Why “ All Cash “ Is Not Always the Best Choice When Buying Real E state in The Diablo Valley.

With property values sinking, my phone has been steadily ringing with calls from new investors who are considering the purchase of rental property. And with prices on bank –owned single family homes starting at $75,000 in many areas, buying with cash and avoiding the mortgage process is an option there are considering. But before you jump and pay all cash for your next investment property, be sure to run the numbers first. You’ll discover one of the reasons why investing in Real Estate can be so lucrative. Here’s a real case study for a property that a client is thinking about purchasing. It’s a two bedroom, one bath single family home with about 900 square feet and a one car detached garage. The listing price is $95,000 and it will rent for approximately $1,200 per month. For simplicity’s sake, I’ll omit the price negotiations, repair cost, and closing cost details, pretending he’ll be purchasing the home for $95,000 with no other expenses. If my client purchased the home all in cash with no mortgage, his only expenses would be management fees, property taxes, maintenance, and insurance, totaling approximately $235 per month. With a monthly rental income of $1,200 per month, his net annual proceeds would be just over $11,000. That’s a respectable 12.20% annual return on his $95,000 investment. So what happens when we put a mortgage on the home? Common sense would say that the debt would increase the monthly expenses and thus lower the rate of return, right? Not so fast. Let’s run the numbers, first with 50% down and then again with 25% down. With a 50% down payment and a 30 year fixed mortgage at 6.75%, the monthly expenses go up to $542 per month, leaving the net annual proceeds at just $7,900. However, with a capital investment of only $47,500, the annual return actually goes up to a 16.62%. Holy cow! 16.62% return per year? Where do I sign up? Well, let’s save your excitement for a minute while we explore the smaller down payment of 25%. In this scenario, the monthly expenses increase to almost $700 per month, leaving the annual proceeds of just $6.000. But with only $23,750 total cash invested, the annual return climbs to 25.45%. Is anyone getting 25% in the stock market lately? Or in savings or CD’s? Me neither. That’s why leveraged Real estate is and continues to be one of the great American ways to invest.


Christian Rousset

Diablo valley has everything for your horse good life

Having horses on your property is enjoyable when you own real estate in the Lafayette, Danville area.
My older son used to love taking care of them, even late at night when the new born colt wanted to play.
Not only they fertilize the soil of your orchard or your vegetable garden, but what a saving on gas, and extreme pleasure, to ride your horse, go down the next valley to visit your neighbor and friend in the late afternoon. This is what I used to do in the early 80's.
The thing is I enjoyed so much talking about all our realization around the property and the community news that I got caught by the night. Lucky me it was full moon. So I decided to visit little bit longer with my friend. Finally just before midnight, it was time to go home. Sure enough, I was so tired that I fell aslip on my saddle. The next thing I remembered was waking up, on the horse, in front of my house.
Roxanne knew the way, and safely ended this journey.

The spirit of Michelangelo alive in the Diablo Valley

Carving this thirty six inches high piece of earth colored lime stone was inspired by my mother soft face.

I was in my twenties, artist, making my living from my sculpture, trying to keep alive the spirit of the Italian Renaissance Stone Carvers.

Finding inspiration by hiking Briones State park in Lafayette, Pleasant Hill trail, Mont Diablo and his valley. Nature offers a large variety of colors, textures and forms in a such strong way that I can't sculpt anything for few days, when I come back to my studio. Then the magic happen and I can create again with inspiration.

Green Is The Trend For Diablo Valley Residents

Green energy is getting affordable and we are going to see in the next decade a huge improvement in his utilisation, in cars, commercial and industrial buildings and in residential housing.
The Diablo Valley offers a great possibility. Lafayette, Pleasant Hill and Danville
in California are perfect areas to benefit from the Pacific coast wind for windmills and the sun exposure for photocells utilization.
Twenty eight years ago it was a real adventure to built my own windmill. Not too much literature and manufacturers to buy from. So I had to find a used alternator.
buy some fir, being the best wood for a small propeller, that I had to carve myself to the right profile and assemble the whole thing together on the top of a 35 foot pole like you see in the picture. In building our homes, let's consider a budget for green energy.

Danville Art - Fountain at the Danville School

This fountain was a donation by Bob and Brenda Markstein of Diablo in recognition of the 2001 graduating class, at the San Ramon Christian Academy. I was involved in executing this project, because of my close relationship with the Markstein family who gave me the opportunity to build several projects at their residence over a couple of decades.
Art like this piece is a message of Tranquility, Love and Balance that we often forget to include in our daily life, whether in school, church or home. Ownership of real eastate, espacially in the Diablo valley, gives us the chance to express ourselves through fine art, music, poetry, and litterature in any form we like. Keep this spirit.

Pleasant Hill Market Update

Pleasant Hill Update
August 2008

Pleasant Hill Sales Activity

Active Inventory On 8/1/08 On 7/1/08
Number of Listings 120 130
Avg Days On Market 73 74
Avg List Price $609,037 $617,264
Median List Price $587,000 $589,450
Avg $ / Square Foot $337 $339
Pending Sales On 8/1/08 On 7/1/08
Number of Listings 51 54
Avg Days on Market 63 57
Avg List Price $497,562 $479,548
Avg $ / Square Foot $323 $325
Closed Sales 7/1/08-7/31/08 6/1/08-6/30/08
Number of Listings 35 27
Avg Days on Market 43 54
Avg List Price $542,969 $510,969
Avg Sales Price $523,677 $491,833
Avg Sales $ / Sq Ft $331 $337


“I’ve never felt more compelled and stronger about advising anyone and everyone who ever thought about getting into real estate to do it now.” This is a direct quote from Gus Kramer, the current Contra Costa County assessor, in a Contra Costa Times article this week, discussing the condition of our local real estate market.
Kramer is the person in charge of valuing all real property in Contra Costa County for tax purposes, and there are not many others more qualified to comment on the subject. Articles like this one are not the only sign that the housing market here in the Bay Area is primed for a rebound, or at the very least, a leveling off.
Despite the strong influence of a relentless flood of foreclosures and a lackluster economy, July marked the fourth month in a row in which the volume of home sales outpaced the month prior. Even more impressive is that July also marked a new record for number of homes sold for Contra Costa County in a single month, besting the previous record set in June of 2006 according to my personal market records.
The good news doesn’t stop there. Inventory continues to fall steadily at a time when we’d normally expect a seasonal increase, and pending sales in Contra Costa and Alameda have increased every month since December 2007, currently up 236% since that record-setting low point.
At the end of the day though, home values continue to remain soft. Unfortunately in many areas, they continue to get softer despite robust sales activity. One thing is for sure though--if the media continues to sing a favorable song, that strong rebound will be here sooner than you think.

Christian Rousset, Realtor

Bay Area Real Estate

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