Unconventional Investments

Time for a change in investing

Tag: condo

SUCCESS!!!

The purpose of this blog is to show how unconventional investments can add value to your portfolio.  The condo went to settlement a week ago and closed the chapter on this investment. Final sales price was $171,000 on a small beach condo purchased for $83,000 six years ago.  That was a 106% gross return on investment and an 88% return net of commissions and transaction selling costs. By all standards, this was a great success.  The condo paid for itself for all 6 years through rental fees and never required any additional operating cash from my personal funds.  A couple of observations from the past several weeks:

A.  When selling an out of state property, a hands on real estate sales person makes a huge difference. Sheila Geer with the St Pete office of Coldwell Banker  was fantastic in handling all aspects of the transaction, including meeting repair contractors and even the small tasks such as having keys made.  That level of assistance and expertise is very much appreciated.

B. The appraisal can throw a monkey wrench into the best of deals. In our case, it come in lower than our contract price but the buyer did not have a contingency in the contract for that circumstance. Even though they wanted a new price, the original was not changed.  My opinion is that the appraised price had not caught up to the fast sky rocketing prices the area was beginning to experience and the buyers were still getting a good deal.

C. Be aware of the tax consequences that a sale can incur and plan accordingly so surprises in April do not take you off guard. The right tax planning can make the difference so contact your tax professional for options.

As this investment gets placed in the plus column, it is time to look for a new replacement so let the fun begin…

Thanks for reading…

Jeff

 

Condo sale update

It was definitely the right time to list the beach condo for sale. Within 3 days, we had 3 offers to purchase the unit. With a list price of $179,900, the 3 offers were as follows:

1.       A full price offer with a contingency stating that their condo must be sold first

2.       A cash offer of $165,000

3.       A offer of $171,000 with a 24 hour deadline to accept and settlement in June

The 3rd offer was accepted after the party with the cash offer refused to go any higher. The contingency offer was not considered due to the uncertainty of their sale. After our contract was signed, we learned that the two others were considering a change to their offers in the event that our transaction does not make it to settlement; so it is great to have these as potential backups. There is no guarantee the transaction will be completed as it requires numerous steps to be attained. These include a property inspection, real estate appraisal and financing approval.

 An inspection has been done and requests by the buyer for additional settlement credits were countered with an offer to purchase a home warranty insurance policy on their behalf with a term of 1 year. This was accepted and is a common concession in these circumstances. A year policy can be purchased for around $500. Step 1 is now completed. Next step is to ensure that the unit is valued at the sales price by a real estate appraiser so that the bank will approve their financing. I will keep you posted on our progress.

 Thanks for reading.

 Jeff