Mack the Knife – Frank Sinatra
The people who bought properties as flips in 2007 had to put their own money into the transaction. All of these people made a small fortune by starting out with a larger one.
One of the myths of the real estate bulls is the rich-foreigners-will-save-us fallacy. This myth has a hint of racism to it: foreigners must be culturally superior to have the money to come to the rescue of us poor Americans. Whenever I see this argument raised, I always link to a post done by Rich Toscano at Piggington.com called The Dumb Money. As stated in the article, “Far from being a positive fundamental, a sudden excess of foreign
participation in an asset market is indicative of ill-informed
speculative money at work. When the foreigners really start piling on,
it’s always a good sign that the end of the bubble is nigh.” As you might have surmised, today’s featured property was a flip attempt by someone with a non-Westernized name (as was yesterday’s.) The stupidity of this particular flip is breathtaking to me. It was purchased as REO for well over what the lender paid, and now it is being offered for much less. The entire loss is going to be the flipper’s money.
If the property looks familiar, it is because we have featured it before: Brookside Comp Killer.
Asking Price: $660,000
Income Requirement: $165,000
Downpayment Needed: $132,000
Monthly Equity Burn: $5,500
Purchase Price: $740,000
Purchase Date: 12/19/2007
Address: 4342 Brookside Street, Irvine, CA 92604
| Beds: | 4 |
| Baths: | 1 |
| Sq. Ft.: | 2,200 |
| $/Sq. Ft.: | $300 |
| Lot Size: | 5,623
Sq. Ft. |
| Property Type: | Single Family Residence |
| Style: | Contemporary |
| Year Built: | 1971 |
| Stories: | 1 Level |
| Area: | Portola Springs |
| County: | Orange |
| MLS#: | Y803965 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 3 days |
SELLERS MOTIVATED SUBMITT TODAY. CALL LISTING AGENT FOR SHOWING
That description is a lie (and annoying for several reasons.) This is not REO. Do you think the seller is so embarrassed that they are losing so much money on the deal so quickly that they are pretending it is still bank owned?
This property was REO when the bank purchased it on 12/17/2007 for $678,340. It was sold to a woman “as her sole and separate property” on 12/19/2007 for $740,000. Perhaps the husband knew it was a dumb idea? The lender had to be thankful someone was foolish enough to purchase a house for over $60,000 more than they paid at auction, particularly given the sorry state of the market last December. A lender was willing to loan 80% of the $740,000 purchase price, but the owner had to put $148,000 down. If this property sells for its asking price, the owner stands to lose $119,600 after a 6% commission. Basically, they lost $120K in 6 months. That knife was quite sharp.
I doubt a regular reader of the IHB would have made that deal. I must admit, I feel a bit of schadenfreude on that one 😉
Thus concludes another week at the Irvine Housing Blog. Come back next week as we continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.
🙂
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Oh, the shark has pretty teeth, dear
And he shows ’em, pearly white
Just a jack knife has Macheath, dear
And he keeps it, keeps it way out of sight
When that shark bites with his teeth, dear
Scarlet billows, they begin to spread
Fancy white gloves though has Macheath, dear
So there’s rarely, never one trace of red
On the sidewalk, one Sunday mornin’
Lies a body oozin’ life
Someone’s sneaking ’round the corner
Could that someone, perhaps, perchance, be Mack the Knife?
From a tugboat on the river goin’ slow
A cement bag, it is dropping down
Yeah, the cement is just for the weight, dear
You can make a large bet Macheath is back in town
My man Louie Miller, he split the scene, babe
After drawin’ out all the bread from his stash
Now Macheath spends just like a pimp, babe
Do you suppose that our boy, he did something rash?
Ah, old Satchmo, Louis Armstrong, Bobby Darrin
They did this song nice, Lady Ella too
They all sang it, with so much feeling
That Old Blue Eyes, he ain’t gonna add nothing new
But with Quincy’s big band, right behind me
Swinging hard, Jack, I know I can’t lose
When I tell you, all about Mack the Knife babe
It’s an offer, you can never refuse
We got George Benson, we got Newman & Foster
We got the Brecker Brothers, and Hampton’s bringing up the rear
All these bad cats, and more, are in the band now
They make the greatest sounds, you ever gonna hear
Hey Sookie Taudry, Jenny Diver, Polly Peachum, Old Miss Lulu Brown
Oh the line forms, on the right dear
Now that Macheath, I mean that man Macheath
Yeah he’s bad, mercy mercy
Yeah he’s badder than old Leroy Brown
You better lock your door, and call the law
Because Macheath’s, that bum,
He’s back in town
Mack the Knife – Frank Sinatra
Theres a crazy little shack beyond the tracks
Working so hard every night and day
Once there was a great storm,
I haven’t really ever found a place that I call home