Well I was drinkin last night with a biker
And I showed him a picture of you
I said, pal get to know her, youll like her
Seemed like the least I could do.
Cause when hes chargin his chopper
Up and down your carpeted halls
You will think I am dressed up quite proper
Never mind how I stumble and fall.
You imagine me sipping champagne from your boot
For taste of your elegant pride
I may be going to hell in a bucket, babe
But at least Im enjoying the ride, at least Ill enjoy the ride.
Hell in a Bucket — Grateful Dead
I have to wonder if today’s flipper decided to buy after a night of drinking. He certainly had more kool aid than common sense. Today’s property was purchased for peak pricing a year after the peak in May 2007. This property was purchased despite the news of the subprime blow up 3 months earlier. Perhaps this flipper really believed the “subprime containment” meme? It is easy to ridicule a bad investment after the fact, but we at the IHB would have ridiculed it before the fact, and we would have been right. Enjoy the schadenfreude at this flipper’s expense, with the damage to his credit this fiasco will entail, he won’t be doing it again any time soon.
Income Requirement: $212,498
Downpayment Needed: $169,999
Monthly Equity Burn: $7,083
Purchase Price: $1,050,000
Purchase Date: 5/9/2007
Address: 53 Legacy Way, Irvine, CA 92602
1st Loan $787,500
2nd Mtg. $262,500
|Lot Size:||7,426 Sq. Ft.|
|Type:||Single Family Residence|
|View(s):||Park or Green Belt|
|On Redfin:||2 days|
Rarely on the market, Largest floorplan in The Legacy Tract. Spacious West Irvine Home features a Gourmet Cook’s Kitchen with Granite Counter tops. Large Family Room With Fireplace. Beautiful tile floors throughout family room. Extra large Loft. Guest Bedroom on First Floor with full Bath. Three car garage with large driveway. Top Award winning schools: MYFORD Elementary, PIONEER Jr High and BECKMAN HIGH. Wonderful neighborhood with no association dues. Views of the Park and trees.
This large, single-family detached property is selling in Irvine for $231 / SF. This is not a bad property in a bad neighborhood, it is a beautifully updated property with a large yard backing onto a park. It is selling at such a low price for a couple of reasons. First, the market is declining precipitously, and there are few buyers around. Second, this seller used 100% financing (I guess you could still get that in May 2007,) so he doesn’t have any reason to keep up payments. This was purchased as a speculative flip, and the lender was taking all the risk. It didn’t work out, so the flipper gets bad credit, and the lender gets a huge loss. If this property sells for asking price, the lender (JP Morgan) stands to lose $251,005 after a 6% commission. That is a sizable loss considering this loan was made about 9 months ago. I wonder if the flipper has even made any payments? This could be fraud, but the owner is a real person and not some fictitious business entity, so I think this was a real flip attempt — a very foolish one.
That concludes another week at the Irvine Housing Blog. I hope you have enjoyed the Grateful Dead. Come back next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.