Use Tax Season to Prepare for Homeownership.

I just had a discussion with a client about making sure that while they do their taxes, they should get their home buying checklists in order.  This article from the Real Estate Book has great tips on how to get organized to put your best foot forward when it comes to preparing your finances and credit during this tax season.

http://blog.realestatebook.com/2015/02/25/preparing-finances-homeownership/

Sincerely,

David R. Madaffari, Realtor
Keller Williams Realty – First Choice
Office: 225.744.0044
Cell: 225.772.3283 (DAVE)
37325 Market Place Dr. Ste D
Prairieville, LA 70769
www.DavidMadaffari.com
Each office independently owned and operated

Pricing a home – 5 things to remember

I was going to write about some of my latest research on flip properties, mainly about price/ft and how to determine where in the spectrum a property needs to fall.  Then I came across this blog by Ryan Lundquist, an appraiser in Sacremento that pretty much has everything I was going to say.  He essentially says that many factors go into determining price in a neighborhood and that $/ft isn’t the be-all, end-all focus of our pricing strategies.  Here it is below and be sure to visit his blog linked above for more details!

5 things to remember when using price per sq ft in real estate
By: Ryan Lundquist

DOWNLOAD a more detailed version of this post.

Image purchased by Sacramento Appraisal Blog from 123rf dot com and used with permission

5 principles to remember when using price per sq ft in real estate:

1) There is a price per sq ft spectrum in a neighborhood: There is never just one price per sq ft figure that applies to every property in a neighborhood. For instance, a neighborhood might easily see a price per sq ft range from $100 to $250 when looking at all sales.

2) Similar houses tend to have a similar price per sq ft: When homes are similar in size, location, bed/bath count, etc…, they tend to have a similar price per sq ft. That’s obvious, but the contrasting factor is that non-similar homes might have a VERY different price per sq ft that shouldn’t be used to value your home.

3) Property characteristics can quickly change the price per sq ft: When there are differences in condition, location, lot size, quality of upgrades, bed/bath count, size, etc… the price per sq ft can change dramatically. We might see a small remodeled home selling at $250 per sq ft, a model match fixer selling at $175 per sq ft, a short sale model selling at $185 per sq ft, and a home with an adverse location selling at $215 per sq ft. Thus even for one model there could be a price per sq ft range from $175 to $250.

4) Smaller homes tend to have a higher price per sq ft: It costs more to build smaller homes, so smaller homes tend to have a higher price per sq ft than larger homes. This is why it’s dangerous to use a price per sq ft figure from a smaller sale to value a larger home. A smaller home might sell at $250 per sq ft, but a larger home might be closer $150 per sq ft. Here is a quick video below (or here):

5) Price per sq ft provides a valuable context: When you can talk through price per sq ft figures in a neighborhood, and explain the above points, you are an incredible resource. Appraisers, pay close attention to the price per sq ft range in a neighborhood. Some appraisers treat price per sq ft as a meaningless metric, but it’s actually valuable. If your value does not fall within the range (especially the competitive price per sq ft range), it’s important to be able to explain that.

CONCLUSION: Be careful about using price per sq ft to price a property because sometimes it’s like putting the cart before the horse. I recommend starting a valuation with an “apples to apples” approach where you first and foremost try to find other similar sales and listings in the neighborhood, and then subtract and add value based on any differences with your property. After you have a grasp of similar sales, research price per sq ft figures for the entire neighborhood as well as competitive properties. Ask yourself if your value makes sense in light of price per sq ft figures.

 

David R. Madaffari, Realtor
Keller Williams Realty – First Choice
Office: 225.744.0044
Cell: 225.772.3283 (DAVE)
37325 Market Place Dr. Ste D
Prairieville, LA 70769
www.DavidMadaffari.com
Each office independently owned and operated

Multi-Family Property Roundup

Here are some of my favorite multi-family property listings on the market right now, that have great returns that justify the prices they are asking.

5244 Brightside Park Units A-D, Baton Rouge, LA 70820

  • 4 Units, 2 bed/1.5 baths, 1,100 sq ft each in great shape.
  • Asking $419,900, Potential gross income $4000/month

 

 

343-345 Jennifer Jean Dr, Baton Rouge, LA 70820

  • Two 3 bedroom/2 bath units close to LSU, renovated nicely.
  • Asking $225,000, Potential gross income $2,200-$2,400/month 

4504 Walmsley Ave, New Orleans, LA 70125

  • Two 3 bedroom/1 bath units, renovated in New Orleans.
  • Asking $195,000, potential gross income $2,100/month

Call me to place a bid on any of these, I have extensive knowledge on each!

David R. Madaffari, Realtor
Keller Williams Realty – First Choice
Office: 225.744.0044
Cell: 225.772.3283 (DAVE)
37325 Market Place Dr. Ste D
Prairieville, LA 70769
www.DavidMadaffari.com
Each office independently owned and operated

Home Prices expected to rise 4.8% in 2015

Investors Business Daily, my go-to site for stock and economic news had this article regarding home price trends in 2014 and the outlook for 2015.  It’s a quick read, but very informative.

http://news.investors.com/business-inside-real-estate/020715-738427-real-estate-home-price-forecast.htm?ref=HPLNews

Maybe I should invest in some DR Horton stock – they’re building everything in sight these days!

– David

 

REO Property Sales 2014 – East Baton Rouge

Today let’s look at the Baton Rouge REO property sales bought with CASH.  As I stated yesterday, 2013’s average discount for these properties was 88% using cash.  That proved to be a magic number for my investor clients as all of our deals fit right at that number.  So was 2014 any different?

The average List to Sold price ratio was 89% in 2014.  A slight uptick from 2013, but still a great number to keep handy when thinking about what your investment should be.   The average days on the market is also only 76 days, which means these properties are being snatched up a high rate.

After the last three days worth of data, my advice to investors and homebuyers is to work with what the banks are giving us.  Since we know that the list prices tend to be at or near market value, we can reasonably expect them to go no lower than 88% of their asking price when paying cash.   Buyers using financing should also try this tactic as well – after all, they prefer to sell to owner-occupants.

I hope this series has helped educate those looking to make offers on properties like these.  While it does happen, offering 50%-60% below market value is not typically an effective way to win bids in a hot foreclosure market.

David R. Madaffari, Realtor
Keller Williams Realty – First Choice
Office: 225.744.0044
Cell: 225.772.3283 (DAVE)
37325 Market Place Dr. Ste D
Prairieville, LA 70769
www.DavidMadaffari.com
Each office independently owned and operated

Cash is King – REO Property Sales 2014

Yesterday we saw that all distressed and REO property sales in Ascension combined for a 97% average list/sold price ratio when considering all types of financing.  When we think about that, that’s pretty much a normal market for non-distressed property.  “But aren’t foreclosures and short sales supposed be deals for investing?”  Yes, but knowing HOW to buy is just as important as WHAT to buy.

Simply put: Cash is KING.

Looking at the cash sale numbers you’ll see what I mean.  Check out the percentages now for all 58 cash purchases:

2014

2013

In 2014, the average discount you could expect was 87% from the original list price; in 2013 it was 86%.  Looking at the bottom line of each graphic, the total volume of lis/sold prices was 86% in 2014, 8 points higher than the total volume of 2013.  The conclusion? There is more competition for these properties.

So while banks are putting their properties on the market at fair market value,  the ability to pay cash is the best leverage you can have to get the right price.  Offering at 86%-88% of list price represents where you can expect the highest rate of negotiating success.

Tomorrow we’ll do all East Baton Rouge cash sales.  In 2013 the average was 88% – how did 2014 fare?

David R. Madaffari, Realtor
Keller Williams Realty – First Choice
Office: 225.744.0044
Cell: 225.772.3283 (DAVE)
37325 Market Place Dr. Ste D
Prairieville, LA 70769
www.DavidMadaffari.com
Each office independently owned and operated

REO Properties – 2014 Sales numbers

In today’s REO Properties update, we look at the numbers for all Ascension Parish distressed sales in 2014. These are for ALL financing types, not just cash only sales:

2014 Ascension parish REO Sales

Compared to 2013:

The main numbers to look at are the Avg Selling Price to List price (SP/LP) ratio.  For all sales, foreclosed homes sold for 97% of the bank’s list price at the time of sale in 2014, up 1% from 2013.  The implication here is that Baton Rouge is a hot foreclosure market not just for investors but for all buyers.  Banks know this, so it is more time-consuming to find the deals.  We have seen more financed foreclosed sales from owner-occupants in 2014 than in 2013 too, which means investors have faced competition for the same property they enjoyed almost free reign on from 2011-2013.

Tomorrow we’ll look at how just the CASH sales for Ascension parish REOs changed from 2013 to 2014, a figure investors should use to determine what their bid prices should be for 2015.

David R. Madaffari, Realtor
Keller Williams Realty – First Choice
Office: 225.744.0044
Cell: 225.772.3283 (DAVE)
37325 Market Place Dr. Ste D
Prairieville, LA 70769
www.DavidMadaffari.com
Each office independently owned and operated