I found this little article and video on McKinley Village interesting – Let’s go take a look!
Keith Klassen, Real Estate Broker
A good portion of my business has trended toward investors and investment properties, I get this question/scenario posed to me often. If the question is not asked directly, I’m usually bringing up the issues revolving around selling with a tenant in the property. There are a lot reasons why the answer could go either way on this topic, but let’s explore some of the main concepts that will help you make a good decision based on your situation. (Qualification: This discussion mainly has to do with single family income properties, rather than multi-family units).
Many agents just don’t want to deal with the hassle of selling with a tenant. There are scheduling conflicts, posting of notices, and high emotions when treading on someone’s living situation – all potentially emotionally charged and exasperating situations. While these can be good reasons to sell vacant, they may not be the best. A good agent knows how to handle and deal with tenants in a caring and professional manner. It does, however, make the process a bit more grueling and cumbersome.
I find the main issue boils down to is loss of income. Most owners balk at asking tenants to leave, because they don’t want to lose the monthly rents. In most cases I’ve found that the loss in rent is less than the higher amount a home will fetch when vacant. Why?
Call or write to discuss your situation in more depth.
Ketih Klassen, Real Estate Broker – 916.595.7900
I just read an interesting article that motivated me to convey some thoughts and experiences on solar panels.
It’s exciting to see the progress solar power and panels have made in the last decade – more affordable and more efficient. I visited a remote village in Northern, rural India where no power line reached… but to my surprise, they had a communal solar panel in the middle of the village to, yes … charge their cell phones. Solar farms are popping up in open spaces – I saw a huge one recently on a drive to Las Vegas. When I visit my home town of San Francisco and look out over a view, it seems more homes had solar panels than ones that do not. I’ve sold new homes that now have solar panels as part of the purchase package – what home owner doesn’t love almost free energy! And I’ve now interviewed three companies to hear their pitch for solar panels on my own home.
While I’m all for solar power, saving the planet, and money if possible, my experience was a little discouraging. I hope that you might get a few tid-bits from my own journey.
It seems that purchasing panels is still not very popular, as the out-of-pocket expense out weigh the benefits/savings. Some might argue, like buying a hybrid car, “You don’t buy it for the saving, rather for the planet.” There are also many incentives in California that go along with the purchase of solar panels. The federal government gives tax credits (write-offs) for owners of solar panels. And, there are a bunch of local incentives to look into if you are going to purchase panels. Like a car, there are avenues and incentives to finance the purchase of solar panels too. This attracted me, because it seemed that one could save money on power, then eventually own the panels. However, I was also informed that the life of the panel’s efficiency is only about 20-25 years, which just so happens to be the life of the loan. Take the time, look into the kick backs for your area, do the math and then make a decision. Purchasing may be the right path for you?
Leasing the panels is another option where you pay a set amount (lower than your average monthly utility bill), but I found that a “power purchase agreement [PPA]” seems to be most popular route offered. Leasing and the PPA are similar in that there’s little to no money out-of-pocket. With the PPA, it’s as if you are agreeing to a fixed utility rate (lower than your average monthly utility bill) and allowing the company to use your roof to harvest solar power. The company I spent the most time with asks for a 20 year agreement.
At the end of the day, while I love our planet and believe solar power and panels are a great move, I decided against it for now. Here are the issues I came against:
Again, I have friends and associates that it’s worked great for, and I love the idea. For me, it’s not the right time. What experience have you had? What am I missing here? Surely my experience is not all-inclusive.
Picture from my trip to India in 2015, with small solar panel on roof.
Keith Klassen – Real Estate Broker
Whether you are selling retail, wholesale, or analyzing a flip project, the costs can sometimes be tricky to figure out. It’s not just estimating the sales price and backing the loan amount out of the proceeds. There are many fees involved that can sting a seller if unaware. This is where experience and some simple tools come in handy.
For retail sales, your favorite title company can drum up an estimated cost sheet with your potential sales price. Or, you can usually get the title company to give you a net sheet spreadsheet or a link to their website, which many of them have a seller’s and buyer’s net sheet program. If you are an agent, doing it yourself can save time and help establish your expertise. Remember to remind the seller that this is an estimate, however, the better you get at filling in the net sheet (and comping properties) the closer you will be to the exact net number. I like to give a worst case scenario, then the client is happy when I negotiate a better deal. The following are included in a typical net sheet:
Here’s a sample net sheet:
|SELLER’S NET SHEET|
|Address:||SACRAMENTO, CA 95818||Est. Close Date:||6/28/2016|
|Prepared by:||Keith Klassen, Klassen & Associates, 916.595.7900||Annual Taxes:||$0.00|
|Estimated Sales Price:||$645000.00||1st Loan Balance:||$385000.00||Interest:||$|
|Approx. Gross Equity:||$260000.00||2nd Loan Balance:||$0||Interest:||$|
|CA Withholding (3 1/3% of sales price):||$|
|County Transfer Tax:||Paid by: Seller||$709.50|
|City Transfer Tax:||Paid by: Seller||$1773.75|
|Title Insurance Premium (Owner’s Policy):||Paid by: Seller||$1815.00|
|Escrow Fees:||Paid by: Both||$712.50|
|EWC Drawing Fee:||$0.00|
|Courier Fee (includes Federal Express):||$40.00|
|Total Commission:||6.00% + $0||$38700.00|
|Transaction Coordination Fee:||$350.00|
|First Loan Balance:||$385000.00|
|Interest on 1st Loan:||$|
|Second Loan Balance:||$0|
|Interest on 2nd Loan:||$|
|Natural Hazard Disclosure Report:||$99.00|
|Pest Control Report:||$125.00|
|Work Required for Pest Clearance:||$|
|Tax Proration (if not paid to date of recording):||$|
|Total Estimated Costs to Seller:||$429999.75|
|CREDITS TO SELLER|
|Total Estimated Credits to Seller:||$0|
|CASH TO SELLER|
|Estimated Sales Price:||$645000.00|
|Plus Estimated Credits:||$0|
|Less Estimated Costs:||$429999.75|
|Estimated Sale Proceeds to Seller:||$215000.25|
Contact me if you’d like a complimentary value assessment done on your property, or to discuss the costs of selling in detail.
Keith Klassen – Real Estate Broker