That’s right, your very own fraternity house! In fact, the seller is so confident you want to hearken back to your Frank The Tank days, he didn’t even bother to stage the place! Well, except for the rear parking lot. Look at what kids are driving these days: Cadillac CTS with rims, BMWs…instead of selling the place, they should have jacked up the rent!
Address: 745 Elm, 90813
Asking Price: $569,000
$Size: 5 beds, 2 baths, 2,082 sq. ft. (built in 1907)
$/Sq. Ft.: $273
$Purchase price: $117,000
$Purchase date: 1990
MLS#: P597408
On Redfin: 138 days
Description: * * * FIXER * * * or, * * * BUILDABLE LOT * * * Excellent opportunity. Presently used as a fraternity house! Just a block south of St. Mary's Hospital on a huge lot (50 X 150). Zoned PD-29 (which has residental R4 standards). This home is a major fixer; see the pictures.
A very honest listing, although I don’t see how they had much choice. The pictures speak for themselves.
Full disclosure, I actually lived in this house during college. I don’t want to hurt my fellow frater’s chances of a sale, but at 138 days on market I doubt I can do much harm. In fact, maybe this post will provide some publicity and catch the eye of a savvy investor!
I haven’t lived there for more than a decade, but it looks likethose years were ROUGH. ¾ of the staircase’s wooden slats have been kicked/punched out and that kitchen looks pretty revolting.
This is most assuredly not a "FIXER" unless you've got A LOT of time and money to burn. The best bet is to take advantage of that R-4 and build some decent rental units.
Let's look at the financial implications of fixing it up and living in it:
Down Payment: A 10% down payment would run you $56,900.
Monthly Payment: Financing the remaining $512,100 at 6.5% would leave you with an approximate monthly payment (including property taxes and homeowners insurance) of $3800. Now, the bedrooms provide significant rental opportunities, so you could bring that monthly nut down a bit. However, I would guess the new owner needs a minimum investment of $50,000 to $75,000 to make it livable/rentable (see photos).
Income Requirement: Assuming a 4x income calculation, the annual household income required to buy this "fix it or f**k" it house would be $142,250 (plus the cash to make it inhabitable). Do you think anyone in his or her right mind making that kind of money would live in this place? Probably not, so this place is clearly cut out for an investor looking to raze it and build some rentals.
As I recall, this house was purchased just as the bottom fell out of the LB real estate market in the late 80s/early 90s. Now, I don’t proclaim to be smart enough to time the market exactly, but given this seller’s attempt to sell a house like this--in this market—I wonder if market timing is really their thing.
However, if you look at the sales history, a purchase price of $117,000 would yield a nice little return on investment if sold for asking price today. Instead of being a landlord to wild college students, the owner probably just wants to get out of it and park the proceeds in a less volatile investment vehicle. Makes perfect sense, given the economic environment.
But, considering $100,000 has already been lopped from the original asking price with no takers, a sale at this price seems highly unlikely. What are construction costs per square foot these days? $100? $135? You’d be paying at least $375 per square foot just for the privilege of tearing this thing down and building apartments.
Razing an old decrepit home and constructing a nice house or some rental units can be a smart investment—IN A NICE, UPCOMING NEIGHBORHOOD. This, I’m afraid, is not one of those neighborhoods. In fact, during my tenure, gunshots, car vandalism (the fact that quite a few cars are now parked behind a gate in the back yard tells me street parking still isn’t a good idea), homeless, and even car fires (!) were yin to cheap rent’s yang. I drove by for old time’s sake a few months ago and not much has changed.
Plus, considering the median income is $23,493 a year and 88% of properties in this zip are rentals, there would be an awful lot of dirt cheap competition (A quick search turned up a 3 bedroom/1 bath a few blocks west renting for $1500 a month). Not a great investment property at this price.
It’s sad that these college kids won’t have a fraternity house anymore (man, those were some good times), but if any alumni want to get together to relive the glory days, now is their chance. Just be sure to disinfect the Jacuzzi first.
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