Today (October 3, 2011) there are over 45 Active listings in the 63116 zip code for 2 bedroom homes priced between 75-100K. For a first time home buyer, this can be extremely overwhelming. In an effort to help my clients save time, we start by sorting online with a personalized MLS portal. The portal allows my clients to view ALL the inventory in their price range and stated area that matches their criteria. From the original list they can save or reject specific properties and keep on eye on certain homes to see when they go under contract or if their price is reduced.
Looking at 45 homes is a possibility but really isn’t reasonable. Ten is a much more manageable number to view. Viewing 10 homes will take about 3.5 hours so could be accomplished in the morning or afternoon. But to get from 45-10 will take a some strategic “eliminating”
My goal is to eliminate 35 of these options and bring the ten best options to the forefront. Part of my job as a buyer’s agent to keep my clients focused and help them save time. Who wants to spend an entire Saturday looking at houses that just won’t be a fit.
This particular client wants a brick home, so we can eliminate all house with siding. She would prefer a pitched roof to a flat roof and hardwood floors are a must. By using this simple criteria we can reduce the 45 original options to 21
21 is still too many. A garage was not a “must have” but it was a preference. By eliminating homes that did not have at least one covered garage space, I was able to reduce the number of possibilities to 15.
That is still too many to look at in one afternoon. One suggestion would be to consider square footage. But I really don’t trust the tax records. It is often just wrong but even if it is technically correct it might not accurately the true sense of the space. This is why you will often see “0″ as the recorded square footage in the MLS. The incorrect number has been deleted. House with “0″ or smaller square footage need to be viewed. Space is tricky and places that measure “small” can feel plenty big. Space is something that needs to experienced.
CDOM stands for Continuous Days On Market. In my opinion this is an indication of price or condition. Average days on market for this batch of homes is 173. The highest is 599. The least is 31. If time is of the essence, we really want to see the newer properties first. If a house has been on the market for almost two years, what are the chances it is going to fly off the shelves before my client and I get a chance to schedule a second tour. For our first tour, I really want to choose the best possible house or at least those that I think will actually be fit. A property that is priced well and in good condition is likely to sell quickly. So we want to make sure to get into those first. Choosing all the properties that have been on for less 150 days brings that total down to 9.
Yesterday I went out with one of my new clients to look at rehab possibilities. I always think the first day out with a new client is interesting. It’s a learning process for both of us. It can be a little overwhelming especially if you are unprepared for how badly some of the places are in need of repair.
This particular client has experience with renovation as he has worked with several developers as a general carpenter. He is able to buy a place with cash, then slowly over time put the home back together using his own funding. In that regard he is very fortunate. But there are loan options out there for people who need to borrow the funds for purchase and renovation.
Here are a couple shots from our tour yesterday. This is the second floor of a mixed-use building. The rooms are spacious and much of the original molding is present. Still, this place needs to be completely gutted.
The pine floors were in pretty bad shape. A small portion of the home was open to the elements so there is some water damage that needs to be taken care of. In addition to all of the cosmetic work, this space will need all new plumbing including the sewer lateral line and new water supply service, new electric and HVAC including ductwork.
This is a photo of the rear of the building. Obviously there’s some brick work that needs to be done in addition to all new windows and doors. The floors in this room were shot as well.
And here is the third floor. It is missing an entire section of wall! Needless to say this project was a bit too overwhelming for my client. The good news is we looked at 7 other properties yesterday and he found two homes that were more his speed.
So the moral of the story is–Yes, you can rehab, but it may take some searching to find the right place.
I read an article yesterday that found a silver lining for those who are thinking of buying but missed the deadline for the $8000 tax credit. Three points to consider were lower interest rates, builder incentives for new construction and the decreasing of list price by home sellers.
On that note, I did a quick search of our MLS to see what happened to the price of homes in a couple St. Louis City neighborhoods. I performed a general search of the zip codes 63116, 63118 and 63104 for homes that are currently listed between $150,000-$300,000.
I found 178 ACTIVE listings in this price range. Next I went through the data and separated the homes by days on market. The deadline for contract acceptance to receive the tax credit was April 30,2010. So I looked for homes that had been on the market for at least 68 days. Of the 178 current actives, 113 of those have been on the market for at least 68 days. Of the 113 that have been on since before the end of the tax credit, 80 have had price reductions, 32 have remained at the original list price and one price actually increased.
Of the 113 that have been on the market longer than 68 days and have reduced their sale prices, I picked four that I have already walked through to highlight below. The four that I picked were ones that were in the top running for some my clients.
2215 Sidney was $215,000 when I looked at it with some of my clients. The couple I was with loved this house and it was their top choice until they found another home that had a two car garage. The home they ultimately bought was listed at $238,000. At the current list price of $189,000, I think 2215 Sidney is a great house for the price.
2647 Russell When I looked at this house, I was impressed with its size, location and two car garage. Now that the listing price has dropped by $20,000, I think it is a steal! Currently listed for $225,000 its a good find in Fox Park. Close to highways and walkable to Lafayette Square.
2012 James was listed at $235 when I walked through it. Since then it has decreased to $225,000. James is a short street tucked into the Benton Park neighborhood and walkable to the new Bittersweet Bakery on Gravois and Blues Cit Deli. The finish quality of the rehab is outstanding and the home has just enough space, a private yard and one car garage.
2745 Accomac This is an amazing rehab! The quality of the construction in this home and high level finish is really hard to find. Before the tax credit the home was listed for $253,000 and it is currently listed for $249,900.
To recap, people who bought in up and coming neighborhoods, before they were THE place to live made a wise investment. Granted they weren’t thinking “this is going to be a wise investment.” Instead they were probably just looking for a place they loved at a price they could afford.
If you are looking for a place to love, as in capital L.O.V.E., the kind of home that would make your friends green with envy, the kind of place you see only in magazines, this is IT!
Historically preserved and modernly updated, this house has to be experienced. While you may get a sense of this home through the pictures, you really must walk through the doorways and stand in the rooms to appreciate the time, planning and execution of the details.
From the street , it is impressive with pieces of the original wrought iron fence and perfectly symmetrical proportions. New Douglas fir doors have been milled to match the originals. The slate mansard was completely rebuilt in 2007 and the painting and tuck pointing on the facade are recently completed projects.
Once inside, the details become overwhelming. The walnut hand rail on the second floor main staircase was hand milled by a New Zealand stair expert to match the original.
The refinished original pine floors span the entire level and the pull the whole space together. All the pine baseboards, moldings, trim and 4-panel doors have been stripped and refinished.
The first floor layout is wide open allowing light from the huge windows and side door to flood the room. The front room is an example of the simple elegance that pervades the home. Nothing is out of place, every door handle, every hinge belongs and is exactly where it should be, in exactly the right style, shape and finish.
The kitchen is exceptionally well planned and is unique to the home. While it speaks to a different era with the reclaimed Geneva metal cabinets and oak counter tops, it belongs here just as if the original builder had done it himself. Through the cut out (which is bar height and designed to function as a breakfast bar with stools on the opposite side) is the office/den area and adjacent is the side porch which is really just a bright extension of the kitchen as the 11′ glass and wood doors open onto a private outdoor dining area.
The cabinets were reclaimed, refurbished then professionally painted by an auto body repair shop. This kind of creativity and thoughtful design is priceless.
All of the private areas are upstairs. Below is a picture of the back hallway (w/ cove lighting) as the wall wraps around the bathroom conforming to the shape of the original 6′ claw foot tub inside. The skill and patience it took to create this elegant detail is evidence of the quality throughout the entire restoration.
There are three large bedrooms, each with interesting details. The front two bedrooms are featured below. They are separated by fully functioning restored pocket doors. Both have elegant mantles in pristine condition and the middle room has a door to the side balcony which has fir tongue and groove flooring and Soulard style railing.
Even the privacy fence is a master piece! The rear patio, arranged in a herringbone pattern, was built with bricks from the original walkway and is lined with salvaged limestone window sills.
LOCATION: Southampton is one of the most sought after neighborhoods in the city. How do I know this? It says so on their home page. Southampton was rated as one of the top residential choices for families in the 25-35 age bracket. But there’s more, this house is near the intersection of Devonshire and Macklind which, in my mind, is the best neighborhood mainstreet that we have in the city. Grand is great and Morganford is marvelous but Macklind actually bridges the two parts of Southampton and makes this little neighborhood feel like a village complete with its own economic center. All within walking distance of 5328 Devonshire are Home Eco Green General Store, Big River Running Company, Mackland Avenue Deli, Manzo’s Imports and Deli, Murcoch Perk, and Onesto Trattoria
Interior Finish Quality: Not everyone is going to love this house. Clean lines and modern finishes aren’t for everyone. That big blue LazyBoy recliner is NOT going to work in here. If you are attracted to a lofty feel but not really interested in the condo fees or the cost of upgrades, then you are going to LOVE it. If you like to cook and entertain, then the layout will impress you. The kitchen has a perfectly designed work triangle, plenty of prep area and a peninsula with barstools so even those who aren’t great with knives can be part of the action. (Also the double drawer dishwasher is very cool). Want a spa inspired bathroom? Take your pick, there are two! Worried about utilities in a big brick house? Well this house has zoned HVAC and lots of extra insulation. Looking for 2 sleeping areas and a space for office/informal family room/play room? It’s all upstairs. I could go on, but the photos tell the story.
Value: Below is a CMA report from the St. Louis MLS. Based on a map search of the Southampton area, the numbers show that Devonshire is priced to SELL. Of the five other move-in ready homes currently active in the neighborhood, Devonshire is priced at 189,900 meaning it is about $9500 below the average list price. Additonally if you look at the SOLD values you can see that the average SOLD price of a 3 bedroom 2 bathroom home in the Southampton neighborhood is $204,278 which means Devonshire’s list price of $189,900 is an amazing value. Also note that the AVERAGE price per square foot of the ACTIVE listings is $123.01 while 5328 Devonshire is priced at $108 a square foot. No need to make low-ball offers here, this seller has priced according to the current market.
5247 Bancroft is an interesting property because it would make a great owner occupied investment property. Judging from the pictures, it looks like one of the first floor units has a spiral staircase to a finished lower level creating a two bedroom apartment. So if you are looking to owner occupy, you can keep the larger unit for yourself and rent out the other which should cover your entire mortgage.
Fully rented this building is bringing in $1700 a month. Sounds like the current owner is willing to make some improvements to sell. Off street parking in rear
This building has interior entry to each unit, which means that the hallway is common space which is less appealing because it would not be possible to convert to fee simple town homes in the future. This probably isn’t a concern for most investors, but if the for sale market ever sky rockets again, it would be a nice option to have.
4165 Potomac is another 4 family that has piques my interest.
What I like:
Lots and lots of updates. Only one unit is vacant, so there’s money coming in right away and no wasting time looking for tenants. Fully rented the building would bring in about $2000 a month.
Floor plan: The units are small with walk-thru bedrooms. Rents are at their full potential. No garage.
Again, if you are interested in looking at these units, I’d be happy to open the doors for you.
For the rest of this week I am devoting my posts to rental property. I have been thinking that now would be the perfect time to buy a four family building for myself. Currently I have large house that I have been renting out. It’s a beautiful house, but much better suited for an owner than a renter. It requires more maintenance than one tenant justifies. I figure with a four family there is a much better economy of scale. With a four family there are only four exterior walls and one roof to maintain while collecting four total rents vs. a single family building with four walls, one roof and only one tenant.
In selling the current building and purchasing the new building I am using a 1031 exchange which will allow me to transfer all the profit from the first building into the second building without paying any capital gains taxes at this point in the game. Taxes will be due, of course, but it is a matter of time. In the meantime, I am doing the preliminary research.
3811 Fairview is one of my favorites. Currently the building is bringing in $1780 a month in rents. It has some updates and each unit is two bedroom so I think over time as each tenant moves out I will be able to do a little work and significantly increase the rent.
Since I am using a 1031 exchange, my hands are currently tied. So, if you are interested in purchasing a four family and would like to view 3811 Fairview or any other listing in the St Louis City area, give me a call and I will it open up for you.
Stay tuned: More multi-family investment opportunities to follow this week.
That is what the New York Times is saying. All signs point to the buying opportunity of a lifetime for those who can qualify for a mortgage: housing prices have dropped, mortgage rates are down to 5.5% with talk of going even lower and there is $7500 federal tax credit for eligible first time buyers.
Some Interesting Quotes
Since prices generally soften in the winter, it may make sense to start looking seriously once the mercury bottoms out. “If you look at new developments next spring, you may not have the choice you thought you would have or be in the bargaining position you thought you would be,” Mr. Shepherdson said. Also, if you wait after June 30, you will miss out on a $7,500 federal tax credit for income-eligible first-time home buyers that works like an interest-free loan
“You can never time a bottom. This is a long-term investment for us, and it truly is the best investment we have in our portfolio right now.”
The Big Fear
Loss of equity is the big fear. Many prospective buyers that I have talked with recently are cautious about investing their money into a home because they are afraid that housing prices haven’t hit bottom and that they won’t get back what they paid. The table below comes from a study ( also linked in NY Times article) done by the Center for Economic and Policy Research and the National Low Income Housing Coalition called “The Changing Prospects for Building Home Equity” which tries to predict locations where the equity positions of buyers purchasing now would be lower in 2012. The study has identified 33 markets (located in the upper right hand corner) where owners may have negative equity positions by 2012.
What I thought was most interesting about this particular chart was the position of St. Louis. Notice that it is on the lower left hand side in the section called Non-Bubble Markets and that in that it ranks in the middle of that list where the rank represents the size of equity from lowest to highest. What makes me feel particularly optimistic is the quote from the study about Table 1, particularly the last sentence: In comparison, metro areas without housing bubbles will likely accumulate positive equity in a relatively short period of time.
I’m an experienced Saint Louis Realtor specializing in St. Louis City as well as neighborhoods like Webster Groves, Maplewood, Clayton, University City and Ladue. With an undergraduate degree in Education and Master's in Urban Planning and Real Estate Development — I have the heart of teacher.
I have been immersed in Residential Real Estate, helping home buyers and sellers understand the market, manage the ambiguities and negotiate the best terms for themselves. I am consistently voted a 5-Star Agent by clients and featured as one of St. Louis' Best Agents in Saint Louis Magazine.