In honor of this past Black Friday, Cyber Monday, and my latest Instagram video post on @richardhaynesrealestate, I thought it would be appropriate to write about a local South Bay “deal of the week.” I don’t usually write a “deal of the week” post as it puts our buying clients at a disadvantage. That being said, there are a few properties in the South Bay that are even better deals than the one I will be writing about today…but I will reserve those for my current clients.
The Deal
1410 Goodman Avenue in North Redondo Beach.
- Listed at $879,000
- A legal duplex in Golden Hills
- Livable square feet of 1,110
- A 2-bedroom unit and a 1-bedroom unit
- An over-sized 4,642 square foot (sq. ft.) lot
- Zoned R-1 (single-family home)
- Conservative rent $3,000 per month ($1,000 for the 1-bedroom; $2,000 for the 2-bedroom)
Comparable Sales
This property can be a bit tricky to compare because it is located in the heart of “tall and skinny” territory of North Redondo where most lots are around 2,500 sq. ft. with a few trending up to 3,500 sq. ft. In rare cases, there are 4,500 sq. ft. lots that can be subdivided and those should be thrown out. And, since there have been no residential income property sales in this area since 2004, we need to heavily rely on the following single-family home sales:
- $758,000 June Sale: 1747 Axenty Way (3 bed, 2 bath, SFR, 1,026 sq. ft., 2,497 sq. ft. lot)
- $840,000 August Sale: 1636 Steinhart Avenue (3 bed, 2 bath, SFR, 1,432 sq. ft., 2,497 sq. ft. lot)
- $1,025,000 August Sale: 1627 Herrin Street (3 bed, 2 bath, SFR, 1,271 sq. ft., 4,591 sq. ft. lot)
Essentially, our subject property at 1410 Goodman Avenue is a 3-bedroom home. The first two listed comparable properties justify a similar value with smaller sized 3-bedroom sales, but they lack the large over-sized lot. The last comparable property on the list is in a more desirable area of Golden Hills on the other side of Aviation, but it shows you what buyers are willing to pay for a double lot with a big backyard.
Land Value
The land value analysis is what puts a cherry on top of this property.
- $1,500,000 September Sale: 1601 Stanford Ave (5 bed, 4 bath, 2,640 sq. ft., 2,508 sq. ft. lot)
- $1,590,000 October Sale: 1717 Reed Street (4 bed, 4 bath, 2,444 sq. ft., 3,417 sq. ft. lot)
- $1,577,000 in Escrow: 1546 Harper Avenue (4 bed, 3.5 bath, 2550 sq. ft., 3,754 sq. ft. lot)
These are all homes that could be built on the lot of our subject property on 1410 Goodman. If you are a construction hawk, you could build a 2,500 sq. ft. brand new construction home for around $250 per sq. ft. with a 15% budget for soft costs totaling about $720,000. A purchase price of $879,000 + $720,000 puts you at about $1,599,000.
That all-in cost is very similar to the above larger sales. A new home on the Goodman lot should command more due to the larger lot and it being brand new construction.
So in a nutshell, the asking price of the 1410 Goodman is land value.
With sales on the other side of Aviation at 1115 Steinhart Avenue and 1107 Goodman Avenue, selling for $1,730,000 and $1,890,000 respectively, this property has bright prospects as a development over the long term.
Conclusion
The $879,000 is a solid price to ask in an appreciating market, and for a savvy home buyer this duplex will cost them less than owning a single-family. Why? If you only need 2-bedrooms then you can live in one unit and collect at least $1,000 per month in rent, effectively making this property feel like a $679,000 purchase with a tenant paying for some of your costs…something you cannot do with the other single-family options.
Or even better, live in the 1-bedroom and collect $2,000 per month effectively making the property feel like a net cost of a $479,000 purchase price. How can you beat that in the Beach Cities?
All in all, 1410 Goodman in North Redondo is a great property for our “Deal of the Week.” The property affords a buyer to own a house for a price that matches market comparables, while owning it a fraction of the cost of normal home owners by renting out one of the units while residing. In addition, one can see how the value is there with the new construction comps and how this is priced at land value so to speak. This listing works for virtually any type of savvy property buyer and predicts to do very well over the long term as a home, income property, or new development.