Anatomy of a Deal

July 15, 2013

Anatomy of a deal… Wanted to show you guys how you can look at an expensive property and see how it could work for your group, provide you work/income and be able to live & own a slice of heaven. This property is 126 acres in North County San Diego with 55 acres of income producing avocado grove. It has at least 3 houses on it, 3 bed main house and 2 bed guest house to private lake and a 2 bedroom caretaker house, 5200 sqft packing house and some other buildings. I called the selling agent and asked for profit and loss statements for the last 5 years on the grove and the most recent info is:

2011 $162,000 income = $55,000 wages for 2 guys, $6,000 payroll, $12,000 insurance, $11,000 property taxes, $96,000 utilities (water). 2012 is expected to be $225,000 income as they have steadily been watering more (though more utilities).

This ranch was owned by a dad that passed away and the kids don’t have much interest in upgrades. The property used to have a well but a tree fell on it and they now just use city water because they don’t want to spend $50,000 – $70,000 to have a new one dug. But they are spending that every year on city water as well as using less than desired amount. If the new owner drops a well and watered appropriately the yield may be closer to $275,000 or more a year plus you get to drop the utility costs every year after the well is built.

So let’s say at year two the avocado grove made $225,000 minus wages for two of the owners, minus the rest of costs to run the orchard you would be left with $115,000 to pay towards a mortgage for the property. The mortgage could be about $10,000 a month ($120,000 a year) depending on how you finance it. Then you still have the rent from the 7 bedrooms in 3 houses to cover the remaining $5,000 ($416 a month) a year needed. IF you charged $750 per room to rent you should have a surplus of $58,000 a year to cover losses, problems, etc. You can even claim a loss on the avocado business as it does not cover all the mortgage.

After that you can still hold events at this property that backs up to the Cleveland National forest to raise funds for building projects for your community. But most importantly you can live in and own a dream property for $750 a month while possibly even employing yourself. These deals are everywhere.

Change your state, live the life that you dream of.
http://www.redfin.com/CA/Fallbrook/40376-Sandia-Creek-Dr- 92028/home/12528096

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About the Author ()

Jonah Mesritz lives in San Diego County and has been actively involved in buying, selling and investing in real estate here since 1999. He is a former U.S. Navy SEAL sniper and now brings to real estate his ability to think out of the box, be thorough, precise and to find creative ways to complete the mission.

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