Compared to storage auctions, real estate auctions were even more chaotic, especially with the incessant ringing of the phones.
The houses were auctioned off according to their numbers. The first house was a city house in downtown Santa Monica.
City houses, also known as condominiums, were houses with two or more units connected by a wall. They could also be called terraced houses. The value of such houses was lower than that of detached houses, and their land area was smaller.
The value of a house in the United States depended on two things: land and buildings. Buildings became cheaper as they aged, while land increased in value as the area developed and the environment changed.
This house was built in the early 20th century and had a history of more than a hundred years. There were many such houses in the United States. They could be lived in after some repairs. It was common for houses to be older than the occupants.
Because the house was so old, the transaction value of the house was very low. Like many old houses in the city, it was quite large. It was 150 square meters.
White Gloves knocked on the table with the mallet and said, "Everyone, quiet, quiet, listen to me. The auction has officially begun. If you are interested, come forward and bid early. Good houses will not wait …"
"I repeat the rules. Three bids. Three bids will determine the price. The transaction amount must be lower than your bank card or cash. Anyway, you have to know your own money. Don't bid randomly …"
"Okay, the starting price of the house is twenty thousand dollars. Twenty thousand dollars, twenty thousand dollars. With only twenty thousand dollars, you can get a big house in the city center. Very good, twenty-one thousand dollars going once …"
Santa Monica was a resort city. Its status in California was similar to that of Flagstaff in Arizona. It was a small place, but because of the environment and climate, many rich people bought houses there. The prices were not low.
Twenty thousand dollars for a house of 150 square meters was a bargain. Even if the house was a hundred years old, it was still a very low price.
This was the value of an auction house. The price was low and the profit margin was high. However, no one knew the exact condition of the house. They did not even know if it was still habitable. Hence, it was a big gamble.
Li Du joined in the bidding. "Twenty-five thousand dollars!"
The auctioneer pointed at him and said, "This gentleman is bidding twenty-five thousand dollars, twenty-five thousand dollars, twenty-five thousand dollars. Is there anyone willing to bid higher? Twenty-six thousand dollars. Very good. That gentleman is bidding twenty-six thousand dollars. Let's be more daring …"
The price kept rising. The final price of this old house was estimated to be around fifty thousand dollars.
The market price of such an old house was probably only about a hundred thousand dollars. The reason why the house-pickers dared to bid was because of its good location, convenient transportation, living, entertainment, and schooling.
Because of all the conveniences, although the house itself was built for a long time, resulting in a low sale value, its rental value was high, and the return on rent was high.
According to the information that Li Du had read, the gross rental rate for a house in California could generally reach seven to nine percent.
After deducting the holding costs and management costs, the net rate of return was still 5 to 6%. This was different from China, where the rental rate of return in China's rental market was only 2 to 3%. The ratio of housing prices to rents was abnormal.
For example, the villa Sophie rented in Los Angeles was about three thousand square feet and was worth about nine hundred thousand dollars. The annual rent was eighty thousand dollars, and the return on rent was close to eight percent.
Just as Li Du expected, the price rose step by step and soon reached 50,000 dollars.
Everyone's goal was the same. Once they bought such an old house, they would clean it up and rent it out. If the house itself was not badly damaged, then the rate of return would be amazing. It might even reach 20%!
In real estate auctions, the closing price was particular. It was based on the estimated value of the house to determine the price range. Generally, if the house was worth less than 100,000 dollars, people would bid up to 50,000 dollars. Any higher and it would be risky.
If the house was worth less than 200,000 dollars, people would bid up to 60% of the value. At 500,000 dollars, the highest bid would be 70%. At a million dollars, the highest bid would be about 80%.
Any higher and people could only bid based on their own experience and luck. A house that was worth more than a million dollars could be a big win or a big loss. The house-pickers who dared to buy such a house were all people with deep pockets.
When it reached 50,000 dollars, the enthusiasm of the people bidding decreased rapidly.
Someone at the side calculated, "50,000 dollars. If it's 50,000 dollars, the annual rent would be about 7,000 to 8,000 dollars. The rate of return would be 15%. But to pay the property tax of 2,000 dollars, the lawn and yard maintenance fee would be at least 500 dollars, the house insurance and maintenance fund would add up to 1,000 dollars, and the vacancy cost would be more than 1,000 dollars. Fifty-one thousand dollars! "
"Fifty-five thousand dollars!" A house-picker followed suit.
The auctioneer pointed at him and said, "Fifty-five thousand dollars, fifty-five thousand dollars, fifty-five thousand dollars. Is there anyone willing to bid higher? For example, fifty-six thousand dollars?"
Li Du rubbed his chin and said, "Sixty thousand dollars!"
Hearing this bid, some house-pickers shook their heads.
"D * mn, the price is a little risky!"
"Such a dilapidated house would cost 50,000 dollars at most. Any higher and it would be a fool with too much money!"
"Where did he come from? Since when did Santa Monica have such a Chinese? "
"He's a treasure hunter. He used to be in Arizona."
"Ha, he's really generous. So he's a rookie? Let him take it then. "
The market value of the house was 100,000 dollars. If it was listed at 90,000 dollars, it could be sold very quickly. The house-pickers did not dare to bid too much because they did not know about the water, electricity, and decoration of the house.
Li Du was not worried about that. He had used the space-time bug to take a look. The house was well protected. All the wiring and passageways could be used. At this price, he would definitely make a profit.
The auctioneer pointed at him and started to set the price. "Sixty thousand dollars going once, sixty thousand dollars going once, is there anyone who wants to bid? Sixty thousand dollars going twice, going twice. If there's no one else — buddy, sixty thousand dollars sold!"
Li Du smiled and nodded. He raised the number plate in his hand to show the official in charge of the auction. The rest of the procedure was to settle the property. An agent would come and help him.
The second house was up for auction. It was a detached house in the city. It was very new, only ten years old. It was considered a new house. The price of such a house was higher. The market price of a 140-square-foot house was about 300,000 dollars.
Li Du did not participate in this house. There were people living in it. It was a Mexican family with a child. It would be difficult to take the house back from them.
The others also knew about this news. They had inquired about the house in advance. The final price of the house was 120,000 dollars. If they could successfully chase away the people living in the house, there would be a lot of room for profit. However, that would be difficult.
Li Du looked at the house-picker who had bought the house. He guessed that the house would be ruined. The Mexican was a lawyer. If he dared to stay in the house, he must have had something to rely on.
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