How to price my house?

[PlumLoco]

We live in a somewhat unusual set-up for Southern California. The main house was likely built in the late 1880's, along with two other "houses" and a large garage. Only the garage has been officially permitted LOL. Each of the smaller houses are approximately 800-900 sq ft. The first one was uninhabitable when we bought the property from HUD. $30K later it is beautiful inside and the have been renting it out for over 5 years now. It is quite nice with both tub and shower, wash/dry, and a private fenced yard. The second house has a large bathroom and closet, but no kitchen. It would make a badass man cave, game room, in-laws pad. Previous elderly owners used it as a master bedroom because they could no longer do the stairs in the main house.
My question is, how do I evaluate what these other two houses should realistically add to the current assessed value per Zillow, Realtor, Redfin etc? We have long since recovered the price of the restoration and now it is just an income generator. Current prices only consider the footage of the main house. We are planning our CA exodus and it is really hard to get a realistic comp simply because there aren't any properties like this one around for a variety of reasons.

 

[shintoooo]

Can you use $ square footage to come up with something based on recent comps in the neighborhood?

 

[Havasu blue label]

Location in so cal

 

[RiverDave]

We live in a somewhat unusual set-up for Southern California. The main house was likely built in the late 1880's, along with two other "houses" and a large garage. Only the garage has been officially permitted LOL. Each of the smaller houses are approximately 800-900 sq ft. The first one was uninhabitable when we bought the property from HUD. $30K later it is beautiful inside and the have been renting it out for over 5 years now. It is quite nice with both tub and shower, wash/dry, and a private fenced yard. The second house has a large bathroom and closet, but no kitchen. It would make a badass man cave, game room, in-laws pad. Previous elderly owners used it as a master bedroom because they could no longer do the stairs in the main house.
My question is, how do I evaluate what these other two houses should realistically add to the current assessed value per Zillow, Realtor, Redfin etc? We have long since recovered the price of the restoration and now it is just an income generator. Current prices only consider the footage of the main house. We are planning our CA exodus and it is really hard to get a realistic comp simply because there aren't any properties like this one around for a variety of reasons.

Where is it at?

 

[PlumLoco]

Where is it at?

Redlands, CA. Garden spot of the I.E.

 

[Gonefishin5555]

Sell it as an investment property. Use Multiple of the annual rent like 20x or whatever the realtor says is current multiple for the area

 

[PlumLoco]

Sell it as an investment property. Use Multiple of the annual rent like 20x or whatever the realtor says is current multiple for the area

I'm not ready to talk to any realtors yet. But I figured there must be some kind of "formula" that is commonly used. I guess the correct term is "multiple"?

 

[NicPaus]

That's a job for the realtor unless you plan on selling by owner. I think @D19 is not far from Redlands. I would consult with him. If you were in the Southbay I have several excellent realtors I could refer.

 

[Cdog]

Hire an appraiser

 

[PlumLoco]

Hire an appraiser

IMO not worth the money at this point. Market changes in the next 2-3 years will have an equal, if not more, effect on pricing when we are ready. Plus a qualified appraiser for a house that is frankly unusual even for a Victorian is a tough find. The house directly across the street is finishing up more than 2 years of construction. It is also a turn of the century build but it has gone from 3000 sq ft. to nearly 6000. At under 2000 sq ft. in this house, it is very small for the time period on such a large lot.

 

[rivergames]

Just throw an extra 0 at the end!

 

[DC-88]

From my experience owning similar stuff the buyer may need cash or more cash down depending on lender requirements re foundation condition / lack thereof etc along with permitted sq footage. It will sell for sure though as there is an ass for every seat with a good property-

 

[ChumpChange]

That's a job for the realtor unless you plan on selling by owner. I think @D19 is not far from Redlands. I would consult with him. If you were in the Southbay I have several excellent realtors I could refer.

This is pretty much the only answer.

Special properties take the right buyer. It’s all good come down to an opinion of value of the realtor and then the opinion of the value of people who happen to walk through it when it’s for sale.

I don’t think a gross multiple will work because as much as you use it as investment property, in this market, there will be a higher value to somebody who wants to occupy it.

All just depends on why you are looking for value. If you’re looking to put a number down on a personal financial statement and not get in trouble like Trump, use the tax assessed value. lol

 

[PlumLoco]

We are personal friends with the realtor that helped us sell the last house. Both he and the realtor that had this HUD listing both agreed that finding similar comps was impossible. Homes of this era were usually much larger and on bigger plots. Sometimes they have a smaller second house, but never a third. If you wanted to build a kitchen in the third house it could be done extremely easily as the run to the sewer from the main house is less than 15 feet away from where the sink would be.

 

[NicPaus]

Is the third one empty? I would slap a kitchen in there and rent it out. And would recommend keeping it until you really need the money and then sell it to a developer.

 

[D19]

That’s a unique property that will require a specific set of skills to properly evaluate. I regularly handle these types of assessments for asset management companies and investors, and I’d be happy to take a look at it. I'm very familiar with Redlands and have sold several properties there. I'm based nearby in Upland.


Feel free to call or send me a PM with your contact details and the property address, and I can review it next week.


Best regards,
Dennis
909-660-8686

 

[Gonefishin5555]

How about just get 3 realtor opinion of values and calculate the average. You are going to get a range of values and not some exact number until you actually sell it. You also mention that there are some 2 home properties similar to yours so value off those pretending there is no 3rd home and then add a little bit for the 3rd house at a severely discounted amount caused its not inhabitable.

 

[jet496]

$1.2 mil, but comps in the neighborhood would help, even though yours is unique.

 

[jetboatperformance]

Well I was Pleasantly surprized that my appraisal last month was almost a 1/4 mil more than Zillo "zestimate" , Hadnt refied in almost 30 years

 

[jet496]

Sell it as an investment property. Use Multiple of the annual rent like 20x or whatever the realtor says is current multiple for the area

This is a good idea. Figure out what you could rent them for understanding one doesn't have a kitchen & then figure out the cap rate. Just another way to market & look at it. Sounds like a good rental property.

 

[COCA COLA COWBOY]

Honestly, you need to talk to a realtor. You did some great value add, but the market today will be completely different after the first of the year anyways. If you tell the agent what to price the home at, you most likely will end up with an agent that will "buy the listing." Meaning you will choose an agent that tells you the highest number in essence what you want to hear. That is the worst thing you can do. Choose a strong agent that knows your neighborhood and skilled in ADU's and they will provide you with a marketing plan, advice for upgrades to bring the best number, and a marketing price that will give you the highest and best purchase price for the home. Remember, the listing price is not the price the home sells for, it's a marketing price to draw in the highest number of buyers.

Also, since this is an investment, you need to get educated on the 1031 exchange process and have an idea of where those funds are going to ensure you don't get a huge tax bill.

 

[callbob]

Put it up for auction and set a high reserve

 

[lbhsbz]

We are personal friends with the realtor that helped us sell the last house. Both he and the realtor that had this HUD listing both agreed that finding similar comps was impossible. Homes of this era were usually much larger and on bigger plots. Sometimes they have a smaller second house, but never a third. If you wanted to build a kitchen in the third house it could be done extremely easily as the run to the sewer from the main house is less than 15 feet away from where the sink would be.

A 3rd house without a kitchen is a bonus room or a pool house or a shed or a workshop, not a house.

If you want to make it 3rd house, build the kitchen. Not sure if the Cambodians venture to far past Long Beach, but this sounds right up their alley....family of 47 people all in one place. Might be too much land for 'em though.

 

[Gonefishin5555]

Honestly, you need to talk to a realtor. You did some great value add, but the market today will be completely different after the first of the year anyways. If you tell the agent what to price the home at, you most likely will end up with an agent that will "buy the listing." Meaning you will choose an agent that tells you the highest number in essence what you want to hear. That is the worst thing you can do. Choose a strong agent that knows your neighborhood and skilled in ADU's and they will provide you with a marketing plan, advice for upgrades to bring the best number, and a marketing price that will give you the highest and best purchase price for the home. Remember, the listing price is not the price the home sells for, it's a marketing price to draw in the highest number of buyers.

Also, since this is an investment, you need to get educated on the 1031 exchange process and have an idea of where those funds are going to ensure you don't get a huge tax bill.

He needs some tax advice on this last part. He is living there and also has a rental. His principal residence gain is exempt up to 500K if MFJ and maybe he should kick out the renters and convert the other house back to being part of his principal residence. Need to research this maybe he has to use it two years to include it as exempt. I don't think you go any further without more facts

 

[PlumLoco]

Again, I am not interested in selling any time soon. My son lives in the rental, and my racing buddy lives in the other unit. We were forced to boot the renter and move in my son and his girlfriend because State Farm told us after 5 years that our homeowners policy doesn't cover these units unless a family member is living there. I was lucky my tightwad son agreed to move from his free room upstairs to a house where he has to pay rent.
My buddy is in the other unit. He is also 50% owner of the whole thing. He has a small refrigerator and between the BBQ, smoker and air fryer he rarely uses our kitchen, but he is welcome to use the kitchen and the laundry. Because of a big down payment on an unloved property, combined with the rental income, we each only have to come up with about $800 mo. to cover mortgage, insurance and utilities. There are not too many places either one of us would want to move to and be able to live this cheaply.

I'm just trying to get an idea of how my investment is doing. We bought the house to flip in 5 years. We got lazy and took almost 7 but then my buddy didn't want to sell, and we still had a kid in high school and honestly don't know where we would go. The wife and I need a house that has room for boat and toy hauler parking, and a garage big enough for 6-8 motorcycles. The parking issue is how I found the current house in the first place. 3 car garage on 3/4 ac.

 

[D19]

Again, I am not interested in selling any time soon. My son lives in the rental, and my racing buddy lives in the other unit. We were forced to boot the renter and move in my son and his girlfriend because State Farm told us after 5 years that our homeowners policy doesn't cover these units unless a family member is living there. I was lucky my tightwad son agreed to move from his free room upstairs to a house where he has to pay rent.
My buddy is in the other unit. He is also 50% owner of the whole thing. He has a small refrigerator and between the BBQ, smoker and air fryer he rarely uses our kitchen, but he is welcome to use the kitchen and the laundry. Because of a big down payment on an unloved property, combined with the rental income, we each only have to come up with about $800 mo. to cover mortgage, insurance and utilities. There are not too many places either one of us would want to move to and be able to live this cheaply.

I'm just trying to get an idea of how my investment is doing. We bought the house to flip in 5 years. We got lazy and took almost 7 but then my buddy didn't want to sell, and we still had a kid in high school and honestly don't know where we would go. The wife and I need a house that has room for boat and toy hauler parking, and a garage big enough for 6-8 motorcycles. The parking issue is how I found the current house in the first place. 3 car garage on 3/4 ac.

I suggest holding off on the evaluation until you're ready to take action. It will require an onsite visit and hours of research to accurately assess the market value. There's no point in starting the process now if you're not prepared to move forward, as you'll likely end up doing it all over again later.

 

[PlumLoco]

I think for my own mental health, I'm going to ask a few folks about "a multiplier" as if this is a conventional property. It's just a number I am trying to plug in to future hypothetical (at this time) questions. The primary reason this house was purchased by two people is that we had both inherited money that we didn't want to put into the stock market. Figured the right property might be more profitable and less tied to our other investments. We knew it had to end at some point. Circumstances have changed a lot in 8 years. Utilities and insurance have tripled, and CA is getting much less livable. I am just looking forward, trying to navigate unknowable waters with limited skills. Financially and practically, there are solid reasons to sell and not to sell. The problem now is that my buddy, my wife, and myself weigh these things differently. At least I'm retired LOL. I don't miss that stress.

 

[whiteworks]

Don’t over think this, if you were trying to refinance it or if you have a buyer who needs financing then you have an issue to deal with. However it’s basically a tri plex and some investor with cash will snatch it up as such without the need for financing and all the BS that goes with that.

 

[boatnam2]

Honestly, you need to talk to a realtor. You did some great value add, but the market today will be completely different after the first of the year anyways. If you tell the agent what to price the home at, you most likely will end up with an agent that will "buy the listing." Meaning you will choose an agent that tells you the highest number in essence what you want to hear. That is the worst thing you can do. Choose a strong agent that knows your neighborhood and skilled in ADU's and they will provide you with a marketing plan, advice for upgrades to bring the best number, and a marketing price that will give you the highest and best purchase price for the home. Remember, the listing price is not the price the home sells for, it's a marketing price to draw in the highest number of buyers.

Also, since this is an investment, you need to get educated on the 1031 exchange process and have an idea of where those funds are going to ensure you don't get a huge tax bill.

Why will it be completely different?

 

[COCA COLA COWBOY]

Why will it be completely different?

Nobody knows the price your home will sell for. They can ballpark it, but if they do know....most likely the agent will sell it to someone under market that is an investor in their database. This literally happened down the street from me. The seller chose an agent, that agent represented both buyer and seller and home sold for X. While in escrow, the buyer marketed the home to other buyers and found another buyer willing to pay approximately $40k more. This is called wholesaling, but is happening more often than not now.

 

[DarkHorseRacing]

A 3rd house without a kitchen is a bonus room or a pool house or a shed or a workshop, not a house.

If you want to make it 3rd house, build the kitchen. Not sure if the Cambodians venture to far past Long Beach, but this sounds right up their alley....family of 47 people all in one place. Might be too much land for 'em though.

Not necessarily true. There was some multi-million Malibu beach home that the guy built without a kitchen because his wife refused to cook.

No idea how that pencils out trying to sell it but with millionaire level properties they probably don't care too much one way or the other.

 

[boatnam2]

Nobody knows the price your home will sell for. They can ballpark it, but if they do know....most likely the agent will sell it to someone under market that is an investor in their database. This literally happened down the street from me. The seller chose an agent, that agent represented both buyer and seller and home sold for X. While in escrow, the buyer marketed the home to other buyers and found another buyer willing to pay approximately $40k more. This is called wholesaling, but is happening more often than not now.

Well, my DIL is a top Realtor in OC and my GF is a part time realtor, so I'm covered, only problem is that I don't own a home to sell, so I guess I'm safe from the shenanigans.

 

[Justfishing]

When i was involved with real estate the major lenders, freddie fannie were set up to lend on single family residential. If it doesnt fall in that category lending costs go up. You might consult a mortgage specialist to inquire about that.

 

[SoCalHomes]

I'm not ready to talk to any realtors yet. But I figured there must be some kind of "formula" that is commonly used. I guess the correct term is "multiple"?

There is formula we use . Its a simple formula we use with basic information on the property and average rental prices in the area to basically calculate how long it would take for you to get your moneys worth . I use this when I have investors looking to buy and start making profitable income as soon as possible.
I'd be happy to give you those numbers.

Text me !

Adriana Sanchez
626-890-3052