A Review of Recent Trustee Sale Purchases and Flips in Irvine

Today's featured property is part of a growing trend toward Trustee Sale flipping as lenders finally foreclose on many defaulting owners.

73 West ARDMORE Dr kitchen

Irvine Home Address … 73 West ARDMORE Dr Irvine, CA 92602

Resale Home Price …… $528,000


Let me be your rock

I can be the pillar of strength that you need

I'll help you keep it all together

It's better late than never

Lay your world on me

I can take the weight

Lay Your World On Me — Ozzy Osbourne

When I first started writing for the blog, I wanted to save people from buying when prices were too high. As prices moderate, I want to put those families that waited into houses at fair prices. Examining the alternatives, Trustee Sale buying puts families into homes at the lowest possible price; therefore, providing this service becomes a high priority.

When I set out to find a Trustee buyer to serve the IHB community, I wanted someone who was very experienced, fiscally conservative, detail oriented, and calmly confident. Trustee Sale buying is no arena for the inexperienced and foolishly aggressive who skip important research and get overly excited when bidding starts, particularly if the Trustee Sale buyer is working for others.

I turn to Brian Cassingham, a friend and former co-worker at The Shopoff Group, where he served as corporate broker. I worked closely with Brian on the due diligence investigations of a number of large, complex land deals. He earned my respect and confidence with his meticulous preparation and thorough research. In short, he is the ideal Trustee Sale buyer.

When I first talked with Brian about buying for clients at Trustee Sales, he was not enthusiastic. He has been approached by various parties with cash looking for someone to partner with to flip houses, but being busy with his own deals, he was not in need of capital and not excited about flipping for others. As we talked further, I told him of my desire to put families into foreclosures at reduced prices, and I piqued his interest. As it turns out, doing good for people still motivates.

I asked Brian to prepare a post introducing himself and sharing some of his observations of the Irvine Trustee Sale market. The remainder of this post is by Brian Cassingham.

Buying Foreclosures

As a longtime buyer of foreclosures, I am often asked if it is possible to get a great deal on a foreclosure in a declining real estate market. The answer, I’m glad to say, is yes. There are many ways to buy a foreclosure. You can buy from the borrower in default, the lender, and the government. You can buy at the foreclosure sale. You can even buy a defaulted note and foreclose on it yourself. I have acquired property using each of these strategies, and in the current market, the best way to get a deal on a foreclosure is at the Trustee Sale.

Buying from the borrower in default can be successful, but also problematic. In this market, it is a challenge to find a defaulted borrower not under water, and if there is no equity, there is no deal. Sometimes, especially when they do have some equity, they remain in complete denial of their situation and ignore what is coming — “this could never happen to me, no one would actually take my home away.” I’ll never forget what a man said to me when I knocked on his door (actually at that point it was my door) to inform him that I was the new owner of the property. With complete seriousness, he said “You mean I don’t own my house anymore? Where do I go to get a check for my equity?”

Buying from the lender has long been a staple of foreclosure buyers. Not so long ago, when a property I was interested in was acquired by the bank, I could pick up the phone and make an offer. Now, it is nearly impossible to get a human to answer, if you can even find the right phone number. To deal with the sheer numbers of REOs (Real Estate Owned by lenders), lenders typically use asset managers and brokers, who list REOs on the Multiple Listing Service, for prices a lot closer to full market value than in the good old days.

When done right, buying at the Trustee Sale has remained a very effective way to go. I have made some outstanding deals at the Trustee Sale. The cream of the crop for me is a triplex in Santa Monica I bought at a Trustee Sale some years ago. I was quite pleased, to say the least, when no other bidders appeared at the sale and I merely had to bid a penny more than what was owed to the lender. I picked it up for less than $250K, and it is now worth 7 figures.

These days, with home values down significantly from their peaks during the housing bubble, buying at the Trustee Sale remains an excellent way to buy, and the reasons are simple; lenders are highly motivated to slow their ever growing stockpile of REOs, and with financed buyers excluded from Trustee Sales, they know they have to offer significant discounts to motivate all cash Trustee Sale buyers to buy.

Banks Just Say No to REO

Banks hate REOs. They trap capital, they are expensive to maintain, and they are a paperwork nightmare. Record foreclosure rates in recent years have led to record numbers of bank owned properties, far more than banks are set up to handle. Add to this the extremely high volume of short sale offers being submitted to banks for approval, and they are simply swamped with work. At a time when banks are being pressured to tighten up procedures and cut costs, their loss mitigation departments have unprecedented workloads.

What do lenders do, therefore, to avoid more REOs? With the limited success of recent loan modification efforts, there is only one effective solution: lower the opening bids at their Trustee Sales to increase the chances that a third party will take the property off their hands. And as lenders quicken the pace of foreclosure, it is likely they will continue to discount heavily in the Trustee Sale market, as this is less costly than taking on yet another REO and processing it through an already overburdened system. This will provide significant opportunity for cash buyers active during the next several years.

Dropping the Opening Bid

By law, lenders can start the bidding at the Trustee Sale at the total amount they are owed, including principal, interest, late fees, Trustee’s fees, and a myriad of other fees allowed by the promissory note and deed of trust. But lenders also know the obvious: if they start the bidding at an amount above the value of the property, they are assured of yet another REO.

In most cases, therefore, the lender will reduce the amount of opening bid from the amount owed (usually the amount published in the Notice of Trustee Sale) to an amount they hope will attract bids from third parties. Often the amount the opening bid is dropped is significant, and this is where the great deals can be had. In the last four months there were 52 Irvine properties acquired by a third party at Trustee Sale. Of those, the lenders dropped the opening bids on 45 of the sales, and most of these were to an amount significantly lower than the market value of the property.

Show Me the Deals!

That’s a great start, but how good were the resulting deals? How did the winning bids compare to the property’s market values? Let’s take a look some actual Trustee Sale deals in Irvine in the last four months:

10 Foxcrest

10 FOXCREST   Irvine, CA 92620  front 10 FOXCREST   Irvine, CA 92620  kitchen

In October 2009 the 4 bedroom 3 bath house located at 10 Foxcrest in Irvine was purchased by a third party at the Trustee Sale.

The original published bid by the lender was $856,504, but prior to the sale the lender dropped the opening bid to $752,200. The price was bid up a bit at sale, and the winning bid was $796,600. On December 12, just 53 days later, the buyer sold the property and closed escrow at a quick sale price of $940,000, more than $170,000 more than he or she paid for it.

4182 Fireside Circle

4182 FIRESIDE Cir   Irvine, CA 92604  front 4182 FIRESIDE Cir   Irvine, CA 92604  kitchen

Also in October of ‘09, the 4 bedroom home at 4182 Fireside Circle in Irvine went to Trustee Sale.

Following a published bid of $840,467, the lender had dropped opening bid to $403,200. The buyer’s winining bid was $498,000, and only 36 days later, the buyer flipped it and close escrow at $625,000. That is more than a 20% discount at Trustee Sale.

92 Townsend

In December of ’09 a buyer got an excellent Trustee Sale deal on an upper end 3 bedroom 3 bath condo located at 92 Townsend in Irvine. Recent market comparables indicate a value in the mid $500,000s, but the buyer bought it for $451,000, after the lender dropped the opening bid by almost $250,000.

21 Tangelo #288

21 Tangelo 288 front 21 Tangelo 288 kitchen

A buyer got a sweet deal on lower end condo at the Trustee Sale last month.

The one bedroom unit located at 21 Tangelo Number 288 had an original opening bid of $293,673. When the lender dropped the opening bid to just $148,011, there was just one bidder, who got the place by increasing the opening bid by one cent. 25 days later the property, with an asking price of $224,900, is already in escrow.

These deals are real and happening today

Needless to say, I picked some of the better deals for this post. While there are no guarantees that you would get a similar deal at a Trustee Sale, these deals are far from unique or unusual. The buyers did their homework, came to the Sale prepared, and took advantage of the opportunities when they presented themselves. As you probably noticed, most of the examples I picked were properties that were flipped a short time later. I chose them because the fact that they were resold – quickly — clearly illustrates the extent to which they were purchased under market value.

There were undoubtedly other homes that buyers purchased to occupy. In fact, I would argue that these buyers got an even better deal. They won’t have marketing and resale costs, and their assessed property tax value is significantly less than it would be if they paid retail. This will save them many thousands of dollars in property taxes over their ownership tenure. In fact, families that intend to occupy are who Ideal Home Brokers’ Trustee Sale Service seeks to help most. We are happy to work with investors, but it is our aim to provide homebuyers with greater opportunities to buy at lower prices in Irvine and greater Orange County.

Today's featured property is yet another example of what is occuring at Trustee Sales.

73 West ARDMORE Dr kitchen

Irvine Home Address … 73 West ARDMORE Dr Irvine, CA 92602

Resale Home Price … $528,000

Income Requirement ……. $110,951

Downpayment Needed … $105,600

20% Down Conventional

Home Purchase Price … $421,700

Home Purchase Date …. 12/2/2009

Net Gain (Loss) ………. $74,620

Percent Change ………. 25.2%

Annual Appreciation … 142.8%

Mortgage Interest Rate ………. 5.13%

Monthly Mortgage Payment … $2,301

Monthly Cash Outlays ………… $3,020

Monthly Cost of Ownership … $2,410

Property Details for 73 West ARDMORE Dr Irvine, CA 92602

Beds 3

Baths 2 full 1 part baths

Home Size 1,569 sq ft

($337 / sq ft)

Lot Size 1 sq ft

Year Built 2000

Days on Market 9

Listing Updated 1/28/2010

MLS Number P719165

Property Type Condominium, Residential

Community West Irvine

Tract Othr

''''Standard Sale'''' Super Floorplan!! 3 bedroom with 2.5 bath. Spacious Living room with Fireplace, Kitchen with Breakfast Counter and Computer Desk. Nice Hardwood Floor, Fresh painted, New Carpet, Large Master with Huge Bath Area. Bright & Airy, Nice size Patio. '''''''Gated Community''''

Irvine Housing Blog No Kool Aid

I hope you have enjoyed this week, and thank you for reading the Irvine Housing Blog: astutely observing the Irvine home market and combating California Kool-Aid since 2006.

Have a great weekend,

Irvine Renter

55 thoughts on “A Review of Recent Trustee Sale Purchases and Flips in Irvine

  1. Planet Reality

    People who want to buy a single family home in Irvine have a few options:

    100% cash at a Trustee Sale
    or 20% cash and a loan to buy from a flipper
    or waste a lot of time with a bank

    Oh, but I’m sure the folks available to buy with 100% cash and the people with 20% cash will run out soon, since there is a monstrosity of monthly transactions in Irvine. Also neither replenishes themselves *sarcasm* – when the flipper makes a sale he quits and becomes a rocket scientist. The savers are cannibalistic and devour the next set of savers in all locations of earth. Moreover it’s been shown on this blog that it takes a decade for someone making $100K a year to save $100K – LOL The market is simply not going to be able to handle 100 single family homes sold in Irvine a month.

    IR good guest post.

    1. Chris

      “Moreover it’s been shown on this blog that it takes a decade for someone making $100K a year to save $100K”

      Frankly, you should be able to save 50% of your **net** income by being frugal. For someone making 100k/year, you should be able to save $30k a year.

      Think about it, net income should come to about $65k after taxation. $3k/month is not that hard for a family of 2. Sure, it’s not middle class living but it ain’t poverty either.

      I’d hit that $100k saving target in 3 years max with $100k/year in compensation ($10k in investment gain over 3 years….conservative investment).

      1. tonye

        Family of two… well, you see, there’s the problem. “Families” are usually more than two. Most of the families near me are either older folks or have two kids (that seems to be the family size near me).

        So, with four kids, suddenly your ability to save at the rate you propose goes out the window. The only way to really save is to fully fund your 401K.

        Frankly, if you are young and have no kids then it’s best to fully fund the 401Ks and IRAs and what not and keep renting. Only buy if you want to be able to mess around with your house.

  2. AZDavidPhx

    A couple of days ago, I “called bubble” on gold in response to a post by one DoomsdayRichard:

    Astute Observation by DoomsdayRichard
    2010-02-03 03:09 AM

    I strongly encourage investors to cease all brokerage trading and invest in the gold ETF, GLD, held in a trust account not at a brokerage account, British Sovereign gold coins and purchase gold at BullionVault.com and GoldMoney.com

    and I received a reply from one Kelja:

    Astute Observation by Kelja
    2010-02-03 10:55 AM

    AZDavidPHx- nothing to fear. It’s gone up more than 400% since 2000 only because many are loosing trust in paper currency.

    DoomsdayRichard and Kelja – would you care to comment on yesterday’s big story? If I would have taken your advice the day prior I would be one unhappy speculator today.

    Gold tumbles, disappointing investors who sought a hedge against global woes
    February 4, 2010 | 4:07 pm
    In times of crisis, sell your gold?

    It may not make sense to the huge crowd of investors worldwide who have plowed cash into precious metals in recent years, but gold was dumped with most other assets in Thursday’s global sell-off.

    Near-term gold futures plunged $49, or 4.4%, to $1,062.40 an ounce in New York, the biggest one-day decline since Dec. 1, 2008. The metal is at its lowest price since Nov. 2 and down 12.7% from the record high of $1,217.40 set on Dec. 3.

    1. Walter

      Gold is an inflation hedge. If the global economy sputters again, there may be less inflation then feared reducing demand for gold.

      If money printing continues past mid year, gold may start raising again.

      1. Woodbury Renter

        I’ve been looking to place a major bearish bet against the sheeple gold hysteria but just don’t have the mechanism. oh well, it has become obvious to too many investors anyway.

    2. Kelja

      Calling tops or bottoms in any market is a fool’s errand. Nothing goes straight up even in a bull market. There are corrections.

      Gold is down today as I type this and the ‘plunge’ yesterday was 4.4%. Gold is hinged to the US$. Since the PIIGS (Portugal, Ireland, Italy, Greece, Spain) are experiencing financial problems, that is bringing the Euro down and the dollar is strengthening.

      It’s simply a race to the bottom with all the paper currencies. With our unsustainable debt, the dollar is toast. Perhaps not today, but not in the too distant future. That is a fact. The Euro suffers because Greece has unsustainable debt. Greece is 3.3% of the GDP of Europe.

      California is busted, broke, done. California will have to be rescued and it’s more than 10% of the US GDP. And California ain’t the only state that will need rescue.

      Real Estate, both residential and commercial is not stable, it’s ready for another leg down.

      Gold will never go to zero. Some municipal and state bonds will go to zero. Gold is a currency and will see significant appreciation in the not so distant future.

      I know that is will be volatile but for the inexperienced investor, it’s a hedge against calamity. You should have 10 to 20% of your portfolio in precious metals.

      I am an experienced investor. Until 2 weeks ago, I had 98% of my investments in gold and silver – mostly mining companies. I sold 95% of my positions and, as of last week, am 90% short the general equity markets.

      I look forward to again investing in gold.

      1. es

        imma gonna git ma gold and guns hide in my basemen with ma canned beans and if the goddam gubmint wanna come get me well they can just try.

    3. Chris M

      I thought about selling my ~3oz of gold coins when it hit $1200/oz. I bought them in ’00 at $265/oz, so I would have made a nice profit. But I didn’t sell, since I don’t currently need the cash, and I kinda like collecting coins. Probably my kids will sell them at $10,000/oz or something, after I’m dead. I’ll probably buy more gold when it’s down to $500/oz or something.

    1. IrvineRenter

      We are also researching hard-money lenders to provide bridge financing in order to get people in who like me don’t have that much cash handy.

      1. Planet Reality

        That’s a good idea but doesn’t this happen already? Hard money with a buyer already in hand is a low risk high return investment. You may be able to get a finders fee but I imagine it would be a very low commision.

        Of course this is all specualtion since we all know the limited nature of folks with cash buying in Irvine.

        1. IrvineRenter

          There are many buyers with cash; the records show that. I don’t think there are enough to sustain inflated house prices, but there are more active cash buyers here in Irvine than in other markets.

      2. OrangeRenter

        Really! I was going to ask about hardmoney lenders, but thougtht I’d be flamed. If the deal’s right, I would consider that.

  3. nefron

    I used to subscribe to Foreclosure Radar and looked longingly at the prices at those third party sales – it even crossed my mind to find someone to do the legwork and bid at auction for me.

    Unfortunately for me, I doubt that the sort of property I want will ever fall to the amount of cash I’ve got on hand. I think there is room in the market for another step – someone to provide reasonable financing for people who just need another $50,000 or $75,000 for a trustee sale, not a mortgage for $600,000. I’m sure I’m not alone in thinking that, and maybe it’s already going on somewhere. Congratulations, IR, I don’t know how much money you guys make on these deals, but I think for the short term (these trustee sales won’t last forever) this is an excellent service.

    1. Walter

      I may be misinformed hear, but would it not be somewhat difficult to have someone lend you some of the money from a lien standpoint. The bid winner gets the deed plain and simple.

      So who gets the deed:
      the lender, in which case they are protected for there gap financing?
      the buyer to protect the large cash position and to have the ownership in place without further transfers?

      Or can the ownership be carved up at action time to protect everyone?

      1. nefron

        It seems like it starts getting complicated when lending gets involved, I agree. Because now it seems like you need a real estate lawyer (more $). But aren’t there people pooling money right now, to buy these houses at trustee sale? Like these “corporations” people used to talk about, buying bulk foreclosures and flipping them, and dividing up the profits. Was that all talk or is it really going on? Or what about these informal collectives that contribute money to a pot and lend to one member, or something like that. How do those work?

  4. awgee

    “By law, lenders can start the bidding at the Trustee Sale at the total amount they are owed, …”

    “In most cases, therefore, the lender will reduce the amount of opening bid from the amount owed”

    Brian, when you say, “By law, lenders can start the bidding at the Trustee Sale at the total amount they are owed”, is that the maximum they can start the bidding at? Someone once told me that the lender is required by law to start the bidding at the amount owed, but I noticed many opening bids were much less.

    Do you ever contact the lender before the auction to let them know what you will bid so that they might lower their opening bid to your amount?

    1. BC

      The lender is only limited on the high end – they can’t start the bidding any higher than the actual amount owed, which they must itemize for the borrower (but not for bidders). They may decrease the opening bid as they see fit to increase the chances that someone bids at the sale.

  5. awgee

    IR – Thanks again for the great info.

    If you think like I do that thing sell for what they are worth, the fact that buyers get great deals at trustee auctions would seem to point out how much more people are paying for financing. Is is a hidden cost and the real price of the house, sans financing, is discovered only when a house is sold for cash. Short sales and REOs sell at market prices when listed on the MLS, unless someone comes along with a cash offer.

    AZDavid – A one day drop is irrelevant and anybody who thinks it is, is a fool. I have been reading people say that gold is in a bubble for the last five years and every year it goes up. Check out a five year or a ten year chart and discover just how relevant the last few days have been.

    1. Planet Reality

      Gold can go down in value and still perform well relative to the dollar.

      Gold has not been identified by the masses as a bubble yet. It seems to take 2 – 3 years after a bubble is identified by the masses for that bubble to pop. There is no question in my mind that gold is a bubble. The only uncertainty is how high it will go, following the peak the price will be cut in half. Right now my guess is gold peaks around 1500 and crashes to 750, this is based on longer term bubble trends.

    2. AZDavidPhx

      Of course Gold is in a bubble being whipped up into a frenzy of Fear-Mongering.

      Why just this morning the local radio station was running ads

      “Call 1-800-BUY-GOLD”
      “Economy Continues To Get Worse And Worse!”
      blah blah blah

      This is just one big stroke job scaring the masses into buying so as to drive up the price.

      AZDavid – A one day drop is irrelevant and anybody who thinks it is, is a fool.

      I won’t deny this. I was just seeking comments by the folks who were telling the world to buy gold as some kind of sure-fire can’t lose investment only to have the price plunge one day later.

      Maybe it will go up again – all I am saying is that if I had taken their advice and put my life savings into gold when they told me to; I would be really pissed off right now and praying daily for the price to rise again.

        1. AZDavidPhx

          I agree. We will be hearing about gold for awhile and I don’t think it is going to implode like the housing bubble since we are going for an inflation bomb.

          I think inflation is going to push it up but whatever that is, it’s impossible to tell because of all “buy gold” euphoria going on.

          1. awgee

            And the television commercial you referred to in the other thread, (cash for gold), as proof of a gold mania was a commercial for the general public to sell their gold, not buy it. Statistically, 2009 was a big year for scrap gold which is an indicator that the general public is selling their gold, not buying. The gold main you refer to is hedge fund buying, and the general public is selling, which is the exact opposite of a bubble. When you say an asset is in a bubble, what is your definition of a bubble? What do you think are the symptoms of a bubble which has a tendency to implode, such as the housing bubble? People feel real smart saying this asset or that asset is in a bubble because the price has gone up, but price appreciation in dollars is a poor indicator of a bubble mentality. Many assets appreciate and they are not symptomatic of the bubble mentality which results in a quick depreciation in price?

            By the way, did you look at the charts? What do you see?

          2. Planet Reality

            I think you asked David.

            What do I see? I see that when gold peaked in the early 80s bubble it took close to 30 years for it to get back to the peak price.

          3. awgee

            I was talking about 5 and 10 year charts, but as long as you are speaking of past peaks, what was the last peak in inflation adjusted dollars?

          4. Planet Reality

            If you read what I said carefully I fully recognize that an asset can go down in price but go up in value.

            Your point that many of the commercials are for people selling gold is laughable. In any bubble or in any transaction for that matter there are buyers and sellers. Be very careful assuming that the hedge fund investors are smarter than the folks hawking gold.

            Bottom line is that if you bough gold in 1980 you were not a happy camper, and even at today’s price it was not a great investment. Not exactly an inflation hedge from 1980 to 2000. For many people 20 years is a long time.

          5. awgee

            In a bubble, the buyers and sellers are not the same as the in the trough. And it is important to be able to identify the difference, not laughable.
            I never said gold was an inflation hedge, either a poor or a good one. I never said gold was a good investment in the 80s.

            Neither you nor anybody else who is calling a gold mania or a gold bubble has identified the symptoms of a bubble. That is my point. If you are going to say an asset is in a bubble, and inferring a bubble that will pop, what do you say are the identifying symptoms of a bubble?

          6. Planet Reality

            The only real question worth debating is how many times gold has experoemced an asset bubble in the history of man kind.

            My guess on where Gold will peak is not worth a hill of beans. I’m only confident that gold will peak and see a severe crash and stagnate. This is comparable to predicting the sun will rise tomorrow and the government will subsidize loan mods.

          7. Woodbury Renter

            I was looking at strategies that would pay off if gold were to fall below 800 by the end of the year. I see no need to debate. I would need investors who disagree to take the other side of the trade. I’ve read both bearish and bullish articles on gold and just tend to agree more with the bearish view. My ultimate litmus test is that even the shoe shine boys and taxi drivers are sure that gold is a great bet, that awakens the contrarian in me. By the way I haven’t pulled the trigger yet – mostly because I feel more strongly about betting against China.

          8. awgee

            “My ultimate litmus test is that even the shoe shine boys and taxi drivers are sure that gold is a great bet, that awakens the contrarian in me.”

            How often do you talk to shoe shine boys and taxi drivers? Seriously? About investing?

            Jesse Livermore makes one snide comment and people feel brilliant repeating him for the next fifty years.

      1. es

        It’s a bubble if there are commercials about it. That’s my rule of thumb. When the “suzanne researched this” commercial and the commercial where a new homeowners wallpaper was $100 proof sheets (AS THEY WERE MOVING IN!) were on the airwaves, my parents sold their house. It was the peak of the peak. If the layman knows about it, it’s already at a peak. Gold prices are absurd for a material that tons of are mined out of the ground on a daily basis. Gold investing is for Glenn Beck listeners people who think Mad Max is real.

        PS how did this thread get hijacked into a gold discussion?

        My real question is: why is it cash only at a deed of trust sale? Is that a law or just general practice?

        1. awgee

          “It’s a bubble if there are commercials about it. That’s my rule of thumb.”

          Did you think this up all by yourself? Well at least someone had the guts to say how they identify an asset bubble.

          1. Planet Reality

            I’ve made nice returns investing in gold this decade. I recently got out. I will use myself as a litmus test; I usually get out of the bubble too early. Keep investing in gold and I’m sure you will be able to brag about how wrong I was for quite some time.

            One thing we can count on is that history always repeats itself; we never learn. If you go back in written history you would have a hard time documenting and accounting for all of the gold bubbles.

            I don’t think the recent high was the peak, but if it was I expect a hard landing around 600 with 20 years of lack luster returns.

          2. Planet Reality

            One last point. Everyone is expecting a collapse of the dollar so guess what? We will get the exact oppostie.

            What people fail to realize is that every currency in the world is in a worst position than the dollar. Quit the fantasy, the US dollar is the strongest currency in the world bar none. That is not patriotism that is reality.

          3. awgee

            Valuing the UDS by comparing it to other fiat currencies is another logical fallacy, a fallacy promulgated by the Wall Street. Finding the healthiest heroin addict in a room full of heroin addicts says less than nothing about the health of the heroin addict because it is misleading from the point of what true health is. Reality is all fiat currencies are going in the toilet.

            Another mistake you are making is mistaking talk for behavior. How are people behaving in relation to the USD? The biggest representation of the USD are US T-bills and notes.

          4. Planet Reality

            I hope the collapse of our fiat lives happens before the end of the world in 2012.

            If neither happens we will all have to admit that the time period we live in is as mundane as any other time period in human history.

            Instead we can talk about climate change again, that is why we are living in the most critical time in human history – LOL

  6. nefron

    I don’t know what laws and restrictions etc… there are on money lending, but you could earn a better return than the crappy 1 and 2 percent CD rates and stay out of the market, lending small amounts of money this way. Provided, of course, you lend to someone who is a good investment…hmmmm, I think we (collectively) have been down this road before……

  7. byronic

    “As prices moderate”?? C’mon. There is no moderation of prices in Irvine. Why don’t you do a post on West Irvine or Westpark or Woodbridge or Northpark where homes get listed at $25,000 to $50,000 over a three month old comp and sell for almost that amount within a week. How far off is your prediction of median prices now?

  8. Yummyhatorade

    Isn’t this hurting the families that you are so devoted to?  If the already
    rich buy these and live in them, they won’t be available to flippers.  Then,
    when prices crash like you promised, the flippers who don’t have these
    houses won’t be able mark them down so that regular families can benefit.
    Also, do you mean “bridge financing”, as in “lending at loan shark
    rates/fees against other property these families already own”?  Wouldn’t the
    5-8 points on the bridge loan and your cut eat away most of the profits?
    I’m not seeing who (other than yourself) will benefit from this scheme.

    1. AZDavidPhx

      I had a mixed reaction to today’s post. While I don’t have a problem with flipper’s wagering their own money – I completely fail to see how this actually helps make the overall system more efficient by moving the flipping profits to industry insiders.

      I think that what slightly rubs me the wrong way about the guest-author’s exuberance in this “Flip This Trustee” game is that the banks offloading these “deals” to cash buyers are recouping their losses with taxpayer Dollars which effectively are transferred to the flippers. So I sort of see a service such as to be on the order of bailout Profiteering.

      I would prefer to see the banks just put REO’s directly onto the market and implement a policy to slash prices 5% each week until someone offers the full asking price. Flippers would be more than welcome to buy, but they would have to play on the same playing field as the common man that doesn’t have the insider knowledge because he is too busy working a real job during the week.

      If I am missing something – I’d love to be corrected.

      1. BC

        I agree that the bank bailout adds an undesireable element to the process. I am personally against the government bailing out the banks, especially considering that the bank’s liberal lending policies and lack of common sense underwriting restraint contributed so heavily to their current losses in the first place.

        Trustee Sale buying has been an effective way to acquire property at a discount for decades, and shall continue long after the bailouts, as long as the Trust Deed system is used to collateralize debt. Our Trustee Sale Service provides access not just to flippers, but more importantly to those who wish to occupy the home, provided they can meet the cash requirements. If someone is going to ‘profit’ from the bailouts, I would like to see it be a taxpaying citizen buying a home for their family.

  9. DarthFerret

    This post is in regards to the featured property on Wednesday’s article, 5054 ALDER. I’m cross-posting it here, because the comment on the older article is not likely to be read.

    I happen to know the property owner for this property, and I discussed some of the background financing with him. He gave me permission to post this statement:

    “This gentleman makes a lot of assumptions – some of which are correct, and some of which are not. My business is largely about buying low, selling high, and utilizing equity to drive cash flow. The property has been a rental for 11 years. There are better opportunities, so I am selling to purchase some all cash deals. Good investors will use HELOC’s, but in this case there is nothing utilized on the 2nd. The other important aspect is to drive the total cost of your debt down among all the investments that you own – that is why this has been refinanced. Other properties are held all cash. Just funny how he interprets without all the data.”


    1. IrvineRenter

      Thank you for reposting. I didn’t see that comment myself. The records show what they show, and I did mention in the post that the 2nd was questionable and I presented the data either way.

      As for his statements about financial management, I think he is crazy, but if he feels good about it, good for him. He implies he took great care with the management of his cost of debt, but appears he was not as successful in managing the total amount of debt since the amount obviously ballooned out of control. Based on what he owes he is not going to net much cash out of this deal, and the only thing he really accomplishes is getting out from under the debt, which is a good thing. He extracted his cash and now he moves on. I don’t see where this improves his wealth much.

      1. DarthFerret

        I have mixed feelings about it, but he’s a very successful investor. It’s hard to argue with success. The point of my post was just to remind all of us of the murkiness of the RE markets. As diligent as we can be in our research, there can still be a lot of unknowns out there on any property.


  10. InTheMarket

    I just starting shoppoing for a house in Irvine/Tustin Ranch about 6 months ago. I’m looking at putting 20% down for a 500K place.. hoping for a 3 bedroom, 2.5+ baths, at least 1500 sq ft. Your blog about Trustee Sales interests me… how do I go about looking for these properties? Do I need to have all cash tho?


  11. Gray

    “the gold main you refer to is hedge fund buying, and the general public is selling, which is the exact opposite of a bubble.”

    No, you’re wrong. The general public watches idiots like Glen Beck talk about how gold is the only safe investment, that the Obama Socialist Regime will kill the dollar and ruin the economy so you’d better invest in gold gold gold!!!


  12. JK

    Where does one find out about upcoming trustee sales? That is without having to get a subscription to foreclosureradar.com or such.

    Also IR do you handle other trustee sales in OC or just Irvine?

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