Where And What Are We Investing In?
On June 21, 2017, the San Mateo Real Estate Meetup came together to share some of the ways we have been investing to date. I'll keep them anonymous here but would like to show the diversity in real estate investing.
Kevin: Private lending deals
Portfolio of short-term loans are going well with a Debt Coverage Ratio (DCR) of 1.48 (target is greater than 1.2) and a Break-Even Ratio (BER) of 68% (target is less than 85%).
A few highlights of our current projects:
- Dallas, TX: Seven development homes (all pre-sold) nearing completion within the next two months.
- San Antonio, TX: One rehab home recently finished and on the market.
- Tampa, FL: Two rehab homes that began in early May and currently on schedule to complete in six months.
Investor 2: Development of 4 bedroom/ 3 bath single family home in West Oakland.
In 1981, investor purchased a $3,500 plot of vacant land at a tax deed auction. (California issues tax deeds on properties with taxes delinquent for five or more years, or if the owner has not enrolled in the county’s Five Year Payment Plan.)
Development costs for a 4/3 home: In the SF Bay Area, construction costs can vary greatly from $350-700 per square foot. Additional costs include engineering/ architectural, building permits, utility permits for gas, water and electricity, park fees, school fees, insurance and more.
Expected sale: $1,000,000.
Investor 3: Assisted care facilities for the elderly
As of the beginning of 2017, investor purchased five assisted care facilities in Arizona. Each will house 10 patients with an average of $4,200 per month in rent per patient. Margin is estimated at 50% with an IRR of roughly 30%. Investor's long-term goal is to acquire and run 15 similar facilities.
Investor 4: Land opportunity
Investor is evaluating a land opportunity in Half Moon Bay: 25 acres for $25M. Purchase of water rights requires additional fee. City ordinance restricts growth to 1% annually. Seller financing is available (no interest, no payments) for five years to acquire permits then potential sale of $1.2M if acquired in time.
Did you know:
- Steeper the pitch of a roof, the longer it will last?
- In California, a licensed engineer can sign off on architectural plans?
- In California, the height of a home dictates the ability to have a crawl space?
- Sanborn maps, originally created to assess home insurance liability, can be used to cross-reference historical facts to help build and modify your home? It is especially helpful when working on permits!
Great meeting as always. Looking forward to the next.
Kevin + Kiri