Wednesday, February 06, 2008

La Plata Redux

Everyone remembers las week's Sunny Side of The Street post where we compared two neighbors looking for a buyer. Turns out the the "nice" 2865 is also for rent. Let's see how renting does as an investment strategy:

Rental $2,900
3 Bed, 3 Bath
2,036 Sq. Ft.

Sold new 05/14/2001: $416,000 We'll go with all the usual assumptions. Mortgage is ~$310,000 which is ~$1800/mo. Taxes are $380. Mello-Roos/HOA guessing a low $250. Call it all in $2500/month. This idea cash flows if they can actually get the $2900 for a house that is also for sale ($749,000). In fact given my conservative estimates I'd bet the expenses on this house are exactly $2900/mo. This is called needs based pricing. Good luck with that.

20 comments:

wagga said...

So with First & last plus the pet deposit, you'd need a chunk of cash to move in...

Benoit™ said...
This comment has been removed by the author.
Casey Serin said...

I've just taken out four mortgages with three different banks, all at 100% financing, to purchase this property. Thanks!! ;-)

(GMail mix-up snafu. heh.)

Property Flopper said...

Nice article (nothing new, just good to see it in print)

http://money.cnn.com/2008/02/06/real_estate/walking_away/index.htm?cnn=yes

Quotes Duane LeGate.

Rob Dawg said...

Just heard from Duane. He has a favor to ask the EN regulars. Details forthcoming.

Bill said...

Why everybody's still renting:

http://money.cnn.com/2007/11/06/real_estate/home_prices.fortune/index.htm

and note:

"There's one more factor that will prevent housing prices from recovering as quickly as they might have: the gargantuan rise in property taxes. In many affluent urban and suburban markets, property taxes have doubled since 2000."

I'm going through my mom's old checkbooks now - it will be interesting to see the rise in valuation/property taxes from 1978 (when my parents bought their "big house" for $190,000) to 2008 (property is currently listed for $1.2 million)

Jean ValJean said...

@Benoit:

I face the same issue, too. I finally found an online tip that works if you're using Firefox: download the "IE Tab extension" that allows you to open any page on a Firefox tab using the IE engine. That allows you to keep your regular Gmail account logged in through Firefox, and keep a second Gmail account logged in through the IE Tab.

Sun said...

http://money.cnn.com/2008/02/06/real_estate/walking_away/index.htm?cnn=yes

Troubled homeowners: Can't pay? Just walk away



Don't like your job? ...just walk away!

Had an unexpected kid and don't feel like dealing with it?.. just walk away!

Pedestrian bleeding to death from a car carsh, don't want to waste your cell phone minutes?...just walk away!

It's all good!

Benoit™ said...

Thanks, Jean :o)

chickenlittle said...

Move a war to Iraq?....just walk away!

(note I didn't say start)

bohica said...

From whatreallyhappened-dot-com,(CNN link), top 100 foreclosure cities.

http://money.cnn.com/real_estate/zip_code_foreclosures/

chickenlittle said...

That's so fitting because the whole "ka-ching mentality" can be traced back to Vegas.

Sac RE Agent said...

What a deal for the owner if they can get the $2,900 a month.

Jean ValJean said...

So what's the favor?

Peripheral Visionary said...

They should rent it out for $5,000 a month, that way they'd definitely be getting a positive cash flow! Or, wait, rent it out for $10,000 a month! Or more!

(What is this "market rate" thing people keep talking about?)

w said...

I think $2900 is close to the current rental market. It looks like a nice house. If you like the whole golf course thing it would be even better right? Rentals of lesser houses that are also in good neighborhoods with good schools are going for $2200-2500 from what I see. Of course I expect rental prices will come down a few hundred a month as work slows in Ventura County.

Rob Dawg said...

There are two SFR rental markets in VenCo. The place to live and the live like a millionare places. This one falls in the gap. $2500 is pretty much the top for a place to live. There's a lot of "compression" in that number. Above $2500 and people bought thus setting the cap. As fewer people buy that may rise a bit. Supply considerations pushed lower rents up so there isn't much at the low end say $1500-$1800. apartments are often $1100-$1500 again supply constrained.

It is a very nice house, new fancy and just a golf course down the road from the infamous Dawg House. Doesn't matter anymore. There are tens of thousands of low cost basis VenCo homeowners who are going to be switching their houses over to rentals "to cover the mortgage" in the next few years but there aren't many looking to rent on those terms.

Here's a FB trying to become a landlord with a serious wishing price problem:
Ramona

$3500? No good enough for you? Try one golf course further away:

$10,000 per month!

Funny Circus Bears said...

I saw DooWayne LeGate was quoted and his website mentioned in a CNN piece yesterday.

w said...

Beazer Homes Survey Finds ''Smart Time to Buy'' Sentiment Prevails among Experienced Homebuyers

http://biz.yahoo.com/bw/080207/20080207005158.html?.v=1

How could all of these "experts" be wrong?

Peripheral Visionary said...

Interesting you should mention compression of prices. D.C. has seen a lot of compression; when supply was tight during the condo frenzy, a lot of the low-end rents got raised. Now that the market is drowning in supply, there is a lot of pressure on prices, but primarily at the high end.

Consequently, prices are compressing, with virtually everything now in the $1700 to $2500 range, although there is still some wishful pricing out there above $2500.