Friday Finds - Riverside County Income Property 7 Sept 2012

With this being the first posting I would like to explain what the main purpose of this blog is going to be. Of course the name says it all, I will be posting about Income Generating Properties that are ready to be acquired by a new investor. Please do not be mistaken when I state income property I do mean income and with no less than two units on it as the primary function of a single family home is for someone to live in and not to gain income from.

With that out of the way, WELCOME to the blog that will help you understand income properties as I have learned them for more than a decade. My goal is to give you one property to review every Friday at the very least and will be titled as Friday Finds. This will feature a property that I may or may not have a personal interest in liquidating however that will not have any factor in the choice of putting the property on here especially for a Friday Finds as there are plenty of other days throughout the week for me to tell you about those. The base criteria is going to be something is already on the market, at least 2 units (mostly 2 - 4 units as that is entry level property), good value based on others in the area and the overall price within the county of Riverside.

To show there are so many affordable investment properties available right now I actually picked one that is being offered under $100,000 ($100 K).  So I am completely upfront the list price is currently at $98,000 (subject to lender approval). As you develop to know my way of thinking you will see that I do not solely say just because someone has decided to offer a property at a specific price it automatically means their price is right in fact many times (especially with income properties) they are wrong. The standard way to evaluate an income property above 4 units is based on the potential rents to be collected (bad basis because actual income is way more accurate) whereas any property 4 units or below is considered a residential property and therefore is usually valued at the price based on properties sold of similar type within the area.

Enough of a vocabulary breakdown, this property is actually a triplex which has 2 units rented currently at $600 and $550 with one unit vacant, located in the city of San Jacinto. Each unit is a 1 bedroom / 1 bathroom and considering on paper they are exactly the same, I would value the property based on both of them being rented at the lower rate of $550 / month as that is the more guaranteed shot.

Based on the actual rents I would say this property high values at $97,750 with a safe value of $93,500.

If acquired for the safe value and with 20% initial investment this property should yield about $390 per month (already including professional property management fees) at the lower rent and the one unit still remaining vacant. Therefore once the appropriate rental rate could be established and the second unit being rented out to a stable tenant, the cash flow would raise to more than $800 per month.

(K12096431)

Further questions give me a call anytime at 760-500-7292 or send an email to RetireEarly@gmail.com.

Tim Taggett
DRE# 01468188
REI Powerhouse
Darryl Self, Broker