News letters

 

October 2, 2007

 

OROVILLE PROPERTIES PARTNERSHIP   - September 2007

 

 

The national real estate market continues to be depressed by the so called “meltdown” of the sub prime lending market.  There is no doubt that this is making lending harder and sales more difficult.   But our investments in Oroville were so undervalued in relation to the rest of the Sacramento valley that prices have continued to increase. Not as much as before, but, where other areas have experienced a decline in prices, basic values are protecting our investments.  There are many good deals out there right now and buyers will look back at this time as a time when big profits were made.  We are continuing on our program of using this time to fix and re-rent properties until the sales market improves.  The good news is that our houses are all full and we have finally received our property tax exemptions from the County.

 

Generally, the entire area is benefiting from the fact that it is an undervalued market.  In addition, the South Oroville area is becoming noticed and is improving every day.  New homes are replacing burned out single-wide trailers and other distressed houses. 

 

But the biggest news is the Oroville economy.  Last year, a report came out that stated that Oroville had retail sales leakage estimated at $158,617,793.  Leakage is an estimate of the loss of retail sales in a market that go elsewhere.  This is measured by estimating the potential in retail sales from population and income projections then subtracting actual sales.  It is an estimate of how much a market is underserved.  This number did not go unnoticed by the big retailers.  The highlights of the Oroville economy are:

 

  • Last year Home Depot opened in Oroville. 
  • The new Riverbend Park opened and is a huge community improvement. 
  • The long vacant Wards store was sold and is now being remodeled to be a mall for specialty shops.  Word has it that they have some major tenants, but they are not announcing them as yet.
  • The two casinos continue to thrive and put money into the community.  Business is so good that another casino is in the planning stages just north of Oroville. This club will be an upscale resort on 640 acres.  Gaming, restaurants, entertainment, hotel and golf. 
  • The highway between Oroville and Chico is under construction with two major interchanges being built in anticipation of growth in the area.
  • Plans for the new city center are being finalized.  It will be located at the entrance to Riverbend Park off the freeway at Montgomery St.  
  • Appleby’s, Target Stores and Gottschalk’s have all acquired sites near the freeway.  Appleby’s is under construction.
  • Sonic Burgers is actively seeking a site.
  • The existing Wal-Mart store has been sold to Lowe’s Home Improvement Centers.  This will give Oroville both a Lowe's and a Home Depot.  These stores just don’t go anywhere unless growth estimates justify the market potential.  And having both is a big endorsement of the expected growth. 
  • Wal-Mart will be moving to its new super center store which is usually at least twice as big as a regular Wal-Mart.  This will create jobs and demand for affordable houses.  Rents go up and so do our values.

As you can tell, I am just thrilled with Oroville.  I believe that Oroville has been discovered and that we are just ahead of major growth, right where real profits are made. 

 

 

March 2007

 

OROVILLE PROPERTIES PARTNERSHIP   - January, February and March

 

Winter months have been slow, but, with spring time now here, the rental market is starting to pick up.  We are now full with the exception of the house at 2054 “B” St.  which is having the utilities split from the house in front on Myers St.  The house has been remodeled and looks very nice.  It should rent quickly.  Most of the rehab work is completed the houses are all decent and safe.  We will start now with upgrades to make houses ready for resale.

 

South Oroville continues to improve.  I talked with someone from the South Oroville Improvement Committee and they are continuing with street and alley clean-up projects.

 

I have noticed several more new homes started on lots in the area by the neighborhood church that has been building there.  I met one of the leaders of the church and complemented them on the improvements.  They plan to continue working in the area until every substandard home is redone.

 

I learned recently that the new town center is being planned to be on Feather River Boulevard and Montgomery Streets near the freeway.  There will be a convention center, visitor bureau, hotel and city offices.   This is less that a block from our fourplex on Safford, so this will be very important to our investment there.

 

The most important news is the growth planned for north state.  I am attending a meeting on the "Pulse of Transportation" with our representatives and people from Caltrans to learn about where things are going.  The main issue is the freeway that will by-pass Marysville.  Enclosed is an article about the growth in Yuba County.  Yuba County is the next county south of Butte County.  Also, the little town of Wheatland is now processing applications for 11,500 homes.

 

 

August, 2006

  

OROVILLE PROPERTIES PARTNERSHIP

 

We are about six months into our partnership and I am pleased to report that we are ahead of schedule on the repair work.  At this point, the work is substantially complete. By this, I mean that the houses are clean and safe and habitable.  By no means are they show cases yet.  On the down side, we have spent more than we anticipated mostly on Safford and Myers. But, it was money well spent because the units are much improved.

 

We have completed major work on the four-plex on Safford.  This unit was in worse shape than expected.  However, with the new Riverbend Park and Skateboard Park now completed, the investment is justified.  In addition, two old gas stations across the street have been demolished and a new hotel is going to be built on the corner.  This will further improve the looks of the area. 

 

The property on Myers is a large two-bedroom house in front and a three bedroom home on B St.  We put windows in the bedrooms, a new roof, new siding and other major changes which were justified for the three bedroom house.  We still need to put a roof on the front house.

 

We have also had good success with rent increases.  On average, we have raised the scheduled rents by approximately 22 %.  As an example, we were getting $900 per month on Myers. Now we are getting $825 on the front house and will get $750 on the back house.  This is good, but we still have a ways to go and this does not include that we have vacancies which need to be filled.  Of course, as we raise rents we improve our values.

 

We are now concentrating on filling the vacancies.  The units we have finished at 4025 Faunce, 2935 Greenville, the back house at 3281 Myers and unit #5 at Safford are vacant.  We have a good management company and believe that these units will fill soon.  They all show very well.

 

The area continues to improve, new homes are being built everywhere   The South Oroville area has changed dramatically, and, of course, this is what we are counting on to help our properties appreciate.

 

While certainly, real estate, in general, is not the frenzy that it was last year, we should still do very well.  We believe that we will benefit both from the improvement of the South Oroville area, as well as the appreciation of the Oroville area in general, as price pressure fans out from Sacramento as Sacramento becomes more and more unaffordable.

 

October, 2006

 OROVILLE PROPERTIES PARTNERSHIP

 

The market statewide has slowed substantially and the median price of homes is declining.  This is a healthy trend for the market in the long term as it would never have sustained the rapid appreciation of a year ago finally resulting in a crash.  I am now finding isolated instances of price reductions and will try to take advantage of sellers that are not confident in the market.  Remember, the median price of a home is falling; however, the median is that price which has the same number of sales on either side.  Therefore, what is really happening is that high priced homes are declining and low-income properties are not.

 

I had been interested in a vacant lot on Wyandotte Street, but, it is now a brand new home.  This is happening all over South Oroville.  In another instance, one particular single family mobile home was burned down and had been blight on the whole street.  It has been demolished and the lot has been cleared for a new home.  Things are happening so quickly that I can’t keep up. 

 

The South Oroville Improvement Committee organized a community clean-up.  This effort resulted in the removal of numerous abandoned cars, used appliances and other junk which had been cluttering the area.  The difference can be seen everywhere.

 

I attended a BBQ picnic fundraiser for the El Medio Fire Department in South Oroville sponsored by the Oroville Association of Realtors.  I met many people who are excited about the progress being made in South Oroville.  New homes everywhere, streets cleaned-up, and a larger police presence which is reducing the criminal element, are all making a big difference.  All the signs we want to see in a rehabilitation project.  One realtor that I spoke with at the BBQ just kept commenting on how amazed he was in the change in the area.  While the slower real estate market in general may extend our projections, all the signs point to good sustained price appreciation. 

 

While it is most important to make a profit in return for our effort and investment, it is also nice to know that we are playing a part in improving housing for low-income families who are not as fortunate as we are.  Although we still have more work to do, our houses are all now clean, safe housing where decent families reside.

 

 

November, 2006

  

OROVILLE PROPERTIES PARTNERSHIP

 

Even though the market has slowed substantially, we still have good progress in the lower-end properties.  Appreciation has slowed, but is still positive.  We have rented the houses at Greenville and Faunce.  We are continuing to push rent increases.  The property at Myers Street was rented for $900 per month.  We improved the property and now the front house is rented for $800 and the back house will rent for $750.  About a 72% increase.  The property on Faunce was rented for $600.  We improved the other house that was vacant and have now rented it for $650.  This doubled our income from that property.

 

For a long time you have heard me talking about all the new houses being built in the area.  I had heard that this was being done by a local church and decided to investigate who it is and what they are doing.

 

Right in the heart of South Oroville is the Fathers House Church.  It looks more like an industrial building that a church.  The pastor is Steve Orsillo who also owns a construction company.  The church is behind all the new homes being built.  At the present time they have 51 houses in South Oroville.   Pastor Orsillo believes in putting this preaching into practice.  He takes addicts and straightens them out and gives them a job building houses.  The new homes become half way houses for recovering addicts.  The addicts get a new start and learn some marketable skills, the neighborhood gets major new improvements and the church makes money to operate.  He is “walking the walk” as they say.  He plans to continue until all of South Oroville is rebuilt.

 

While it is most important to insure that we make enough in return for our effort and investment to sustain our work, it is also nice to know that we are also playing a part in improving housing for low-income families who are not as fortunate as we are.  “Doing well by doing good”.  Although we still have more work to do, our houses are all now clean, safe housing where decent families reside. With our efforts, that of the Fathers House Church and others, we should bring about positive change and profit from the effort.

 

 

January, 2007

 

 OROVILLE PROPERTIES PARTNERSHIP   - December

 

I was at the Butte County Building Department to get a permit to get a separate electric meter for our property at 3281 Myers St.  As you know, this property is two houses on one lot, but, it has never had separate electric service.  The rear house was served from the front house.  It is not an easy process, but, I was successful in getting them to recognize the rear house and allow separate service.  I was also able to get a separate address for the rear house.  Since it is on a corner, I was able to get 2054 “B” St. for the rear house.  This is important because now the building department recognizes the rear house and cannot make it an issue at a later date.

 

While I was at the building department waiting for this to be decided and approved, I had the opportunity to visit with the building inspector.  We started talking about South Oroville.  Her comment was that there is much activity there and the area is improving rapidly.  Everyone is talking about how much better it is becoming.  We also talked about Reverend Steve Orsillo and the churches efforts to build all the new homes there.  The inspector could not say enough good things about the effort of the church and that Pastor Orsillo had big plans to keep on making improvements.

 

The market is slow as you all know.  California, like the rest of the nation, is following the national trend.  Home prices are flat, sales are few and rentals are slow.  But, this is part of the overall market right now.  South Oroville is continuing to be a good investment area and lower priced properties still remain to be not so affected by slow national and regional markets.   It is expected that the market will start up now that the holidays are over.  Yet, in all likelihood, we should expect that the slow market will add to our projected holding time for the properties.  We remain optimistic that the properties will make for sound investments.

 

Our houses are all now in good serviceable condition.  Basic repairs have been made and no problems are expected.  There are cosmetic things that need to be fixed and we will now turn our attention to those matters.  Landscaping, painting, new fences, etc.  Things that will make the properties show well.