Monday, August 24, 2009

Little Cabin Lost




Meet 1381 Laura. Lots of telling information about this one. Back to the bank in July $137,275. Still has some old furniture inside. No indication of any action or listing. Zillow thinks it is worth $222,000. Taxes have increased every year since 2004 when it was last purchased for $176,5000. Why would a house that probably had a $110k mortgage before arrears and penalties not short sell or sell to an investor on the court house steps? Because the true market price is so much lower than even that. You'd may not believe that looking at the MLS/Redfin but that's because true inventory in this small mountain enclave is easily 3-4 times more than what makes the MLS.
But what about renting for cash flow? The previous owner could have broken even at maybe $700 after a tax adjustment. Remember taxes alone are currently $170/month. I'll use the rent equivalent and a 120x multiplier to call fair value at $84,000. Of course careful investors are not paying fair value these days and that's probably what happened here. This small mountain community has run out of knife catchers and only has pros left to buy.

And then there's the "details." Like many "slow bleeders" this one suffers from deferred care issues. The water heater and central heat are fine and other than two broken windows the shell is in decent shape. Inside new floors everywhere are needed but cheap. And that's where a detail pops up. The information states 1,296 square feet. 2 floors, 20x30? look at the picture. the "second floor" is a barn style loft. Rough estimate; 550 useable square feet down, 400 up. All of a sudden you are paying over $100/sf. No thanks.

We'll watch this and see how it plays out.

17 comments:

1.44MB said...

Yikes, if all I'm getting is $700 per month in rent I'm not paying much more than $50k for the sticks.

Agent #777 said...

I was going to say look into Victorville, but now that one is listed at 70K, up from 48K. What gives with that?

Rob Dawg said...

1.44Mb,
My sentiments as well.

Agent #777,
The Victorville house sold Aug 4th to a flipper for $49k. no doubt they listed right away in the hopes of free money before even trying to slap a dress on the pig.

1.44MB said...

In WrightWood even if you picked up one of these cabins for a reasonable price who are you renting to? Back (south) east I rent to blue collar chaps who have unspectacular yet fabulously stable jobs close to where they live. WW is miles from anywhere, offers seasonal employment at best and there's a glut of properties. Where's the floor on rents? $400p/mo?

Rob Dawg said...

1.44Mb,
Wrightwood is "special." There's a reason I obsess on its' performance. There are 20 people "down below" who would live in Wrightwood if they could. That's doubleplusgood. It tells us about the regional economy and it decants the froth of the carnage "down below."

The fact that there are multiple and falling price vacancies in Wrightwood tells me that there is no floor for now. I saw this in 2005 and got out by April 2006.

Cobradriver said...

Rob,

I posted a bunch of recent sales from this area up on a site and most thought due to the huge losses they were from the Detroit area.

Couple of quickies...

12/1983 VACANT $5,000
4 /1985 IMPROVED $64,500
10/1994 IMPROVED $100
9 /2005 IMPROVED $194,900
8 /2009 IMPROVED $35,100


5 /1987 IMPROVED $48,500
4 /2004 IMPROVED $100
12/2005 IMPROVED $100
1 /2007 IMPROVED $154,500
8 /2009 IMPROVED $23,600


On the tax rolls for 700K+...
3 /1980 IMPROVED $132,000
12/1981 IMPROVED $180,000
3 /1995 IMPROVED $100
4 /2004 IMPROVED $100
7 /2009 IMPROVED $100
8 /2009 IMPROVED $100
8 /2009 IMPROVED $100
8 /2009 IMPROVED $206,500

My friends wife is actually having a good year selling. Everything is sub 100K though. She mentioned this weekend the 250K plus market is totally dead.

When the buying subsides,and it will,thats when things get interesting...

Chris

Rob Dawg said...

Cobra,
I'm pleased you understand my paying attention to this canary in the coal mine. Central Floria, Inland empire, Suburban Phoenix, they are all so screwed.

1.44MB said...

I think the phrase 'canary in the coalmine' should be changed to 'thermometer in the ass' as it's more in keeping with the situation being described.

tj and the bear said...

Rob,

You forgot Vegas, which is also royally screwed.

1.44MB,

LOL!!!

Cobradriver said...

Rob,

Here is a piece of vacant waterfront I am seriously interested in. It is an oddball corner lot on a canal. One canal off of the Peace River.It is really close to half an acre.

3 /2001 VACANT $22,500
9 /2001 VAC-MULTI $39,500
7 /2005 VACANT $255,000
1 /2006 VACANT $100

This listing has last years and this years taxes due. Total of about 4K. The current ask is 40K. Been listed over a year. I am seriously thinking 20k cash,plus I'll pick up the taxes and doc stamps(~5K). It is listed as a short sale and I think the owner has passed...

One good thing is the bank has been dropping the price on a regular basis. After satarting at 200K.

"You forgot Vegas, which is also royally screwed."

tj,

I was in rural Ohio to watch the niece graduate from the same school I did 25 years ago. The overbuilding of high end homes that will most likely never sell is staggering. If they do sell it is going to drive the previous nice areas farther down. I have yet to find a major area that wasn't inflated...

Chris

Property Flopper said...

1.44mb -

This might even qualify as a canary up the ass. Yes, it is mixing metaphores, but it's REALLY unpleasant (especially for the canary).

Lost Cause said...

Flip City. Wasn't there once a sidekick named "Chumley?"

wagga said...

According to Radar, the thermometer up the ass doesn't even register when your bladder is bigger than a cricket ball. Neither of us wants to talk about crickies, though.

1.44MB said...

Hmmn anal canaries..... y'know I bet Akubi has a picture of that somewhere..... with fishnets

Peripheral Visionary said...

Cobradriver, I think you're generally correct; a common theme in the media was the regionality of the housing bubble, which in retrospect was more illusion than reality. Yes, Las Vegas real estate went hyperbolic, but when they're building McMansions by the subdivision in suburban Idaho, the bubble has gone national. There may have been some ghost towns in North Dakota that were not affected, but I think it's safe to say that most metropolitan centers were impacted; the question now is which areas will recover, and how quickly.

whosek said...
This comment has been removed by the author.
whosek said...

Chumley was the sidekick to Tennessee Tuxedo, of the eponymous cartoon.