Category Archives: House Flips

Broken Dreams

Tangelo Inside

Asking Price: $280,000

Purchase Price: $265,000

Purchase Date: 10/8/2004

Address: 302 Tangelo, Irvine, CA 92618

Beds: 1

Baths: 1

Sq. Ft.*: 662

Year Built: 1978

Stories: 1

Type: Condominium

View: Lake

Neighborhood: Orangetree

$/Sq. Ft.*: $423

MLS: P564627

Status: Active on market

On Redfin: 40 days

They say a picture is worth a thousand words. The following is pure speculation based on the picture above…

Toward the end of 2004 a young family wanted to get in on the hot housing market and perhaps make some money to trade up to a larger home. They found what they could afford: a 662 SF condo in Orangetree. The family has been living in these cramped quarters for two and a half years sacrificing the much larger space they could have rented in order to build equity in a home (sounds better than flipping, doesn’t it?) After all the sacrifice, they missed the peak of the housing bubble, and they need to sell now for full asking price just to get out at breakeven. It probably won’t happen.

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Do we feel sorry for these people? Didn’t they do what you are supposed to do in Southern California? Is this the profile of a greedy flipper? Where did they go wrong?

What happens if they can’t sell now and end up the bagholder? How would you like to be trapped in a 662 SF condo and be $150,000 underwater for 5 or 10 years? Do you walk away and declare bankruptcy?

Just one example of the death of the California Dream…

Broken Dreams

I walk a lonely road

The only one that I have ever known

Don’t know where it goes

But it’s home to me and I walk alone

I walk this empty street

On the Boulevard of Broken Dreams

Where the city sleeps

and I’m the only one and I walk alone

Green Day — “Boulevard Of Broken Dreams”

Jasmine – Greedy Quail Hill Flipper Will Get His – UPDATE #3

Address: 26 Perennial, Irvine, CA 92603 (Quail Hill)
Plan: 1174 sq ft – 2/2
MLS: R65314 DOM: 138
Sale History: 7/6/2005: $532,000
6/26/2003: $312,500
Price Reduced: 06/20/06 — $648,000 to $599,000
Price Reduced: 07/26/06 — $599,000 to $579,000
Price Reduced: 08/21/06 — $579,000 to $575,000
Price Reduced: 09/01/06 — $575,000 to $570,000
Price Reduced: 09/18/06 — $570,000 to $565,000
Price Reduced: 09/22/06 — $565,000 to $559,000
Current Price: $550,000

This Plan 3 in the Jasmine tract built by Shea Homes in 2003 is in the village of Quail Hill. In the spirit of saving money and being an efficient builder, this tract was reincarnated in Turtle Ridge as Ashton Green. This condo was purchased on 7/6/2005 and then put back on the market less than a year later on 5/26/2006. The greed is clearly evident when you realize that this flipper expected a $116,000 profit! They quickly wised up and started reducing the price. I think they may have reduced the price so many times that ZipRealty currently doesn’t even display the most recent price reduction.

If they obtain their current asking price and we assume 6% in selling costs, this seller will lose $15,000.

UPDATE #1 – October 19th, 2006

This greedy pig actually raised the price $50k yesterday as evidenced by ZipRealty:

Price Increased: 10/18/06 — $550,000 to $599,000
Current Price: $599,000

You’ve got to wonder what’s going through this seller’s mind as they keep messing with the price. LOL, Perhaps they were getting too much interest at a price of $550k? This hog will get slaughtered.

UPDATE #2 – November 4th, 2006

The last price increase lasted only two days and then the listing was taken Off Market on 10/20/2006. I’ll post another update when/if it gets listed again.

UPDATE #3 – April 21st, 2007

Well, this one is back on the market with MLS #: S474139

Price Reduced: 03/07/07 — $595,000 to $575,000
Price Reduced: 03/27/07 — $575,000 to $549,500
Current Price: $549,500

The $550k price didn’t work 6 months ago but since the market is hot now, I’m sure this home will just fly off the market now 😉

Mazzoni Aisle Flop

Mazzoni Kitchen

Asking Price: $547,500

Purchase Price: $542,239

Purchase Date: 12/5/2006

Address: 8 Mozzoni Aisle, Irvine, CA 92606

Beds: 3

Baths: 2.5

Sq. Ft.*: 1,676

Lot Sq. Ft.*: 1,623

Year Built: 1990

Stories: 3

Type: Condominium

Neighborhood: Westpark

$/Sq. Ft.*: $327

MLS: S469169

Status: Active on market

On Redfin: 124 days

Categories: Unsold in 90+ days

Sales History:

Date ————– Price ———- Apprec

12/05/2006 — $542,239 — -10.8%/yr

08/11/2005 — $630,000 — 15.5%/yr

09/24/1999 — $270,500 — 0.8%/yr

04/04/1991 — $252,000

Redfin, Zillow

When I was looking for my most recent rental, I viewed one of the units in this community. The whole place is just too dense (a 1,623 SF lot, WTF?). When your in there, the claustrophobia is inescapable. The unit I viewed was completely updated. This one doesn’t look like it has been touched since 1991.

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Some properties just have bad karma. This one was purchased at the peak of the last bubble for $252,000. The original homedebtor sold 8 1/2 years later and made a whopping $2,270 after a 6% sales commission. When adjusted for inflation and accounting for the stress of being underwater for 8 1/2 years, I consider this one a loss. The second buyer did well doubling their money in 6 years. Housing BubbleThe third buyer… well, they lost about $120,000 after commissions in just over a year — a 20% loss. Here is where it gets strange; the fourth buyer appears to have put the unit up for sale almost immediately after purchase as it has been on the market for over 120 days, and the last sale was almost that long ago. If this fourth buyer sells at the current asking price, assuming a 6% commission, they will lose $27,589 in just 4 months. I would add in some carrying costs as the unit is empty, but does anyone think this flipper is actually making any payments? I doubt it.

This property has had 4 owners; 3 of them are going to lose money on it. Who says real estate always goes up?

Watermarke – You think RE agents/brokers have a clue?! – UPDATE #1

Originally posted January 29, 2007

Address: 2363 Watermarke Place, Irvine, CA 92612 (Jamboree/Campus)
Plan: 635 sq ft – 1/1
MLS: P555645 DOM: 14
Sale History: 3/14/2006: $417,000
2005?: $342,000?
Price Reduced: 01/22/07 — $439,000 to $420,000
Current Price: $420,000

This flip is located in the Watermarke condo complex located near Campus and Jamboree (right behind The Plaza Irvine high rises). The 535 units of Watermarke were built by the Sares Regis Group from 2003-2005. It was originally supposed to be a luxury apartment complex (where it would be competing with Toscana and Villa Siena/Park Place). Halfway through they decided to do a condo conversion, PISSED off some people, and started selling the units instead of leasing them out.

There are several plans and the 635 sq ft Plan A is the smallest. I believe this plan started at around $300,000 back in late 2004/early 2005. I’m not 100% sure but from the property tax records, it seems this unit was originally purchased for about $342k. It was then flipped for a quick profit to the current owner who won’t be as lucky.

The current owner purchased in March 2006 for $417,000 with a 100% financed loan. Yeah, we’ve seen this before. But by a Real Estate Broker? WTF?! There’s no way this flipper can claim ignorance. This broker knew what they were getting into with 100% financing. Why did they decide to do it? My guess is GREED! Any other opinions?

I’m not sure if they occupied it for 6 months or not but in September 2006 they rented it out (MLS S457444) for $1850/month (furnished it seems). They listed it for sale on 1/14/2007 for $439,000 and then dropped the price to $420,000 a week later. If sold at $420,000 (and assuming 3% in selling costs – they are a BROKER afterall), they are facing a loss of $9600! That doesn’t take into account the money they are losing each month.

Also there’s probably more money to be lost in closing costs because the private remarks state: “Tenant has a lease through September 07 $1,850/month- willing to vacate with 30 days notice. Shows great! Plasma TV, washer, dryer, fridge, and some furniture negotiable. SHOWS GREAT! Possible credit to buyer for closing costs. Thank you. Seller is licensed real estate broker.”

Will they be able to sell it? It’ll be tough considering the other Plan A’s listed on MLS are ALL cheaper:

  • 2314 Watermarke Place – Plan A – $379,000

  • 3237 Watermarke Place – Plan A – $382,000

  • 3337 Watermarke Place – Plan A – $384,500

  • 3216 Watermarke Place – Plan A – $389,000

  • 3319 Watermarke Place – Plan A – $389,900

  • 2235 Watermarke Place – Plan A – $399,999

UPDATE #1 – April 19, 2007

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Thanks to dayday in the forums, I’ve come to learn the price here has dropped quite a bit. The MLS # is now U7000785 and this latest listing has been on the market for 59 days.

Price Reduced: 03/13/07 — $429,000 to $409,000
Price Reduced: 04/12/07 — $409,000 to $360,000
Current Price: $360,000

If sold at the current asking price and assuming 3% in selling costs, this investor is looking at a loss of about $68,000!

Here’s what the other Plan A’s are at now:

  • 2314 Watermarke Place – Plan A – $369,000

  • 2235 Watermarke Place – Plan A – $399,999

  • 3267 Watermarke Place – Plan A – $409,000

  • 3237 Watermarke Place – Plan A – Sold for $367,500 on 3/28/2007

  • 3337 Watermarke Place – Plan A – Rented for $1,600 on 4/1/2007

  • 3216 Watermarke Place – Plan A – Expired

  • 3319 Watermarke Place – Plan A – Expired

Shadow Play

56 Shadowplay kitchen

Asking Price: $888,000

Purchase Price: $855,000

Purchase Date: 11/24/2004

Address: 56 Shadowplay, Irvine, CA 92620

Beds: 4IrvineRenter

Baths: 4

Sq. Ft.*: 2,492

Year Built: 2004

Stories: 2

Type: Condominium

Neighborhood: Northwood

$/Sq. Ft.*: $356

MLS: P571009

Status: Active on market

On Redfin: 6 days

When looking at the state of the Irvine residential real estate market, I am noticing two different segments of the market showing stress: small starter homes and condos, and new construction purchased since 2004. Below is a screen capture of Redfin’s map of homes available for sale in Woodbury and Northwood. The area in red highlight was built after 2004, and the area to the left is older construction in Northwood. Notice the larger number of for sale homes in the newer construction areas? This is opposite of what we should be seeing.

New Construction Area

This says something about the current market: recent home buyers are concerned. Asking prices would indicate they are not panicking yet, but the number of homes for sale are showing their concern. Each of these homeowners is hoping a greater fool buys them out at breakeven during the spring buying season. When that fails to materialize, we should begin to see panic.

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Giving hope to the FBs on this street is the recent sale of 58 Shadowplay, Asking $839,000, Paid $800,000 on 4/10/2007. It looks as if the original owner paid near $800,000 for this property as the assessed value was $812,940 which represents the original purchase price with some adjustment. This original owner lost the commissions ($48,000 @ 6%) and whatever carrying costs were put into the place. I hope the new owners are happy; despite the loss, I imagine the seller is happy.Shadowplay

The property at 56 Shadowplay is one of 3 properties for sale on this one spot of this one street. The others are not going to be so happy with the $363 / SF sale price of 58 Shadowplay:

62 Shadowplay, Asking $849,000, $396 / SF, Paid (unknown, assessed at $800,624), DOM 236

68 Shadowplay, Asking $850,000, $396 / SF, Paid $782,000 on 6/30/2005, DOM 49

Are our featured owners quixotically jousting with windmills, engaging in their own shadow play, or are they serious about selling. Since they are looking at a loss, I would say they are serious. If 56 Shadowplay gets the full asking price of $888,000, and assuming a 6% commission, this seller stands to lose $20,280. They will not like the loss, but better a small loss than being the bagholder for the big drop to come…

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