Monthly Archives: October 2006

Bad investment, fraud, or what?!?!

Thanks to a tip from ocjohn, I’ve come across what looks like just an investment gone wrong at first glance. Upon further research I’ve found an even more interesting situation. Any personal names in this post have been jumbled for obvious reasons.

The property we’ll start with is 39 Modesto which is a detached condo in the San Simeon tract in Northpark. It was purchased using 100% financing on 7/31/2006 for $720,000 and rented out for $2850/month on 8/23/2006.

Let’s pause and take a look at what a great investment this is. 😉 Assuming a 6% Interest Only loan for the whole amount, the payments are $3600/month. After adding in HOA fees of $206/month and Property Tax (including Mello Roos) of $800/month, this ‘investor’ is going to be negative at LEAST $1750/month. This by itself is post worthy but read on to see how crazy this gets.

I became curious and wondered if this ‘investor’ (let’s call him ‘Shagi Indud’) made any other great moves. I was surprised to find out that Shagi owns FOUR properties in Orange County *AND* THREE properties in Los Angeles County:

  1. 7/10/2006 – $854,000 – 444 Ponce Ave. Placentia, CA 92870

    • Lender: BNC Mortgage $854k

    • Seller: Alalanaa Bizza

      • Purchased 11/30/2005 – $677,000

      • Lender: DBA Westworks Mortgage $541,580 / Hic Star Corp $135,395

  2. 7/20/2006 – $600,000 – 12301 Rives Ave. Downey, CA 90242

    • Lender: Encore Credit Corp. $480k/$120k

    • Seller: Leda and Racal Bizza

      • Purchased 2/22/2005 – $460,000

      • Lender: BNC Mortgage $459,900

      • Refinanced: Southcoast Loans & Mortgage $440k and $110k

  3. 7/20/2006 – $735,000 – 1885 Gladys Ave. Signal Hill, CA 90755

    • Lender: First Franklin $588k/$147k

    • Seller: Drianna Bizza

      • Purchased 4/1/1997 by Barache Daafy (I couldn’t locate the transfer to Drianna Bizza)

  4. 7/31/2006 – $720,000 – 39 Modesto Irvine, CA 92602

    • Lender: Resmae Mortgage Corp $576k/$144k

    • Seller: Red Abo Henc and Hunshiy Gnaw

      • Can’t locate prior purchase information

  5. 8/7/2006 – $685,000 – 860 Buttonwood Dr. Brea, CA 92821

    • Lender: Aegis Funding Corp $548k/$137k

    • Seller: Nanda Bizza

      • Purchased 3/23/2006 – $635,000

      • Lender: Encore Credit Corp $508k/$127k

  6. 8/14/2006 – $1,250,000 – 10258 Hasty Ave. Downey, CA 90241

    • Lenders: 1st Choice Mortgage $1000k / Cameron Financial Group $250k

    • Seller: Leda and Racal Bizza

      • Purchased 10/31/2003 – $485,000

      • Lender: BNC Mortgage $485k

      • Refinanced 11/4/2004 – $593,750 – New Century Mortgage Corp

      • Refinanced 3/15/2006 – $998,750 – BNC Mortgage

      • Refinanced 7/11/2006 – $126,250 – Secured Funding Corp

  7. 8/21/2006 – $850,000 – 920 E. Bastanchury Rd. Placentia, CA 92870

    • Lender: Axiom Financial Services $680k/$170k

    • Seller: Alalanaa Bizza

      • Purchased 12/7/2005 – $666,000

      • Lender: BNC Mortgage $532,720 / $133,180

Now there are several things that scream out as being suspicious:
– ALL 7 properties were purchased with 100% financing
– ALL 7 properties closed within about 40 days
– ALL 7 properties were funded by different lenders
– 6 of the 7 properties were purchased from the Bizza family

I haven’t yet researched all the purchases by the Bizza family but I noticed that some of them were bought less than a year ago and then flipped to Shagi. Is there any way this could be legit? Is Shagi Indud even real? If so, Shagi Indud is in deep doo-doo with his 100% financed debt of $5,694,000!

UPDATE: I’ve updated this post with any purchase/refinance information by the Bizza family I was able to find on the homes that were flipped to Shagi. The Bizza family also bought everything on 100% financing. There is definitely something fishy going on here. Take a look at how quickly some of these properties (1,2,5 and 7) were flipped. I wonder who the loan broker for Shagi was? That person must have made a ton of shady money as well.

Out and About – San Diego musings

I visited my dad in San Diego today and so had the chance to take a first-hand look at the blood on the streets as described on Piggington.com. I saw quite a few condo conversions with sign twirlers…sitting at a traffic light near University and the 15 I was quite impressed by one fellow. He really had some moves going. If he had been a she I would have figured there was a high school color guard history in his past but, at least where I grew up, all those flag tossers were girls.

In my dad’s gated townhome community there were four townhomes for sale within a 2 minute walk of my dad’s place. Actually, three were for sale and one had a “sold” placard on its sign. Interestingly, all four were the same model, 1300 sq. ft, 3/2, yet the one that had sold had the cheapest asking price range ($385k-$395k). The other three were asking $395 to $405. The one that is “sold” is still in escrow so I don’t know what the final price was but it’s highly unlikely it went for the full $385k. So apparently the other three FBs don’t realize that they can’t price their homes higher than the previous sale any more. I blame their realtors. Still eating that late-summer delusion-berry pie!

Back in Irvine, I was perusing one of those glossy real estate mags while getting my car washed and I have to say, I am amazed and kind of disheartened at how the local “wishing” prices don’t seem to be budging at all. The same 20+ year-old tract houses with tired, outdated kitchens and bathrooms on tired, run-down looking streets still asking $650k or more to start. These same darn houses have been boring me for months! I wish these fools would lower their prices already so their houses would sell and I wouldn’t have to keep looking at the same pictures! (Don’t these people realize it’s their job to keep me entertained, for Pete’s sake?!)

I didn’t get a chance to go into any open houses this weekend since it was my weekend with my little guy, but I plan on hitting a bunch next weekend. Plus, on October 21st Portola Springs is having a Fall Festival as described in a lovely flyer that I received in the mail yesterday. I will definitely be taking my little guy there and I’ll be reporting on the level of desperation that I observe among the fine homebuilders hosting this gala event!

Oak Park – Oak Creek Flip Not Working Out

Address: 804 Maplewood, Irvine, CA 92618 (Oak Creek)

Plan: 1200 sq ft – 2/2.5

MLS: S458207 DOM: 25

Sale History: 8/10/2005: $549,000

12/21/1998: $185,500

Current Price: $569,000

Here’s a Plan 3 in the Oak Park tract built by Presley Homes in 1998 in the village of Oak Creek. This condo was purchased on 8/10/2005 with 10% down. This means the owner has a little room to lower the price if they really want to sell. They listed the property for sale a year after they bought it. The Realtor.com link shows a range pricing of $529,000-$569,000 although I don’t see that in the local MLS. There’s also a different plan (also 2/2.5 and 1200 sq ft) in the same tract at 904 Maplewood listed for $524,900.

Assuming 6% in selling costs, the seller will lose about $14,000 if sold at the high end of the range and will lose over $51,000 if sold at the low end of the range.

Buy 1 bedroom and get a second for free (or almost)!

Would you buy this 1bd/1ba 1001 sq ft condo in the Collage tract built by D R Horton in Northpark for $499,900…

Address: 100 Timberwood, Irvine, CA 92620 (Northwood)

Plan: 1001 sq ft – 1/1

MLS: S445813 DOM: 109

Sale History: 06/28/2001: $198,500

Current Price: $499,900

…when you could buy a 2bd/2.5ba 1400 sq ft in the SAME tract for the SAME price at 714 Timberwood?

Not interested?? Well what about this 1bd/1ba 822 sq ft condo (first spotted here) built by Shea Homes in the Ashton Green tract in Turtle Ridge for $599,000…

Address: 214 Coral Rose, Irvine, CA 92603 (Turtle Ridge)

Plan: 822 sq ft – 1/1

MLS: U6602927 DOM: 24

Sale History: 12/18/2003: $310,500

Current Price: $599,000

100 Timberwood - Front

…when you could get a 2bd/2.5ba 1155 sq ft in the SAME tract for only $20,000 more at 235 Danbrook?

Are the sellers of these 1 bedroom units completely oblivious to what the market is like? What are their listing agents saying to them?

Huntington – Another Northpark Flipper

Address: 1 Buellton, Irvine, CA 92602 (Northpark)

Plan: 4133 sq ft – 5/5

MLS: S438082 DOM: 158

Sale History: 11/14/2005: $1,550,000

2/21/2002: $786,500

Price Reduced: 06/11/06 — $1,769,000 to $1,739,000

Price Reduced: 06/25/06 — $1,739,000 to $1,709,000

Price Reduced: 07/24/06 — $1,709,000 to $1,699,000

Price Reduced: 09/10/06 — $1,699,000 to $1,675,000

Current Price: $1,675,000

We found out about this flip from an anonymous tipster (Thank You!). This huge Plan 3 in the Huntington tract built by Richmond American in 2002 sold for about 100% more in 2005 and came back on the market 5 months later in April 2006 for even more. The original owner made some great money on this property in those 3 1/2 years from 2002-2005. The original owner was able to move this property from listing to escrow in 9 days (see MLS S413640)! That’s FAST considering it was late 2005 at the time. Great timing huh? The original owner also sold for $45,000 less than the original listing price of $1,595,000. Motivated seller huh? Perhaps.. but accepting a price $45k below asking after only 9 days on the market just doesn’t make sense.

That is… until you find out the original owner is a RE broker and represented the new buyer. This broker was more than glad to reduce the price by 3% since he wouldn’t have to pay a commission to another agent.

Let’s look at the new buyer. From what I can gather, the new buyer has loans totaling $1,469,500 – which INCLUDES a $307,000 loan from the original owner/RE broker! The original owner/RE broker really had to put in some effort and $$ to make this deal come together. A $1,469,500 loan on a $1,550,000 property is just absurd! That’s a 95% financed purchase! Any idea what would happen if the new buyer can’t make the payments?

Now the new buyer listed the home 5 months after they bought it hoping for a quick 200k profit. That’s definitely not happening. You can tell they realized this and started reducing the price. The first two price cuts were 30k each but after that you can see the hesitation in reducing the price further. IF sold at the current asking price of $1,675,000 they will make a profit of $24,500. We’ll have to just wait and see what happens here.