Tuesday, November 20, 2012

What Passes for a Deal Locally

Camarillo real estate is a misnomer as there is little "real" about it even today.  In fact the unreal has come back with a vengance as all the "lower" priced properties are being snapped up by extreme flippers and remarketed much later due to the the amount of work involved and called new resales by the idiot likes of Case-Shiller.

Only one of those is "for sale."  The others are foreclosure notices.  These would rent for between $2500 and $3000 meaning none of them cash flow or even make sense after tax benefits.  Besides (or is it because) anyone who can lease for $3000 can buy for less in their position.

Look at all those lots.  One house for sale.  7 in pre/foreclosure.  Look at the prices.  The foreclourses are still looking at $250/sf.


Thomas Stone said...

Dawg, the problem in Sonoma County is that one company is buying almost everything that hits the courthouse steps. Blue Mountain. And they are flipping them fast, 30-60 days.
About a month ago there was a discussion at the Broker's meeting about these flips and it was remarked by several people that a number of home inspection companies refuse to inspect these homes due to a fear that serious defects have been hidden. They feel the liability is too great.
Even oblique criticism is rare at these meetings (Liability again) and this kind of direct criticism is almost unheard of.
I avoid their listings if possible, and bring up the fact it may be difficult to find an inspector willing to look at the property if a client insists on seeing one. Cash Flow? Gimme a break.
I read a post about the 6 reasons you should buy "Income" property in Sonoma County the other day. The writer claimed a 6.84% cash on cash return, no mention of vacancy rate or maintenance, let alone the costs involved in managing a property.
I like Real Estate as an investment when the numbers work, but I get tired of people trying to blow stale smoke up my ass.

sm_landlord said...

Wishing prices on the houses for sale in my little corner of Venco as well. It's going to be interesting to where the sales that happened actually close.

I got a flyer from a local used house salesperson last week which listed houses he had sold last summer, with their **asking** prices shown. needless to say the actual sales prices were significantly less.

Wonder if anyone was fooled by that tactic?

Rob Dawg said...

In the area highlighted it is long time small developers buying tired properties and pushing them to the higher end with superficial updates. Keeps them employed and keeps houses from transacting at market. There are easily twice as many more houses in preforeclosure as are indicated by the map.

Tom, thanks for the comment. Here's to hoping this place gets you the feedback that was so lacking elsewhere.

Rob Dawg said...

Thanks for helping a fellow reader.

If it was "Hadley," he's good people but has also been a realtor his whole life. If it wasn't Hadley then they were just an ordinary agent.

Thomas Stone said...

Dawg, there's a pretty good signal to noise ratio here, so I'll keep coming by. A lot of people find my approach to Real Estate disconcerting, I'm straightforward and do my best to describe properties and their potential in a low key and accurate way. Those "Cash on cash Returns" loan brokers and agents tout should be cut in half.I have been there and done that, they make sense on cash flow or they don't, never bet on appreciation.

Rob Dawg said...

I addition to no bet on appreciation I'd strongly suggest not relying upon the current tax structure for depreciation and AMT and such.