Let’s take a look at a typical small residential income property in Menlo Park.

We're sorry, but we couldn't find MLS # 81210267 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

This property consists of four 1 bedroom 1 bath units priced at $1,325,000.

Current rent for all four units is $4,650 per month or $55,800 per year. This property is priced at $1,325,000/$55,800 for a gross rent multiplier (GRM) of 23.75 – asking price is 23.75 times current annual rental income.

Market rents for all four units is estimated at $,6100 per month or $73,200 per year. This results in a GRM of 18.1 ($1,325,000/$73,200).

Property operating expenses – property taxes, insurance, utilities, gardener, management, and repairs, etc.  (loan costs are not property operating expenses) are estimated to be $31,250 per year – (42.7% of gross scheduled rents). This is a pretty typical operating expense ratio – should generally be at least 35% to 40% of gross scheduled rental income.

Gross scheduled income ($73,200) less operating expenses ($31,250) less vacancy and credit loss ($3,000) results in a net operating income of approx. $38,950 per year.

This is what will be left over to pay debt service or loan payments.

Investor loans for residential rental properties are currently available to approx. 5%.

$38,950 per year or $3,245 per month will pay loan payments on a $605,000 loan which means a purchaser would need $700,000 cash down payment to reach a break-even point.

This property is located in a very nice area of Menlo Park near the Civic Center and Burgess Park – one can easily walk to either downtown Palo Alto or Menlo Park.

An investor would need to forecast an increase in rents and property values over the next 1o to 15 years for this investment to make sense.

The Menlo Park real estate market has become extremely active since the first of the year.

The median market action has moved from approx. 19 in Nov 2011 (strong buyer’s market) to approx 28 in March 2012 (balanced market).

Here is the median market action index broken into price ranges.

Interesting to note, it is the highest price range in Menlo Park where the greatest increase in market action index is.

The median price in the highest Menlo Park quartile is $2,180,000.

Homes in this price range of Menlo Park are generally located west of El Camino in the following neighborhoods:

Downtown/Allied Arts

Showing properties 1 - 5 of 10. See more Allied Arts / Downtown Menlo Park listings *.
(all data current as of 5/19/2012)

1. $1,350,000 : 1244 Hoover St, Menlo Park
   
   3 beds, 2 full, 1 part baths

   Home size: 1,550 sq ft

   Lot size: 3,518 sqft
   
2. $1,175,000 : 675 Middle Av, Menlo Park
   
   2 beds, 2 full baths

   Home size: 1,382 sq ft

   Lot size: 7,800 sqft
   
3. $989,000 : 752 Roble Av, Menlo Park
   
   2 beds, 1 full bath

   Home size: 1,130 sq ft

   Lot size: 5,400 sqft
   
4. $859,000 : 455 Yale Rd, Menlo Park
   
   2 beds, 1 full bath

   Home size: 750 sq ft

   Lot size: 5,796 sqft
   
5. $2,795,000 : 665 Cambridge Av, Menlo Park
   
   5 beds, 4 full baths

   Home size: 2,784 sq ft

   Lot size: 8,100 sqft
   

Listing information deemed reliable but not guaranteed. Read full disclaimer.

West Menlo

Showing properties 1 - 5 of 7. See more Central Menlo listings *.
(all data current as of 5/19/2012)

1. $1,175,000 : 1204 Sharon Park Dr #85, Menlo Park
   
   2 beds, 2 full baths

   Home size: 1,997 sq ft
   
2. $1,688,000 : 1150 Westfield Dr, Menlo Park
   
   3 beds, 3 full baths

   Home size: 1,790 sq ft

   Lot size: 8,400 sqft
   
3. $817,500 : 967 Menlo Av, Menlo Park
   
   2 beds, 1 full bath

   Home size: 1,060 sq ft
   
4. $5,500,000 : 475 Cotton St, Menlo Park
   
   5 beds, 4 full, 2 part baths

   Home size: 4,784 sq ft

   Lot size: 10,000 sqft
   
5. $3,395,000 : 1013 Seymour Ln, Menlo Park
   
   5 beds, 3 full, 1 part baths

   Home size: 3,640 sq ft

   Lot size: 22,100 sqft
   

Listing information deemed reliable but not guaranteed. Read full disclaimer.

University Heights – County area along Alameda

Showing properties 1 - 5 of 7. See more County / Alameda *.
(all data current as of 5/19/2012)

1. $1,589,000 : 1131 Sherman Av, Menlo Park
   
   3 beds, 2 full baths

   Home size: 1,700 sq ft

   Lot size: 6,250 sqft
   
2. $1,999,000 : 1245 Sherman Av, Menlo Park
   
   4 beds, 3 full, 1 part baths

   Home size: 3,070 sq ft

   Lot size: 6,250 sqft
   
3. $1,998,000 : 1361 Sherman Av, Menlo Park
   
   3 beds, 3 full baths

   Home size: 3,010 sq ft

   Lot size: 9,375 sqft
   
4. $1,395,000 : 121 Stanford Av, Menlo Park
   
   3 beds, 2 full baths

   Home size: 1,710 sq ft

   Lot size: 5,650 sqft
   
5. $1,895,000 : 301 Vine St, Menlo Park
   
   3 beds, 2 full, 1 part baths

   Home size: 2,460 sq ft

   Lot size: 6,384 sqft
   

Listing information deemed reliable but not guaranteed. Read full disclaimer.

My office put a listing on in the Suburban Park neighborhood of Menlo Park on February 6th.

14 Greenwood Place was listed at $1,249,000.

It is an 1890sf nicely updated home with 4 bedrooms and 2 baths.

8 offers were submitted on Valentine’s Day and there was one very happy buyer at the end of the day!

Property sold significantly over list price.

To search for historical sales data or current listings (there will not be many! :-) ) in Flood Park and Surburban Park, click here.

Last week, I received a call from an old client who purchased her home from me way back in 1984.

She still lives in that same house 27 years later……..

This is a woman who has worked 2 jobs most of her life…….nursing and in home care – hard work – tougher than I could do…..

On the phone, she told me she has lots of things on her mind that trouble her – partially real estate related but more family related and that she would like to sit down with me and talk about everything.

We met last Friday afternoon at my office and we talked for about an hour and half. It wasn’t about buying and selling real estate, it was about HER and her life.

She told me that she racked her brain trying to figure out who she could talk to - who she could trust – and then she thought of me.

All her friends and family were happy to give her advice, but they all had an agenda that wasn’t about her, it was about them…..

She told me that she always knew she could trust me – that I had her best interests at heart.

I can’t tell you how great that made me feel – I was on cloud 9 - this is what the RE business is all about for me – to be acknowledged as a trusted advisor and friend.

Real estate sales is about helping people – taking care of people – holding their hand when the need arose – handling their affairs even more carefully than I handle my own…..

I have never cared about being THE #1 AGENT rah rah rah……..it was about helping one person at a time…..

After 33 years in the local real estate market, I have a strong loyal clientele and I am thankful for that.

It is always a pleasure to help my clients, their friends, families, and associates in any way I can – the focus is on relationships and not transactions.

Mildred, THANK YOU. Your words mean the WORLD to me.

Do you have an FHA mortgage on your home?

If so, you may be able to refinance at current very low interest rates even if you owe more on your home than it is worth.

So if you currently hold an FHA mortgage at 5% or 6%, you can now obtain a loan under 4%.

To learn more, click here……..

The local real estate market often “kicks off” after Super Bowl Sunday.

As of today, the inventory of available homes on the San Francisco Peninsula is extremely low.

Inventory generally drops towards the end of any year and then increases until a peak is reached late spring or early summer.

Inventory in all four mid-peninsula communities is lower than it has been in the past three years.

At the current time, there are plenty of buyers looking for homes. The limiting factor on sales is the number of homes for sale.

If local inventory is going to increase in 2012, we should start to see the increase in the next month or so.

If inventory does not start to increase, home buyers from Palo Alto to San Carlos could be in for a long and competitive home search.

Unlike primary personal residences, where single folks get up to $250,000 gain tax free and married couples get up to $500,000 gain tax free upon sale.

When one sells a rental property and receives the cash proceeds of sale; the gain on that property is taxed. In order to defer taxation on this gain, which allows the investor to use the entire proceeds of sale towards the purchase price of the new property, a 1031 exchange needs to be executed. Please note I use the word defer and not tax free. Executing a 1031 exchange allows the investor to defer paying taxes on that gain but does not forever eliminate the tax due on that gain.

Most 1031 exchanges are executed through the use of an exchange intermediary.

Under this scenario, the investor puts his property up for sale and tries to find a buyer just like any other sale. No difference. This contract will include an addendum indicating the seller wants to complete sale via a 1031 exchange and that the buyer will co-operate with seller in doing same. No additonal cost to buyer, just a few additional documents to sign at close.

At close, instead of a check being sent to the investor, the proceeds are sent to a 3rd party intermediary to hold until the new purchase  property is located. The investor can not touch that money or a taxable event will be created.

The investor then attempts to locate the purchase property. The investor typically has 45 days from close of the sale property to locate the purchase property. A property is located, contract negotiated and included a clause indicating that the investor now the buyer wants to do an exchange ansd that seller agrees to co-operate in doing so.

The rules governing exchange are quite complicated and legal and tax advice should be obtained. That being said, a real estate broker experienced with investment property and exchanges can guide the investor client in the right direction. An investor still needs to find a buyer for his property and then still find a property to purchase. All of that is the same as ay other purchase or sale. The paperwork in contract and closing is different.

If you have owned a small rental house, duplex, triplex, or 4plex for many years, chances are the property has gone up in value and you have paid down loan – both increasng your equity in property. Using this equity to buy a bigger larger higher income property may prove to be a good thing.

So if you own rental property and want to know what your investment options are, please let me know. I have clients looking for investments in the SF Bay Area as well as in Texas and North Carolina. Some of the investment opportunities that can be found out of state can be very attractive. I am looking at new duplexes in Dallas Fort Worth area that cost around $250,000 and rent for $2,500 per month. The cash flow from the property will pay off the mortgage in 15 to 20 years.

Here are some guides to 1031 exchange. Just let me know if you have questions.

1031 JUST THE BASICS 06 08

1031 Exchange Identification Requirements 06 08

1031 CLOSING COSTS in a 1031 Exchange 08 08

1031 Restrictions on Receiving Cash in a 1031 Exchange 06 08

Some real estate agents always say “the market is great” or “great time to buy” or “great time to sell”. Informed consumers of real estate understand all proclamations of this type must be taken with a grain of salt. Altos Research tracks real estate markets across the country. They do not sell real estate, they provide real estate data.

For detailed information on Altos Research’s methodology: what market statistics they track and how they analyze the data.

altos-stats-data-sheet   altos-future-price-research-review   altos-leading-indicators white paper

The Market Action Index (MAI) measures the strength of a local market by looking at the number of home sales versus inventory or number of homes for sale.

30 is considered a balanced market.

Above 30, seller’s market. Below 30, buyers’ market.

One can see that from June 2010 to March 2011, MAI was 22 to 24 – buyers’ market.

Since March 2011, MAI has gone from 23 to 36.

This is a significant move towards a sellers’ market after buyers’ market from January 2008 to March 2011.

For a longer term view of the Market Action Index in Palo Alto, please review the chart below.

What segment of the market is the strongest?

Here is median MAI for Palo Alto broken down into 4 price ranges.

The four price quartiles have average prices of $4.0M, $1.8M, $1.3M, and $1M.

The highest price quartile in Palo Alto was the weakest in 2010 while the two lowest quartiles were the strongest in Palo Alto. Since January 2011, the highest price range has gotten much stronger like the other price ranges in Palo Alto.

This data indicates that Palo Alto is now a seller’s market. Buyers looking for homes in Palo Alto will face stiff competition.

Here is an early look at some of the tour properties in Menlo Park, I will take a look on Tuesday.

To see more information or to schedule a showing of any of these listings, just click on address header.

Looking for a fix up or site for new construction in Allied Arts?

Check out 155 Yale Road – 3/2 – $1,250,000

We're sorry, but we couldn't find MLS # 81121628 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

Search for other homes in Allied Arts, click here.

To review sales data in Allied Arts, click here.

Looking for an affordable updated home with Menlo Park Schools?

Check out 956 Timothy Lane – 3/1 – $898,000

We're sorry, but we couldn't find MLS # 81121659 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

Search for other homes in the Flood Park area of Menlo Park, click here.

To review sales data in Flood Park area, click here.

Another option is 530 Central Avenue – 2/1.5 – $848,500

We're sorry, but we couldn't find MLS # 81121642 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

Search for other homes in the Willows, click here.

To review sales data in the Willows, click here.

 More and more investors are using their retirement funds from a 401K, IRA, Roth IRA, and SEP IRAs to invest in real estate.

The stock market has done well over the past few years but self-directed IRAs allow you to diversify and invest in many other types of assets including real estate not available through traditional avenues.

The rules which govern real estate investments purchased through the use of retirement funds are detailed and somewhat complicated. Before embarking on any purchase with self-directed retirement funds, an investor should consult appropriate legal and accounting professional as well as working with a qualified intermediary and a real estate broker familiar with these purchases.

Top 50 Questions about Self-Directed Investment

ABCs of Self-Directed Investment