental since purchase):
    5.5/27.5=20%

    $490k*0.8=$392k.

    Assume 6% commission, therefore:

    392k/0.94=$417k

    Thus the profit point is 94% of the amount of the sale above $417k.

    Yes, I still suspect there will be a loss, since I estimate this place to be worth around $250k, but we should at least use the right number when computing profit or loss.

  6. madhaus Says:

    SEA, I am all in favor of showing your work, but it would help if you would label your terms clearly. I have no idea what either 5.5 or 27.5 represent above, so the rest just looked like hand-waving. You divided one number by another and called them “amount of home used.” Then you came up with a percentage subtracted it from 1, then, um, where did $490K come from?

    I know, I should eat before I try doing math.

    Anyway, are you guys tired of the DEALS already? No comments on the Santa Cruz Value today. And you’re going to love what I have coming up tomorrow. Most of you can buy it for whatever cash you have on the sidelines, or at least the couch cushions.

  7. SEA Says:

    What does ~$250k buy in that neighborhood?

    658 N 14th St – Pending at $250k
    3/3
    1,150 sq.ft = $217/sq.ft

    663 Jackson St (about 10 doors down) – Open house at $250k
    2/2
    766 sq.ft = $326/sq.ft

    645 N 15th St – Pending at $275k
    2/1
    776 sq.ft = $354/sq.ft

    In September 2005, 470 N 12th St sold for $513k; currently listed for $319k
    3/1 (extra bath permit ‘unknow’)
    1,132 sq.ft = $282/sq.ft
    “Great opportunity”

    In June 2005, 455 N 14th St sold for $555k; currently listed for $315k
    3/1
    1,274 sq.ft = $247/sq.ft
    (1 crazy photo with no description)
    on redfin 439 days: Originally listed at $250k.

    At $714/sq.ft, today’s featured place is double the psf price of the others in the area. And as #3 point out, this place appears to be in fine repair. I know; I know. What about the 1,500 sf barn? That has got to be worth the half million.

  8. SEA Says:

    #6 GAAP/IRS Depreciation measured in years. I did include the land, which I should have excluded, so from that my depreciation expense is a bit too high. At the same time, I ignored the first and last year modifications. I was just plain lazy in that regard. I didn’t allow for any improvements–as if I needed to, lol. Finally, I didn’t outline the differences between what might be allowed under GAAP versus the IRS.

    That said, the profit or loss is computed off the basis, which is generally not the former sale price. Who knows what accumulated depreciation this fine asset has, since we don’t even know when it was placed in service. The point remains, however, that there is some accumulated depreciation, and thus a lower than purchase price basis, since it’s currently a rental.

    To answer your question:
    Years used/total life = % consumed
    5.5 years in service/27.5 years total life = 20% consumed.

    1-20% = 80%

    80% is the part that is not consumed.

    Purchase price of $490k less the part that is consumed = $490k * 0.80 = $392k (again, with all kinds of assumptions and the land error, as outlined above)

    Next we need to net $392k to not profit nor lose, so with 6% sales expenses, a sale of $417k would result in a no loss nor profit sale.

    If you want to embellish these, or make other assumptions, please do so.

    Again, rather than get into all these technical computations, which I generally like to avoid, the larger issue is the fact that the loss is not computed on the former sale price.

  9. nomadic Says:

    SEA, you give the seller too much computational credit. My initial comment was based my speculation of what crossed the seller’s mind, and not on anything resembling the real world.

    madhaus, I didn’t even notice your Santa Cruz gem. Too many new posts in one day. I’ll go read it now though.

  10. SEA Says:

    #9- The seller is likely thinking: “Market values can only go up, and such should go up by a minimum of 6.4% to cover the 6% transaction expenses.”

  11. madhaus Says:

    nomadic, I’ve been including a regular feature and a BLACK FRIDAY DEAL every day since Saturday. On Black Friday we only had a Black Friday feature. So until we run out of DEAL there will be two posts a day.

    I’ve got many good contributions in the queue and I didn’t want to age them out even more by running only the CHEAP DEALS. So the solution: double your pleasure on Burbed!

  12. nomadic Says:

    but madhaus, scrolling down is so much work!

    Today’s pile o’ crap was much better too.


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