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All Forum Posts by: Jefferson Kim

Jefferson Kim has started 16 posts and replied 41 times.

Post: Orange County Auctions Selling at less than 15% Discount?

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5
Originally posted by @Bill S.:

@Jefferson Kim so you use some terms loosely which may impact your conclusion. You stated that the auction was a 15% discount over the "market" So I take that to mean that a comparable beater house in the MLS would cost you 15% more than the same beater house sold at auction. My take is that the auction gives you 15% more margin to work with. That margin is there because the auction does not afford you the same opportunity to inspect and walk away if there are some unforeseen deal breakers. With the auction, you own those issues. Most auction homes get rehabbed and go from worst to first in terms of desirability. It's really hard, especially in a hot market to know what kind of a premium buyers are going to pay (and appraisers allow for) when a house has been completely redone. Also some renos add square footage and amenities.

Yeah, the "market rate" is just what I grabbed from PropertyRadar for a sloppy calculation.

And correct, I'm not considering "value added" projects. For a newbie like me exploring auctions, I was more looking toward bringing the auctioned properties up to "par" with all the other homes that have sold.

There are some examples in my spreadsheet of homes purchased in February / March, sold in summer, with some pretty well done renovations. It's interesting to see which properties are still "pending" or listed that were purchased 5 - 6 months ago.

Post: Orange County Auctions Selling at less than 15% Discount?

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5
Originally posted by @Marcello Di Gerlando:

Colorado Springs is the same. I run really tight numbers accounting for everything down to the light switch covers, then add a sensible percentage for contingencies. I know I'm going to make thin margins but if I can average 12% 6month ROI I'm ok with it. It's just tough to find deals.

This has to be a really weird downturn that we're headed toward. Where housing inventory will be extremely low at least in SoCal & Colorado Springs, and home prices don't decrease much.

At least in California, Bruce Norris talks about the difficulties for new construction, causing inventories to remain low while population increases.

This is going to be a different kind of downturn compared to the last cycle where I imagine the Real Estate side will be relatively unscathed. We have a lot of Chinese investors paying 50% down (because banks don't trust the credit) or even all cash, so even if there's an economic downturn, its not like those inventories are going to be auctioned off.

And then the local people who purchased had much stricter underwriting guidelines than the last cycle, so unless there's massive more unemployment (where SoCal already has extremely HIGH unemployment), those homes won't be distressed either. But the job recovery after the latest cycle has been with relatively lame without the high paying jobs that typically are associated with home purchasing. And the affordability index didn't get much better, so I'd imagine that the people who purchased homes already have jobs that are less at risk in a recession.

Maybe something to do with raising interest rates would slow down new purchasing, and perhaps that could trigger some kind of chain reaction of badness. But I imagine the fed wouldn't do that in the economic trend that seems to be playing out.

It'll be interesting to see how this all plays out.

Post: Orange County Auctions Selling at less than 15% Discount?

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5

From the auctions in Orange County from July 30, 2015 to August 18, it seems to be the case that auction winning bids are less than 15% discounted from market prices.

https://docs.google.com/spreadsheets/d/1Gta1Q8JMFC...

That means for a $500,000 all cash purchase, 10%, or $50,000 going to renovations and whatever craziness occurs (evictions, etc), and then maybe 5% for real estate commissions.

You're already in the hole.

Oh, and hope that the market doesn't crash while you try to sell!

So the only way to make money seems to be that you sell your own house as an agent (save about 2.5% on commissions), and that you do the renovation work yourself (maybe save half to 75% of the contracting cost). And that the market doesn't have any sort of dip whatsoever.

Does my rough analysis seem out of step with reality?

Post: Orange County, California Auction Selling Prices

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5

Nevermind. Please delete this post. thanks.

Post: Orange County, California Auction Selling Prices

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5

There seems to be a list of "Real Properties Sold" on the OC website: 

http://ocgov.com/gov/pa/div/realproperty/auctions/...

Does anyone know if this is comprehensive, or only a selection?
The frequency of sales seems kind of low.

Also, a sloppy analysis comparing "Sales Prices" (which I believe is the winning bid) with the retail price seems to indicate that the discount for many of these homes seems relatively low:

https://docs.google.com/spreadsheets/d/1Gta1Q8JMFC...

I'm probably wayyyyyyy late to the game at this point, which may explain why the auction market competition is so fierce. Is my data and analysis inaccurate?

Post: California Proposition 13 vs. Texas (Long-Term Hold)

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5

Has anyone done an analysis on long-term hold commercial properties on California vs. Texas?

I used to think Texas was a "no-brainer" because of not having State Income Tax, but upon further analysis, the fact that California's Proposition 13 allows property tax appreciation at  a maximum of 2% per annum with property taxes ranging in the 1% range, ends up weighing heavily in favor over Texas (even after paying California State Income Tax).

I'm seeing break even after 4 years based on certain assumptions. Even if my initial assumptions are off, my analysis seems to place a heavy case that the California State Income Tax pales in comparison to the savings I receive in Proposition 13 over a 10 year horizon.

Is there anyone else coming to that conclusion or have done an analysis which counters my findings?

Post: Billboard lease proposal...how much for a lease? $1000? $2000?

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5
Originally posted by @Oscar Toledo:

I would say only if you plan to use the property for another purpose or if the property is really cheap and fits within the building guidelines. However, in austin, you are at the mercy of the permitting process, so there's no way to guaranty that your sign company will be able to procure a permit for the billboard.

Also, austin is NOT allowing any new billboards inside city limits. Same for cedar park, round rock, and other suburbs. A sign company will have to tear down an existing sign to put a new one up. Also, any new signs can be no larger than the one they tore down. This always applies UNLESS the city tears one down to expand a highway (ie, 290). And in that case, they have more flexibility. A sign company gets one credit for a sign that is torn down and have up to 3 years or so to erect another or they lose that credit. 

Lastly, no sign can be within I think 1000 feet of another sign or I think 500 feet of a residence. I think they can build within 500 feet of another sign if they use the credit described above. They are trying to change these rules now, proposition is up for a vote in May.

Note that some signs in austin violate some of these laws. In those cases, they were built and grandfathered in before the laws were in place.

Hope this helps!

 How did you determine what the "fair market value" was for the billboard. I imagine finding the exact lease details of local "comps" is a lot more difficult than residential comps.

Post: Billboard lease proposal...how much for a lease? $1000? $2000?

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5
Originally posted by @Oscar Toledo:

Yes, I spoke with other landowners about their leases and they gave me great insight and advice. I also spoke to an attorney who specializes in billboard lease contracts. I think we negotiated a pretty good deal!

 Would you be willing to share any tips?

Post: Billboard lease proposal...how much for a lease? $1000? $2000?

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5

Did you ever get any feedback on how to get a marketable rate for your billboard?

Post: Google Earth Pro is now free for everyone (Any use for investors?)

Jefferson KimPosted
  • Investor & Manager
  • Buena Park, CA
  • Posts 46
  • Votes 5

http://google-latlong.blogspot.com/2015/01/google-earth-pro-is-now-free.html?m=1

I guess it uses GIS data importing features to your advantage. Does anyone use Google Earth Pro as an investor and can explain how it's helpful?