Pacific Beach – Fieldtrip March 2017
- Lenska´s Fieldtrips are in their 8th consecutive year and have helped hundreds of newbies & seasoned investors. Become one of them! –
We started at Mark Mizuta´s recent project in North PB (check out his Wise Home Ventures website, great insights into his projects!). He already received 3 offers, although it is not even finished yet! We learned that the key to his success is pre-marketing. As soon as the drywalls were in, he set up a computer animated MLS listing and people started to come by immediately. Contrary to what his agent told him: Initially, she wanted to wait until the house was finished to list it to make an impression.
Key Learning: When you are working on a project, list it on the MLS well before it is finished. That gives you the chance that it´ll be sold by the time you finish and save a lot of holding costs.
One of the offers he received was an all cash offer – the seller wants to buy as-is, an other offer was at listing price for the finished house. The profit for selling the finished product would be a little higher, not significantly. Which offer would you take? We had a heated discussion and came to the conclusion that the cash offer/sell now is the better option. There is a big reason for that: RISK – You can exit the project immediately and have the cash in hand, therefore less risk for you. Although the profit could be a little higher for your finished project, the risk involved is also higher and unforeseen things could happen anytime.
Key Learning: When evaluating offers, do not only consider profit margin, but also consider other factors like focusing on evaluating your risks.
Off we were to see more properties:
First stop were two Single Family Homes in North PB with quite similar floor plans. They were slightly different but priced widely apart (245K!).
Key Learning: Know how much your features are worth e.g. view, backyard, updates etc. and look closely at the comps. The one that sells first will set the market rate for the other.
Second stop was an outdated 1/1 condo on Grant Street which we analyzed for cashflow. Although they lowered the price and it needed some work, there was no cashflow to be found.
Key Learning: Do your cashflow analysis, don´t forget to plan for cap ex and maintenance and only buy when it fits your strategy.
Third stop was a Single Family Home that has been on the market for a while. As we visited, they had an open house so we got the chance to ask the showing agent some questions. We assumed that it sits on the market because it is priced too high, but the agent didn't agree with us.
Key Learning: Trust your own analysis!
Last stop was a fancily updated, contemporary (don´t call it modern – huuuuuuuge difference between modern and contemporary as we learned from the owner) Single Family Home. It is priced at $2.3M and only attracts a certain clientele because of the contemporary style. That means it could take way longer to sell this house and therefore having higher holding costs.
Key Learning: Leave the extraordinary rehab’s to someone who is already very experienced. Try to attract a broader audience so it’s easier for you to sell.
As usual, we headed to Chili´s for lunch – Lenska was in the mood for a Margherita! After she gave us so much valuable information, she really deserved this one – Cheers!
Come join us next time on every 3rd Saturday of the month, we look forward to seeing you there!