Author Archives: zovall

OC Apartment Rents in 2012

The OC Register had a post yesterday saying that Orange County apartment rents are projected to rise this year based on data from Marcus & Millichap.

Orange County apartment rents are projected to continue rising this year while the number of empty units will continue to fall, making the county the fifth-best apartment market for landlords in the nation in 2012, a market forecast concluded.

It’s the second year in a row that the Marcus & Millichap National Apartment Index ranked O.C. No. 5 out of 44 U.S. metro areas. The county’s apartment market also ranked third best out of seven California metros.

If the report is accurate, renters need to brace for an average increase of 4% in asking rents. And apartments will be harder to find, with just 3.9% of units expected to be empty by year’s end, the report said.

How did they do last year? Marcus & Millichap projected that O.C. asking rents would go up 3.7% to $1,535 per month in 2011. In fact, the average asking rent rose 2.7% to $1,515.

The brokerage was more accurate in its 2011 vacancy projection: It predicted that vacancies would fall to 4.4%, compared to an actual drop to 4.3%.

What do you think will happen to OC rents this year? What about Irvine rents? Anyone in the process of renewing a lease?

Buy or rent at Kelsey Lane in Oak Creek

31 Kelsey is a 4 bedroom, 2.5ba detached home in the Kelsey Lane tract in Oak Creek.

Kelsey Lane is a tract in the southern most part of Oak Creek and is bounded by the 405, Sand Canyon Ave, Alton Parkway, and Valley Oak. Click the picture below for a closer view.

There are 3 main floor plans in Kelsey Lane:

  • Plan 1: 3 bedrooms / 2.5 baths / 1653 square feet
  • Plan 2: 3-4 bedrooms / 2.5-3.5 baths / 1910-2379 square feet
  • Plan 3: 4-5 bedrooms / 2.5-3.5 baths / 2079-2546 square feet

Plans 2 and 3 have a third floor option which explains the extra bed/bath/space.

In addition to 31 Kelsey, there are a couple of Plan 3s that have not quite closed:

– 82 Millbrook is bank owned, listed at $659,000, and the status is Hold Do Not Show. They are accepting offers and will submit offers to the bank on 3/5/12.

104 Millbrook is a short sale listed at $600,000 and the status is Backup Offers Accepted.

I didn't come across any Plan 3s that had closed recently. The closest I could find in the tract is a Plan 2x (3rd floor model) – 66 Ivywood which sold for $749,000 on 2/7/2012.

31 Kelsey is listed at $699-$739k. For the analysis below, I'll use a purchase price of $675k.

Purchase Price $675,000
Closing costs $20,250 3%
Total price $695,250
Down payment $155,250 20%
Loan Amount / Percentage Of Price $540,000 80%
Interest Rate / Period (months) 4.25% 360
Monthly Yearly
Mortgage Payment $2,656 $31,878
Interest Component $1,913 $22,950
Property Tax $582 $6,978 1.03%
Special Assessments $247 $2,969 0.44%
Effective Tax rate 1.47%
Insurance $50 $600
HOA 1 $59 $708
HOA 2 $79 $948
Cash Out $3,673 $44,081

There are some possible adjustments that may apply to your situation. Be sure to also consider how long you may own the property (average is around 6 years), what kind of financing you actually qualify for, how much you put down, the effect of giving up the standard deduction, potential price declines, costs to sell the property, etc. The NY Times Buy or Rent calculator is a great tool that helps with some of these.

Possible Adjustments
Interest paid $22,950
Property tax $6,978
Total deductible $29,928
Tax benefit $624 $7,482 25%
Opportunity cost of down payment -$259 -$3,105 2%
Principal paid in mortgage payment $744 -$8,928

As far as rents, I found a couple Plan 3x models (third story option) that leased for $3300 (52 Kelsey on 11/3/2011) and $3250 (35 Pembroke on 9/3/2011). I also found several Plan 2 models that leased between $2700-$3195. I'd guess 31 Kelsey might fetch a rent of $3100/month.

So, would you buy 31 Kelsey for $675k or rent it for $3100/month?

Discuss below or at Talk Irvine.

Buy or rent at Liberty in West Irvine

26 Bowie Pl is a 4 bedroom, 2.5 bath single family detached home in the Liberty tract in the Independence section of West Irvine. Click the picture below for a closer view.

There are three main floor plans in the Liberty tract and at 1,755 square feet, 26 Bowie is the middle plan.

There are two other Plan 2's on the market that are in the Accepting Backup Offers status:

111 Confederation – Listed at $571,700

31 Halifax – Listed at $549,000

As far as Plan 2 Closed Sales, I found these:

9/23/11 155 Church Place $585,000

9/19/11 162 Church Place $585,000

Given the actual closed sales and the status of the two accepting backup offers, I'll use a price of $570k for the analysis.

Purchase Price $570,000
Closing costs $17,100 3%
Total price $587,100
Down payment $131,100 20%
Loan Amount / Percentage Of Price $456,000 80%
Interest Rate / Period (months) 4.00% 360
Monthly Yearly
Mortgage Payment $2,177 $26,124
Interest Component $1,520 $18,240
Property Tax $503 $6,039 1.06%
Special Assessments $96 $1,147 0.20%
Effective Tax rate 1.26%
Insurance $50 $600
HOA 1 $0 $0
HOA 2 $0 $0
Cash Out $2,826 $33,910

There are some possible adjustments that may apply to your situation. Be sure to also consider how long you may own the property (average is around 6 years), what kind of financing you actually qualify for, how much you put down, the effect of giving up the standard deduction, potential price declines, costs to sell the property, etc. The NY Times Buy or Rent calculator is a great tool that helps with some of these.

Possible Adjustments
Interest paid $18,240
Property tax $6,039
Total deductible $24,279
Tax benefit $506 $6,070 25%
Opportunity cost of down payment -$219 -$2,622 2%
Principal paid in mortgage payment $657 -$7,884

What do these Plan 2s rent for? I didn't find any recent closed leases for Plan 2s. There is a Plan 3 (~2000 sq ft) at 27 Halifax which is asking $2650/month.

Would you buy 26 Bowie for $570k or rent it for $2650/month?

The Village of Rancho San Joaquin

zovall: The post below is written by Michelle Jones

The village of Rancho San Joaquin is a quiet community that provides a nice escape from the nearby commercial area. It is surrounded by Culver Drive, Michelson Drive, University Drive, and Harvard Avenue. It is right around the corner from the Culver/405 interchange.

Rancho San Joaquin offers a generous amount of trees that line the streets which is nice since it gives this neighborhood a rural feeling. Even though I personally don’t play golf, the golf course also adds to the visual appeal of the neighborhood. Condos and apartments are prevalent in the Rancho San Joaquin neighborhood, including the Rancho San Joaquin apartment homes. The overall curb appeal of the majority of the homes is mediocre. They definitely reflect the time frame which they were built; the 70’s and 80’s.

However, most of the landscapes are neat and well-kept, which at least heightens the overall appeal of the neighborhood. The prestigious University of California, Irvine is only a few miles away; as are many high ranked grammar and middle schools.

The Rancho San Joaquin Golf Course adds some nice scenery, as well as serving as a barrier from the nearby city.

And if you’re interested in history, the Irvine Historical Museum is directly to the left of the entrance of the golf course. What makes this museum interesting is that it was originally the first wooden house built between Anaheim and San Diego. Even if you don’t like history…at least the house adds a little character to the neighborhood.

There is a senior center, where they have educational classes throughout the week. Or, if you’re in need of a ballroom or multipurpose room for any particular reason, they’re available for rent. Not particularly useful on a regular basis, but at least its there if you need it. But, given the outdated architecture, I’m willing to bet the interior isn’t much better.

Right behind the senior center, is the Racquet Club of Irvine. They have tennis courts, tennis lessons, tournaments, a swimming pool, a restaurant, etc. If you enjoy tennis, and can spare the extra cash, it’s actually pretty nice.

Just on the other side of University Drive, is William R. Mason Regional Park, which has an endless amount of shade trees, a 9-acre lake, bike paths, and even model boat sailing. While it would be nice to have this so close to your house, the only downfall is that you actually have to pay in order to get in. And even though this is a very beautiful park, there are many free parks nearby.

All in all, this neighborhood isn’t too bad. It’s close to the freeway, there are nearby shops, and the prices of the houses are relatively decent, considering how expensive Orange County is. I think I would sacrifice the visual appeal of the architecture for a home in this neighborhood.