FIN 351 BPO Project

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School

California State University, Fullerton *

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351

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Finance

Date

Jan 9, 2024

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docx

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Uploaded by xmip007

Broker Price Opinion On Single Family Residence At 518 W Orangethorpe Ave, Fullerton, CA 92832 Prepared for Desen Lin, FIN 351-50 Prepared by Drew Woodring Xavier Preston Harry Kinchett Date of report April 17th, 2023

Property Type: Single Family Residence Property Address: 518 W Orangethorpe Ave, Fullerton, CA, 92832 Property Owner: Darren Bashford Client: Real Estate 351 Real Property Interests: Fee Simple Type of Value: Market Value (Liquidation Value) Intended Use: Sell Intended Users: Seller, Lender and Buyer will need appraisal Site Description: Size: 1,340 sq ft. Location: Orange County, CA Utilities: Heating, Central Gas, Cooling, General Electric, Water

Introduction (Description): This particular property contains 3 bedrooms and 2 full bathrooms, which includes 1 masters suite with a large walk-in shower. One of the perks of this property is that it has recently been renovated and completely upgraded to include waterfall countertops, custom windows, a quartz fireplace, brand new hardwood flooring, fully remodeled bathrooms, as well as illumination of recessed lighting. This property also features a brand new HVAC system. The home sits on a comfortable 7,101 sq ft. lot, and offers a sizable fenced in backyard that displays beautiful landscaping arrangements. This particular community in Fullerton is conveniently located close to the 91 Freeway, Downtown Fullerton shopping and restaurants, Costco, Target, as well as the California State University Fullerton and Troy High School. This property is ideal for a single family with pre-teen/teenaged children. This house is located in the city of Fullerton, California, in northern Orange County just 22.15 miles from the Los Angeles county line. Fullerton was founded in 1887, and currently has a population of 141,874. The total number of housing units within the city is 47,885, with 95% of these units currently being lived in. The job market within Fullerton has increased by 0.06% in the past year. Over the next 10 years, job growth is expected to increase by 32.3% which is just below the US average of 33.5%. The public school district within the city of Fullerton is Fullerton School district which educates a total of 12,066 students. As mentioned in the previous paragraph, Fullerton also contains California State University, Fullerton, as part of the CSU system. Fullerton College is also within city limits, which is a local community college. Between these two universities, Fullerton contains 58,045 college students (US NEWS). Fullerton offers an array of fun activities for both adults and college students. First there is the Fullerton Arboretum, a 26 acre botanical garden which serves as an urban oasis and environmental education center for Fullerton residents. Fullerton also is home to the Muckenthaler Art and Cultural Center, which hosts a variety of events from car shows to art exhibits, as well as musical jazz performances. Fullerton residents can also enjoy a variety of sporting events, as the city is also just a few miles from the city of Anaheim, which is home to Angels Baseball Stadium, as well as Honda Center, home of the Anaheim Ducks. The public transit system in fullerton is operated by the Orange County Transport Authority, which features 60 bus routes around Orange County (OCTA). In addition to a public bus system, there is also the Metrolink Train which provides routes to Downtown Los Angeles, San Bernardino, as well as San Diego. Orange county is the 3rd largest county in California, just behind Los Angeles and San Diego County. Discussion:

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This particular property is in the city of Fullerton located in the state of California. The geographic region and the demand for infrastructure in this area is why it was chosen. Fullerton being in the southern part of California, is located within the northern region of Orange County. Despite its relatively small area, Orange County is the third most populous county in Southern California. The city of Fullerton is a city that offers comprehensive services and is widely recognized for its distinctive blend of residential, commercial, industrial, educational, and cultural settings, which collectively contribute to an exceptional standard of living for its residents. Orange County has focused on investments in transportation infrastructure, public safety, and economic development to attract people to the region. Orange County has made sure to invest in multiple public funds to keep a diverse portfolio and ensure low risk and safe investments. Special Revenue and Agency funds consist of about half of the total investment pool while general debt service funds and enterprise programs followed. The total investments portfolio pool for Orange County as of March 2023 was 14.8 billion. Special revenue and agency funds are attractive investment options for Orange County due to their low-risk nature and ability to generate predictable income. These funds are specifically designed to manage and track designated revenue streams or assets held on behalf of other entities, allowing the county to earn returns on its investments while ensuring that the funds and assets are available to support essential programs and obligations. By utilizing these investment options, Orange County can effectively manage its finances and provide necessary support to its communities. The additional income generated by these investments are used to support important programs and services for residents, such as education, healthcare, and infrastructure projects. The investments made by Orange County shows the county’s efforts towards the improvement in the real estate market in that area. Fullerton in specific has a somewhat competitive market as houses are staying listed for about 37 days before selling. The median price for Single family homes has increased by 2.4% making it the most sought after. The demand for houses has slowed down from previous years, however, there is a restriction of inventory available in the area. Fullerton is currently in a seller’s market due to homes selling 6% over the listing price. Fullerton's convenient location, highly rated schools, and attractive amenities make it an appealing option for renters and home buyers alike, providing a stable and potentially profitable market for real estate investors. Analysis:

The geographic location of the property is the northern area of Orange County in the city of Fullerton, CA. It is close to Anaheim, CA and around 25 miles northwest of Los Angeles CA. The main reason for us choosing a house in California is because of the location. It is near major cities with easy access via the freeways. It is also beneficial to own a house near these big cities as job opportunities grow. It would be likely that the house would also be an appreciating asset. The unemployment rate in California is 4.3%. However, in Orange County the unemployment rate is 3.4% which has improved over the years considering the long-term average for Orange County is 5.05%. We also compared these unemployment rates to New York. The unemployment rates are higher in California especially during times like the financial crisis in 2008 and the fall out in the following years. However, the current data reflects that both states are currently at low rates of unemployment (Exhibit A). The location we have picked in Fullerton presents a lot of opportunity to find work that is suitable for the occupier making the house a great investment choice and appealing to live in this location. The growth rate of California has been declining. This is evident during the Covid- 19 pandemic. California’s population declined by more than 500,000 between April 2020 and July 2022. The home we are analyzing is located at 518 W Orangethorpe Ave. which is listed for $850,000. This house contains 3 bedrooms and 2 bathrooms. It is a single-family home that has been remodeled and is fully upgraded with waterfall countertops, custom windows, quartz modern fireplace and brand-new flooring. It has also been fitted with a new heating, ventilation, and air conditioning (HVAC) as well as new electric panels with permits. The driveway is also equipped with a front gate and there is enough space to fit up to six cars. Finally, this property has a large backyard. The property is 1,340 sqft and the sqft lot size total is 7,101. The price per sqft is estimated to be $634. The three homes we will be comparing to 518 W Orangethorpe Ave. are all close by and have similar property descriptions as well as pricing. The three properties used for the analysis are as follows: 1) 775 Arroues Dr, Fullerton, CA, 92835, 2) 1437 S Courtney Ave, Fullerton, CA, 92833. 3) 1306 W Hill Ave, Fullerton, CA 92833. We will be using these properties and analyzing them through Excel. From the data we determined the avg sqft of the listed properties was 1509.75 with a $478 per square foot. The average listing price of the properties came to a total of $928,745.50. The property we selected is expected to be listed for $850,000 according to Redfin, meaning an arbitrage opportunity of 9.26% exists. Being located in Fullerton the amount of opportunities available in nearby areas make this property appealing to single families or a noteworthy investment opportunity. As stated, due to our analysis this property is likely to offer a good conversion price for the seller and Real Estate Agent since the arbitrage opportunity has a 9.26% upside. Conclusion:

For our broker price opinion we have used data from sites such as FRED, Zillow, Redfin and the U.S Bureau House Data Statistics throughout the report. We have focused this report on Orange County, California, this location provides many benefits to the future occupier at 518 W Orangethorpe Ave. Having easy access to nearby cities which present great opportunities of finding high paying employment. It also offers a vast amount of attractions and great schools in the local area. All of which makes this house a great investment opportunity to find a tenant or to simply resale due to our research stating this property that has been recently listed is in fact undervalued. Looking through our report we strongly believe this property should be listed just under $930,000 yet it is only listed for $850,000. The unemployment rate average in Orange County is relatively low and since the Covid-19 Pandemic has now ended we believe that California will experience more growth than in the past. Appendix: Exhibit A: California Unemployment Rate vs. US, and NY Exhibit B: Fastest Growing States (2023): Source US Census Bureau Population Estimates

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Exhibit C: Property Analysis Spreadsheet Sources for Listing Data: Zillow Exhibit D: 6 Month Market Recap for Fullerton, CA

Source: https://www.movoto.com/fullerton-ca/market-trends/ https://www.cityoffullerton.com/government/departments/community-and-economic- development/economic-development/demographics?locale=en https://fred.stlouisfed.org/series/CAUR https://metrolinktrains.com/rider-info/general-info/stations/fullerton/ https://www.movoto.com/fullerton-ca/market-trends/

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