MULTI-FAMILY REPORT
PALM SPRINGS, PALM DESERT,CATHEDRAL CITY, DESERT HOT SPRINGS, RANCHO MIRAGE, LA QUINTA, INDIO, COACHELLA VALLEY
January 2010

	Available	Pending	New Listings	Sales As % of Inventory
January 2008	201	9	42	4.5%
January 2010	119	16*	16	13.4%

Available property declined by 41% in two years!

*includes sold contingents and pendings. Sold contingents are usually short sale properties. Pendings are usually after contingencies have been removed.

Short sales are becoming more prevalent as lenders are changing their attitudes about short sales. My initial opinion was that lenders were realizing they had to work with underwater borrowers, however check out this site for a different reason!

Think Big Work Small - http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1374510

In the Palm Springs, Palm Desert, Coachella Valley area, prices are becoming more realistic either as a short sale, an REO (these sell QUICKLY) or a seller that understands the market.

Income property has once again become “Income property”. Cap rates range from 6 to 8.5%. Operating Expenses should be in the range of 35 to 50% of Gross Scheduled Income. Use this formula and you know the fair market value of a property.

Contact me…..for some great opportunities……but you have to act quickly when something comes on the market……

I’m also here to discuss any questions or help you any way I can.

-- Jeannie

MULTI-FAMILY REPORT
PALM SPRINGS, PALM DESERT,CATHEDRAL CITY, DESERT HOT SPRINGS, RANCHO MIRAGE, LA QUINTA, INDIO, COACHELLA VALLEY
December 2009

To close out the year we had fourteen closed escrows for apartments this month.

Three triplexes closed escrow in Bermuda Dunes. Bermuda Dunes is a small community unincorporated in Riverside County just east of Palm Desert. It’s also famous for hosting the Bob Hope Chrysler Classic.

There are many small income properties available in the area. Prices here have declined over 50% since the peak of the market late 2005/early 2007.

Cathedral City had seven closed escrows this month. An investor got a fantastic purchase for 29275 Avenida La Paz at $212,000 (All Cash). This was a ten year old duplex in good condition that was an REO.

This property had multiple offers immediately after being placed on the market.

Good property sells quickly here!

Desert Hot Springs enjoyed four closed escrows in December. Three were short sales and one was an REO. Can you believe all the multi-family in Desert Hot Springs sold for less than $87,000? This type of unit will have higher operating costs and may require intensive management.

Attractive purchases can still be located. It’s imperative to have your proof of funds, qualification letter (if financing a property) and be ready to make an offer as soon as a great deal hits the market.

In summary – for December 2009 closed escrows:

REO Sales    - 8
Short Sales   - 5
Regular Sale - 1

Address	City	Sales Price	Year Built	Days on Market
78941 Savanna La Mar Dr	Bermuda Dunes	$260,000	1984	25
41651 Adams St #A, B, C	Bermuda Dunes	$374,000	2004	14
41601 Maroon Town Dr	Bermuda Dunes	$380,000	1987	29
29275 Avenida La Paz	Cathedral City	$212,000	1999	13
68765 Arrowhead Rd	Cathedral City	$131,500	1984	17
33027 Pueblo Tri	Cathedral City	$160,000	1985	7
32425 Monte Vista Rd	Cathedral City	$185,000	1986	11
33185 Moreno Rd	Cathedral City	$186,000	1993	11
32400 Monte Vista Rd	Cathedral City	$199,000	1989	43
36982 Bankside Dr	Cathedral City	$345,000	1977	85
66358 2nd St	Desert Hot Springs	$42,000	1954	43
66384 2nd St	Desert Hot Springs	$59,500	1955	407
66912 Vista Pl	Desert Hot Springs	$60,000	1975	48
66375 Buena Vista Ave	Desert Hot Springs	$87,000	1991	89

-- Jeannie

MULTI-FAMILY REPORT
PALM SPRINGS, PALM DESERT,CATHEDRAL CITY, DESERT HOT SPRINGS, RANCHO MIRAGE, LA QUINTA, INDIO, COACHELLA VALLEY
November 2009

Two 18 unit buildings sold for all cash this month.

225 E. Avenida Palmera is a deluxe 18 unit building in a premium location in South Palm Springs…..sold for a 5.2 cap rate * (per my calculations)

 

9 multi-family properties went into “pending” and 6 multi-family properties in “contingent other” during the month.

A fabulous duplex in North Cathedral City came on the market with five or six offers the first 7 days. This property was the nicest REO duplex that has been available in the current market downturn.

  

I have been very successful in the last 90 days with short sales on income property. Finally, lenders are realizing they must work with investors on these loans that far exceed the fair market value.

10 Closed Escrows in November

City	Type	# of Properties	Total Sales
Cathedral City	REO	1	1
Desert Hot Springs	REO	6	6
Palm Desert	Regular Sale	1	1
Palm Springs	REO	2	2

It’s possible to obtain some great apartment financing……25% down payment and interest rates at 6% or slightly below. I have an awesome lender that knows the area well if you need a loan, both for 1 to 4 units as well as 5 units or more.

All buildings that are five units or more are considered commercial loans and have a substantially different criteria than the 1 to 4 buildings.

* Cap rate is the net operating income divided by the value. Net income is all gross scheduled income minus all operating expenses but does not include your mortgage payment. Any questions….let me know.

-- Jeannie

Cap Rate is an investment tool for analysis that enables an investor to compare one investment to another. The investment creates “net income” and that is the important factor……what leverage an investor chooses to utilize is a totally different decision.

Using Cap Rate I can compare an investment in real estate to a CD at Bank of America or Dividends earned in the stock market. The degree of risk always increases the cap rate.

Always check the itemization of expenses. Many, if not most of the time the expenses will be understated. Understated expenses overstates net income, thus overstating value.

On a newer building in a stable area, expenses should be 32 to 35%. On an older building in a management intensive area, expenses can run as high at 60%.

-- Jeannie

INCOME PROPERTY NOW SELLING AS INCOME PROPERTY

Huh? Didn’t income property always sell for income? NO!!!

In the heyday of real estate from 2002 through 2007 multi-family (income) properties were mostly being purchased for “future appreciation”. The values have now reverted back to investing for income earned on your investment.

Cap Rate is the best tool for determining the value of an income property. Cap rate is calculated as “Net Operating Income” divided by the value of the property.

Another way to look at it is “How much return do I expect on my capital investment”? A 6 to 8% cap rate is mostly the norm in the current market. To ascertain what you will pay for the property, take the “Net Operating Income” and divide by the percentage return you expect and that will be your valuation.

Income Property Analysis Example

Gross Scheduled Income	$100,000	(Annual is always used)
Vacancy Factor	5,000	(5%)
Gross Operating Income	95,000
Expenses:
Property Management	9,500	10% of gross rents collected
Insurance	4.000
Property Taxes	11,000
House Utilities:
Water, Trash, and Exterior	3,500
Electric
Cleaning	1,000
Gardener	3,600
Repair and Maintenance	8,000
Total Expenses	40,600	(40.6% of GSI)
Net Operating Income	54,400

The above is a modified Income/Expense Sheet that most of my clients find easy to understand. Each investor should select a format he or she prefers.

Valuations:

6 Cap rate creates a value of 906,667.
7 Cap rate creates a value of 777,143.
8 Cap rate creates a value of 680,000.

-- Jeannie

Indian Creek Villas
Palm Desert, CA
Update November 2009

As an indication of the strength of the real estate market: six months ago there were very few sales and over 10 properties on the market.

Currently there are three properties on the market priced at 72,500, 103,000 and 109,900. The 72,500 and 103,000 properties are shortsales with the $109,900 property being a regular seller.

Four properties are currently in escrow and there have been 10 closed escrows since 9/1/09.

Sale prices have been a low of $65,000 to a high of 98,900 for a unit that had been totally refurbished. Majority of sales prices are high sixty’s to low 70’s.

Unit 1’s are the front unit, all on one floor and seem to be the most popular model since it’s similar to “a little house”.

 

-- Jeannie

MULTI-FAMILY REPORT
PALM SPRINGS, PALM DESERT,CATHEDRAL CITY, DESERT HOT SPRINGS, RANCHO MIRAGE, LA QUINTA, INDIO, COACHELLA VALLEY
October 2009

Income properties selling for income…not speculation.

Cap rate of 6 to 7 are the average range for valuation.*

Most properties have multiple offers within days of coming on the market.

Many properties are selling for all cash.

Interest rates still at all time lows.

There are 7 multi-family properties in “pending” and 7 multi-family properties in “contingent other” for the month of October. All of the pendings are Bank Owned REO properties, while the “contingent other” properties are all short sales.

Short Sales are becoming far more prevalent in the current sales market. Six months ago it was next to impossible to get a lender to even talk to you about a short sale on income property. Major shift in lender attitude in the last 90 days….which is a good thing for the market. I believe this change in attitude will preclude a huge wave of foreclosures that everyone was anticipating.

13 Closed Escrows in October

City	Type	# of Properties	Total Sales
Cathedral City	REO	4	5
	Regular Sale	1
Desert Hot Springs	REO	4	5
	Short Sale	1
Palm Springs	REO	2	3
	Short Sale	1
1000 Palms	Short Sale	1	1

* Cap rate is the net operating income divided by the value. Net income is all gross scheduled income minus all operating expenses but does not include your mortgage payment. Any questions….let me know.

-- Jeannie

Indian Creek Villas
Palm Desert, CA
Update 10-5-2009

Three condos closed escrow in September:
72685 Raven #1              75,000
72763 Willow #1              81,000
46835 Frontage Rd. #1    98,900
Market times were 24 to 33 days. All sold at listing price or very close to it.

Unit 1’s are the front unit, all on one floor and seem to be the most popular model since it’s similar to “a little house”.

Five condos went into escrow this month. When a good property becomes available, there are multiple offers very quickly. If you are serious about purchasing, have your qualification letter from your lender as well as proof of funds, since these items must be attached with your offer to purchase.

7 condos available for sale as of 10/3/09.

Asking prices are $63,806 to 115,000.
3 are REOs.
3 are Short Sales.
1 is a regular seller.

Least expensive condo sold for $66,000 in August. This property was a fixer and had mold issues.

View from Indian Creek Villas

The rental market is firming up. We now have all our units rented. We are getting less rent than two years ago ($925 vs. $775/825).

	Monthly	Annually
Rents	825	9,900	Projected
Vacancy and Credit Loss	41	495
Gross Operating Income	784	9,405
Water & Electric	0	0	Tenant
Gardening	0	0	Tenant
HOA Dues	220	2,640
Repairs & Maintenance	50	600	Projected
Insurance	20	240	Projected
Property Taxes	90	1,080	Projected @ 1.25%
Management	83	990	10% of gross rents collected
Total Operating Expenses	463	5,550
Net Operating Income	321	3,855

Cap rate 5%

Above is a model and no guarantees are implied by broker.

Inventory declined another 5% during the month of August. It’s a great time to buy as these opportunities will decrease as more investors return to the marketplace.

Indian Creek is a basic, no frills, bottom line project that is very well maintained by the Homeowner Association and enjoys home owners, second homes and investors that rent their properties to quality tenants.

There are four units to a building. Unit 1 is all on one floor at ground level. Units 2 and 3 are two story and Unit 4 is a one story upstairs. Square footage ranges from 840 to 924. All units are two bedroom, one bath.

-- Jeannie

MULTI-FAMILY REPORT
PALM SPRINGS, PALM DESERT,CATHEDRAL CITY, DESERT HOT SPRINGS, RANCHO MIRAGE, LA QUINTA, INDIO, COACHELLA VALLEY
September 2009

Fifteen properties went into escrow this month

Inventory has declined from 181 properties in January to 110 available properties in October. There has been a shift from REO properties to more short sales as lenders become more willing to work with investors.

The investment market continued to improve throughout the summer, even with temperatures well over 100 degrees.

My favorite area for small investment property is Cathedral City Prices are starting to increase. As of 9/30/09 there were only 8 duplexes for sale. There are no REO properties currently available in this area. One duplex sold this month for $219,000….as compared to six months ago when units were selling in the mid to high 100’s.

Good properties sell fast so it’s imperative that you have your qualification letter and proof of funds so an offer can be tendered quickly.

Example of a duplex in Cathedral City area

Most units have tile roofs, are 3 bed/2 ba, on sewer with garages.

Attractive financing is available with 25% downpayment. Rates are at 6.25% interest, 30 year fixed, one point. This applies only to one to four unit non-owner loans.

Closed Escrows in September

City	Type	# of Properties	Total Sales
Cathedral City	REO	3	4
	Regular Sale	1
Desert Hot Springs	REO	8	8
Palm Springs	REO	2	4
	Regular Sale	1
	Short Sale	1
1000 Palms	Short Sale	1	1

If you are looking for a Pride of Ownership building with no deferred maintenance in the downtown Palm Springs area, call me! There’s an 18 unit building available that anyone would be proud to own!

There’s also several 6 to 9 unit buildings in the Cove area of Cathedral City that have cap rates of 8%. With the development planned for this area, these units should perform very well.

Interest rates are still low and the market is improving.

-- Jeannie

Indian Creek Villas
Palm Desert, CA
Update 9-8-2009

Three condos closed escrow:
72756 Willow #3, Palm Desert    66,000 *
72670 Thrush #2, Palm Desert    74,000 *
72667 Raven #3, Palm Desert     76,250

*sold over listing price

7 condos available for sale as of 9/4/09.

Asking prices are $69,800 to 105,000.
3 are REOs.
2 are Short Sales.
2 are regular sellers.

All the condos are selling quickly at prices under $80,000.

The rental market is firming up. We now have all our units rented. We are getting less rent than two years ago ($925 vs. $775/825).

	Monthly	Annually
Rents	825	9,900	Projected
Vacancy and Credit Loss	41	495
Gross Operating Income	784	9,405
Water & Electric	0	0	Tenant
Gardening	0	0	Tenant
HOA Dues	220	2,640
Repairs & Maintenance	50	600	Projected
Insurance	20	240	Projected
Property Taxes	90	1,080	Projected @ 1.25%
Management	83	990	10% of gross rents collected
Total Operating Expenses	463	5,550
Net Operating Income	321	3,855

Cap rate 5%

Above is a model and no guarantees are implied by broker.

Inventory declined another 5% during the month of August. It’s a great time to buy as these opportunities will decrease as more investors return to the marketplace.

Indian Creek is a basic, no frills, bottom line project that is very well maintained by the Homeowner Association and enjoys home owners, second homes and investors that rent their properties to quality tenants.

There are four units to a building. Unit 1 is all on one floor at ground level. Units 2 and 3 are two story and Unit 4 is a one story upstairs. Square footage ranges from 840 to 924. All units are two bedroom, one bath.

-- Jeannie