South Orange, NJ Ranch

Although foreclosures are far more common in working class and lower-middle class neighborhoods where sub-prime mortgages were more common, they’re also happening in upper-middle class and wealthy areas at an increasing rate these days. This 4-bedroom expanded ranch on over a third of an acre in relatively affluent South Orange Village Township is listed at $639,900, discounted more than 25% from Zillow.com’s value estimate of $864,500. South Orange, in Essex County, is home to Seton Hall University. Just about three years ago, the foreclosee-to-be bought this house for $780,000 (7/25/2005).


This house is not the type of house that is generally held as rental property… in fact, an online scan of craigslist and other sites revealed no comparable homes for rent in South Orange, so it is difficult to estimate what its rental value would be. It seems unlikely that this place could be rented for enough to cover a mortgage of this magnitude though. But for the owner-occupant, this place could be a great-find for a Seton Hall faculty member or an NYC commuter looking for a family home in a suburban location --- it’s only a 20 mile drive to Manhattan. Although the days of double-digit property value increases in this area are gone now, a house like this in a neighborhood like this seems like it will retain its value well in years to come because A) it’s the perfect commuting distance from the economic powerhouse of NYC (far enough away to be comfortable for dedicated suburbanites but close enough to facilitate a reasonable commute) and B) it’s in a community that is very stable and well maintained, with just the right amount of prestige and history.

The basics...
Address: 190 Northwoods Drive, South Orange Village Twp., NJ 07079
Current Listing Price: $639,900
PREVIOUS Sale Price: $780,000 (7/25/2005)
Size: 4 Bedrooms, 3 Bathrooms
Lot: .34 acres

http://www.realtor.com/realestate/south+orange+village+twp-nj-07079-1099434563/

Detroit, MI Bungalow

For less than the cost of a decent used car, you can snag a 3-bedroom bungalow in Detroit. Listed at $1,900, this intact house is actually quite typical of some of the REO deals in this troubled city. At $1,900, this place is priced about 98% lower than its Zillow.com estimated value of $82,500! Clearly Zillow.com has an overly optimistic view of many properties, but this one takes the cake. The former owner paid $78,000 for the place just a few years ago (10/29/2004).


From the looks of things, this house is generally intact and is in need of some work. An educated guess here is that $7,000 to $10,000 of work will get this place into great shape. So, $1,900 + $7,000 = $8,900… for a renovated house (albeit in Detroit). The neighborhood does not look half bad though, so this place could make a decent rental property. This block and the surrounding blocks, unlike many parts of Detroit, appear to have mostly intact houses… not tons of vacant lots (one downside, however, is that there appears to be an auto junkyard a block away). It looks like this house could rent for $600 per month in this market – paying for itself (including renovations) in a little over a year. BUT, the ongoing decline of the auto-centric local and regional economy likely means that vacancy rates will continue to climb in Detroit… so, if you find yourself struggling to find a tenant, you’d have to drop your rent a bit or deal with it sitting vacant for a while (not a good idea in a city known for lots of copper theft and vandalism). It could be decades before Detroit’s economy is chugging along at a decent pace again. But still… it’s only $1,900(!!)… This place might be a good buy for an investor interested in buying and reselling on a land contract, rent-to-own, or similar scenario after some basic renovation work. Definitely worth a look if you’re in the area.



The basics...
Address: 9394 Lauder Street, Detroit, MI 48228
Current Listing Price: $1,900
PREVIOUS Sale Price: $78,000
Size: 3 Bedrooms, 1 Bathroom; 930 square feet
Lot: .11 acres

http://www.realtor.com/realestate/detroit-mi-48228-1099748784/

Cape Coral, FL Ranch

If you can stand the heat and humidity of southern Florida, this comfortable 3-bedroom ranch might be worth a look. Priced at $139,900, it is well below Zillow.com’s value estimate of $205,000. According to the realtor’s description, this place is in good condition and is move-in ready (except for the 90s-fab thing going on… especially the kitchen --- see pics), so no time or money need be spent on renovations or repairs here. It even has a pool!! This place sold for $150,000 over five years ago (3/4/2003), so you can now get it at the price it would have been worth in 2001 or 2002. The neighborhood seems pretty typical, with room for development as new houses are built on the vacant lots that are scattered around the area.


A place like this would rent for about $900 per month, so it might be tough to get positive cash flow out of this house --- seems like it might be a better find for a potential owner-occupant. As baby-boomers continue to retire and head to places like Florida, prices seem likely to rebound and continue to climb at a reasonable pace.



The basics...
Address: 2519 SW 23rd Avenue, Cape Coral, FL 33914
Current Listing Price: $139,900
PREVIOUS Sale Price: $150,000
Size: 3 Bedrooms, 2 Bathrooms; 1,520 square feet
Lot: .25 acres

http://www.realtor.com/realestate/cape+coral-fl-33914-1100617488/

San Diego, CA Condo

It might not be the most charming or stunning unit in SoCal, but this 1-bedroom condo in the City Heights area of San Diego seems like it could be a winner anyhow, listed at $79,900. It looks like it needs just minor cosmetics (paint/carpet), which on a place like this should run about $2,500. Interestingly, the bank that’s trying to unload this REO is offering a $2,500 credit toward the buyer’s closing costs (hmmm). This condo sold for $132,000 five years ago (5/22/2003). Zillow.com values this place at $190,500… well over twice its current listing price.


City Heights is a diverse part of San Diego with a strong rental market. For an investor, this condo would rent for $750 per month, so when HOA dues ($120 per month) and a mortgage payment (including taxes) are taken into account, this place would be just about break-even. Despite the lack of present cash flow, it still seems like it could be a strong investment – there is no shortage of people lining up to move to San Diego, so it seems likely that prices here will fully rebound in the next 5-10 years.



The basics...
Address: 3762 43rd Street, Apt. 4, San Diego, CA 92105
Current Listing Price: $79.900
PREVIOUS Sale Price: $132,000
Size: 1 Bedroom, 1 Bathroom; 576 square feet

http://www.redfin.com/CA/San-Diego/3762-43rd-92105/unit-4/home/5503642

Chelsea, MA Colonial Revival

I'm not sure why some people think that using as much vinyl siding on a house as physically possible is ever a good idea, but I'll just let it slide on this spacious colonial revival nestled in Chelsea, just a few minutes from the center of Boston. Listed for just $145,000, this big 4-bedroom house appears to be move-in ready (the realtor even boasts that it has new carpeting... unusual for an REO, but whatever). This place last sold for $275,500 a few years ago (12/2/2004). In the opinion of Zillow.com, this house is now worth $299,900.

In this convenient area, a house like this would rent for about $2,000 per month; with a mortgage payment, including taxes, of $1,200 to $1,400, this place would deliver positive cash flow to an investor. A big bonus is that it appears to be basically turn-key... meaning buy it and move right into it or rent it out right away... no time and money spent on renovations or repairs up front.

The basics...

Address: 85 Marlborough Street, Chelsea, MA 02150

Current Listing Price: $145,000

PREVIOUS Sale Price: $275,500

Size: 4 Bedrooms, 2 Bathrooms; 1,600 square feet

Lot: .04 acres

http://www.realtor.com/realestate/chelsea-ma-02150-1098836698/

Cleveland Heights, OH Colonial Revival

Here in Cleveland Heights, a charming, well-maintained suburb directly east of Cleveland, we find a tidy colonial revival on a good-sized corner lot listed for $19,900. This house, unlike many REOs, was not bought by its previous owner at the peak of the bubble at an outrageous price, but rather sold over 10 years ago, at a modest price tag of $55,300 (9/17/1996). Zillow.com, however, believes this house to be worth $115,000 currently.


In this well-kept neighborhood, a house like this would rent for $750 to $1,000 per month -- a place like this could totally pay for itself in as little as 2 years (3 or 4 if it ends up needing any serious work, which seems unlikely given the property's description); even though it's in an economically challenged region of the US, it seems like it would be a pretty worthwhile investment. Realistically, this house is now available at its 30- or 40-years ago price.



The basics...
Address: 4019 Elmwood Road, Cleveland Heights, OH 44121
Current Listing Price: $19,900
PREVIOUS Sale Price: $55,300
Size: 3 Bedrooms, 1.5 Bathrooms; 1,351 square feet
Lot: .11 acres

http://www.realtor.com/realestate/cleveland+heights-oh-44121-1099677093/

Richmond, CA Ranch

Here's a rather cute mid-century ranch in a not-so-horrible part of Richmond, CA (in the East Bay -- north of Oakland, just east of Marin County) listed for a mere $64,900 -- That's less than 20% of its peak "bubble" price of $385,000 (8/24/2007)! What might sound too-good-to-be-true really has become commonplace here in recent months. In its usual, overly optimistic way, Zillow.com still thinks this place is worth $328,000.


Based on a survey of craigslist rental ads, a house like this could probably rent for $1000 to $1200 a month, delivering positive cash flow for an investor, considering a mortgage payment, including taxes, would likely be around $600 to $700 per month. Based on what is shown in the listing info, the place appears to be in pretty decent condition, but needs cosmetics (the usual makeover... carpet, paint, finishes) and bathroom fixtures. For what would likely amount to about $5,000 to $8,000 this place will shine.


Over the course of the past 6 months, prices have fallen so far in some parts of the Bay Area that it is possible for nearly anyone to buy a house. As recently as a year or two ago, people who could not afford a few hundred thousand for a modest place in a remote location were excluded, unless they person chose a wildly creative mortgages that never really got them any closer to having any equity in the property and only set them up for disaster when the bubble popped.

The moral of the story is that places like this will likely prove to be fantastic investments -- a person can get a house like this for its 10-years-ago price and wait out the market, living in or renting out the house in the meantime. People continue to move to the Bay Area, and the projections show this to continue for decades to come, meaning that in the long run, demand for housing will continue to grow and prices will rebound (eventually) to their previous heights.



The basics...
Address: 579 8TH ST, Richmond, CA 94801
Current Listing Price: $64,900
PREVIOUS Sale Price: $385,000
Size: 2 Bedrooms, 1 Bathroom; 950 square feet
Lot: .06 acres

http://www.realtor.com/realestate/richmond-ca-94801-1100165336/