75 - 85 Cents On The $ For $2million Homes In L.A.?
I know the general rule is 60 - 70 cents on the dollar for the cash market, but what do you think about getting 1.5 - 2 million dollar homes at 75 - 85 cents (off appraised value) on the dollar in Los Angeles.
Would I be able to quick turn the contract to another Investor? Would they be willing to pay cash?
Let me know your thoughts.
The reason I ask is because I figured the dollar value of the equity would be greater. 20% off $2million is much higher dollar wise than say $200,000.
true...but, the higher the price the smaller the market...also to be taken into consideration is where and when is the bottom in Calif ...One may argue that the "upper crust" are not that effected in their housing world but again, they are not stupid...they are waiting just like everyone else for the hammer to really drop and not just 15-25%...be very careful, think twice because most investors are very savvy also...you may have to ride that horse all the way to the real bottom...regards, CWal
There is an assumption here which deserves to be brought to light.
That is that you can establish "value" to within a couple of percentage points. Truth of the matter is "value" is a range with at least a 10% spread. Residential appraisers tend to come in at the high end of the spread.
So I always assume that everything is appraised at 10% over the real "value". Figure that you might have to carry this bargain for 6 months to a year and that easily eats up another 5+%.
So 85% of "value" is not a bargain at all.
If you managed to buy at 75% of "value" then you might make some money. But having $2million at stake in hopes of a 10% return still looks thin to me even if it is $200,000.
Where is this - appreciating/slowing market? How long do you plan to stay? Are you familiar with the area or are you moving to this location for the 1st time?
Yeah, I agree with the guy from Cincy.
The house you live in is not really an investment its a mistake to think of it as one.
So when are you planning to resell?
We were planning on reselling in anywhere to 3-7 years. We decided to rent again since we got a fantastic deal and probably are going to build our dream home (where we plan to stay for 10 years) in a more upscale desirable neighborhood.