Foreclosing on the red carpet – Hollywood home goes from $1 million to $377,000. Real estate with financial glamour. Real Homes of Genius.
What better way to celebrate the Oscars with a glorious foreclosure in Hollywood? For those not from Southern California the idea of Beverly Hills and Hollywood must seem like an onstage fairytale. The reality on the ground is very different. Los Angeles is a very niche specific market with millions of people crammed into a very highly dense area. As the housing market continues on its inevitable correction the scars from the bubble heyday are still working their way through the system. The California budget is going to guarantee additional cuts and higher taxes for years to come. Both political parties would like to make it appear that there is only one option to solve this problem, either through all cuts or all taxes but the unfortunate reality is it will have to be a combination of both. In the end, quality of life in California will not be winning any Oscars anytime soon. Those that jump into the housing market right now should expect to be comfortable with additional price cuts and non-existent appreciation because the market is saturated with shadow inventory and banks are now leaking more and more property out in the market. At the current churn rate this has a burn out timeline years down the road.
Glamour and glitz in Hollywood
6004 Carlton Way, 90028
Beds:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 3
Baths:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 2
Square feet:Â Â Â Â Â Â 1,322
Style:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â One level
Built:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1910
A reader sent this over and at first glance, I thought it was a place in Detroit. This home is located in one of the Hollywood zip codes. This is clearly a Real Home of Genius no matter where it is located. I love the real estate ad on this place:
“PROPERTY SOLD AS IS WITHOUT REPAIR OR WARRANTY. All looking at or showing the home should know that there is a lot of trash inside the home, the kitchen is broekn, flooring ripped . The hard wood flooring has been damaged and there are graffitis all over the interior rooms. All the bathrooms need to be clean up and fixed. Some windows and doors are broken. The garage doors needs to be replaced due to termites.â€
Sounds like we have a winner! This place is a walking disaster. Let us look at the sales history here:
Source:Â Redfin
This place actually sold for $1,075,000 in 2006! Take a quick look at the above home. Is that a million dollar home? The bank that made this loan, simply by looking at this one example, should be dismantled and put into receivership. There is no reason a toxic mortgage should have been attached to this fabulous home.
And just look at this street view of the home:
Looks like we hit the trifecta here. As you can see from the above listing it does look like there is a pending home sale and the latest listing price was $377,000. This is a 64 percent price drop in Hollywood California. Those in the region are going to chime in and say how this isn’t exactly a niche market in Hollywood. That is the point with my arguments for additional corrections in Culver City, Pasadena, or this place. We have more basic and average homes hitting the market that will sell for much lower prices. This will chop into the median price for these areas and take a swift kick to comps.
The 90028 zip code of Hollywood had no home sales last month. 2 condos sold for a median price of $619,000. The current data for the zip code shows us bigger problems:
MLS listed homes:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 28
Shadow inventory:Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 41
This isn’t as bad as Beverly Hills that has a giant backlog of people living in homes making no mortgage payments. I actually cracked up when I did a turnaround on Google maps here:
Please tell me these aren’t condos coming online in this market! These Google Streetview maps are old so it may be the case that this place is already up. Anyone have any idea what this construction is?
Today we salute you Hollywood with our Real Homes of Genius Award.
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65 Responses to “Foreclosing on the red carpet – Hollywood home goes from $1 million to $377,000. Real estate with financial glamour. Real Homes of Genius.”
The most important point I feel was the loss of humanity in our thinking. There’s a riot going on and some are made they didn’t smash a window and steal a TV too…There is no way a complex society can prevail if we all become cannibals. We are sentient beings, not feral dogs, investment bankers, commodities speculators and the like…
This quote goes in the daily WTF section…seriously, WTF?
My point is that Manhattan created the bubble to enrich themselves at the expense of the entire nation, in fact the entire world. If there is no humanity left in us, there is no hope for the future.
Oh please, Dark Ages, there was plenty of greed t go around with home buyers biting off more than they could chew. Had everyone put 30% down and bought homes they could afford, none of those credit default swaps would have paid off for Wall Street.
It looks like the pictures for the complex across the street might be old. According to Redfin, several sales and a pending sale list the year built as 2009. The pending sale is a 1 bedroom for $399,990(http://www.redfin.com/CA/Los-Angeles/6001-Carlton-Way-90028/home/7112845).
How much will this bungalow or a house in this area rent for?How much will a nice looking 1 bedroom (~900 sqft) rent for? If the price is $400k then I would like to be pulling in some where between $2,800 to $3,100 per month.
I have a hard time believing this is true… but I guess it is!
I read a story in the Wall Street Journal today about how the housing market in some areas of the country is picking up because of people paying cash are snatching up properties. They said a lot of the buyers are from overseas. Maybe some slick realtor could sell the sweet pad in this article to an unsuspecting buyer from overseas. Maybe a housing boom is right around the corner because of all of these cash buyers!!!
Yeah thats the ticket.
I’m sure the latest round of “foreign investors” will do as well as the Japanese did in the late 80’s/beginning of the 90’s:
http://www.digitaljournal.com/article/230010
History of 2 Rodeo Drive, quite possibly the most famous retail/landmark in Beverly Hills:
After the center’s completion in 1990, it was sold to a Japanese firm for $200 million. The property was then sold again in 2000 for $131 million; the $69 million loss blamed on a recession that plagued southern California during the time.
Selling the house in the first picture for a foreigner for $377k is about like all those immigrants in the early 20th century being sold the Brooklyn Bridge. You’d have to find a pretty clueless foreigner.
I am not quite sure that the foreigner has to be clueless. What if the “foreigner” is a Sovereign Investment Fund or straight up government purchase through shell companies/proxies? Apposed to our people and society, foreign governments don’t all have our qualms about government owning land/property. A foreign government has a long view; holding overpriced, but easily acquired (without the usual xenophobic furor because our wealthy and powerful are just happy to let off the steam following the consequences of letting corporations and the wealthy run rampant with their greed) properties until inflation or value changes make it profitable decades down the road is nothing.
Many don’t know this, but Washington DC is owned to a large extent by a single European nation that took advantage of our propensity for excesses and crashes many years and recessions ago.
The nation should be the Empire of Austria and Hungary, right?
However that empire broke up, and nobody really figured out how much share Austria and Hungary should get. Austria had held the treasury while Hungary had more people, so the division share was never determined.
The place looks worse than most crack houses I have seen on TV. Some fool still overpaid for that POS. If we would have played guess the neighborhood, I would have swore that was Compton, Watts, North LB, etc.
We are still in for a shit storm and I think it just might come ashore this year.
I think the place is pretty sweet, its got a long driveway I can back my RV into. I could live in motorhome, plug into the electrical, and rent out the house to a waitress/aspiring actress.
You ever actually been to Hollywood? It’s not Santa Monica in the freaking hills. Most of it is incredibly sketchy and just as gang-infested as Watts or East LA. I wouldn’t live much north of Hancock Park or south of the hills.
You’d think they could at least haul the trash out of the house if it’s for sale?! Is that too much trouble?
Yeah, I loved the ad too. 🙂 “….the kitchen is broekn…” hahahaha
Step right up suckahs, reduced to only $377,000 for this tear-down dump.
Dr. H: Just thought I’d pass along an idea for an article in case you were interested. Title it: “Underwater Yuppievilles of (insert your location here)”. The basic idea is very simple. Just pull up new higher-end developments that were built between 2005-2007. The odds are that most buyers didn’t put down 20+ percent. So now most of the development, entire new neighborhoods, of supposedly affluent people are underwater.
One could have fun with this idea throughout numerous areas, I would imagine. Enjoy it if you like it.
Speaking of “Yuppievilles”, my buddy tells me that 9 of 12 homes in a “brand new” complex built in 2007 in one of the nicest parts of Corona have since been foreclosed on (at least once each). 1 more is about to be. So 10 of 12 since being built and sold under 4 years ago. How many thousands, tens of thousands (if not millions) more such new home tracts or townhome/condo complexes are there in Socal?
This house is a DUMP that needs to be DEMOLISHED! It’s not worth $150,000. Common people need to live somewhere too. I’ve been to Hollywood and believe me, not everywhere in Hollywood is glamorous.
Housing is headed for trouble in overpriced areas. If you think all the “rich people” are loaded with money, think again! Here’s a (true) story: I work in a hospital on the central coast of California. Each year at Christmas, the doctors would send baskets of goodies (candy, fruit, nuts, hot chocolate….) to all of the various departments in the hospital. I have worked at the hospital for just over 20 years. EVERY single year we got LOTS of baskets. Guess how many baskets my department got for Christmas 2010? NOT ONE. NOT ONE! Personally, I don’t give a hoot about the baskets, BUT IT”S A SIGN OF THE TIMES. Even the doctors are cash strapped. And believe me, if doctors (and others) cannot afford Christmas baskets, are they going to be stupid enough to be over-paying for a home? Oh heck no!
Hollywood, especially this part of it, is a lot cleaner and nicer than it’s been in the past. Parts of Hollywood, like near this house, used to be pretty cheap and affordable in the 70s and 80s – basically a dump where people went to buy drugs lol. J/k, that was part of it, but really it was just a low-income immigrant neighborhood. The immigrants were mostly from Mexico, Russia, Armenia, Thailand. Also a lot of ur-hipsters, DIY punks, gays, back then. It’s gotten a lot of gentrification money lately, especially with overflow from Silver Lake. Back then, the main “glamour” areas were the hills and parts of West Hollywood, and along Melrose near Fairfax, and down in Hancock Park.
I really liked the old dumpy Hollywood a lot more than this “shopping mall Hollywood” that’s emerged recently.
Huh? What?
I live just south of Melrose & Vine. Most everything to the north of Melrose is a freakin dump until you get north of Franklin that is. Sure, there are a few interesting/modern condos that they threw up here and there but their really just shiny boxes in the middle of a cesspool.
I wouldn’t buy this house for 200k.
I wouldn’t doubt that the $1,075,000 sale was fraudulent as you could have picked up a sweet 1500-1800sf 2/2-3/2 house in Larchmont Village, Gardner Park, or a bunch of other comparable areas for a similar bubbleicious price from 2005-2007.
Umm, this part of Hollywood has gentrified?!! You are either on crack or not from the area. This is still straight barrio.
I’m a health care worker on the opposite (east) coast and even in health care here, we’re seeing the same things. I work in a very large private radiology practice with multiple offices. We’ve seen our 401(k) match cut in half, our year-end bonuses cut by 2/3 and have had no raises for two years. When a “stable” industry like health care gets hit like this, I fear for everyone. It’s going to get rough. Stock up on food, guns and ammo. The time is coming.
I work for a HUGE medical software company and although the CEO sends out emails telling of rising profits, new hiring and how the overall health of the company is booming. No pay increases or bonuses for the last three years, nothing but keep up the hard work and remember, you don’t want to be looking for another job in this market. It is sad but true that most big corps use the economy as an excuse to screw their employees and greed rules the day. I think it is time to “Walk like an Egyptian”
Sign, we’re seeing a similar thing in the World o’ High Tech. Used to be that when a large tech concern gave a conference or attended one, the tradeshow booths handed out all kinds of bling. Garments (some of it surprisingly swanky and useful), tableware, pocket tools, useful IT/comm gadgets, and the like.
Yesterday at Graybar’s (big IT/telecoms supplier) Seattle tech showcase (comm, data, security), the entire haul consisted of a nice tall beer mug (from Graybar) and a pocketful of chocolate hearts. Oh, and this cool cable stripper/folding knife tool. The big boys like Corning, JVC, Leviton, Fluke were there–eh, pens, more pens, and then some pens. Guess one can always use a pen.
All concerns are cutting way back on the lagniappe. This may mean they’re also cutting back on the waste. Any of you who lived through the Dot Con in NoCal are aware of what massive oceans of waste accompanied that. Countless millions (billions?) of dollars of all that exciting “startup capital” ended up directly in landfills.
The point for housing is that the waste wasn’t just on the debt end. It was systematic. Houses made of cheap crap (Killer Ninja Dry Wall), houses put in the wrong places, houses nobody really needed, houses with expensive crap built in that got ripped out because it was exuding radon….
An addiction to waste is a hard thing to wake up to. After awhile we feel we deserve the fruit baskets.
I can second that sign of the times…I work in a large entertainment law firm in Century City. Evey year around Christmas, we would get dozens and dozens of baskets from studios and clients. This year, I don’t believe we received more than one basket.
These three “cottages” are basically what’s left of the single family homes on Carlton Way which is comprised now of mostly dilapidated apartment buildings plus the new condo development across the street. Just south and parallel to this street is the first block of Hollywood’s Selma Avenue, tree-lined with nicely maintained craftsman homes — the way Hollywood was like in the 20s. It’s amazing how the neighborhood here changes so drastically from one street to another. I think that the two houses bracketing the one now for sale have been fixed up, but “gentrification” on this particular street is a long way off.
Selma lucked out. Most of Hollywood was a low income neighborhood of rentals with absentee landlords.
I know the non-Angelenos reading this might be thinking “what?”
Yeah, Hollywood was kind of a ghetto.
Most of Hollywood “was” a ghetto? Most of Hollywood still IS a ghetto! Or “barrio”, if you prefer. How many illegal aliens, oh I’m sorry, “undocumented criminal trespassers” aka “noble, hard working day laborers” are loitering day in and day out at the Home Depot and OSH across the 101 on Sunset and St. Andrews or Sunset and Western? Hell, that area looks more like Tijuana or parts of Mexico than MacArthur Park.
And let’s not even get into the rampant organized crime elements from Russia and former Soviet states like Armenia.
Outside of a few new retail complexes and multi-use or mixed use condo/hotel/retail developments on some of the main streets/intersections in Hollywood, and various old facades with facelifts, Hollywood is still as vile, grimy, crime and drug ridden as it was at its worst in the 80’s and 90’s.
You are not buying a house, you are buying a shot at fame and fortune. Elvis grew up in a shotgun shack but that was all the way out in some shithole called Tupelo, Mississippi. How inconvenient.
If your grow up in this shotgun shack, you avoid all the hassle of being poor and Southern as well as the horrific commute from Tupelo to Hollywood. You are already there, baby!
So, all you future hipshakers between the ages of zero and ten, tell your parents to buy this house and live in it just as it is! You, too, will become a star (and die of an overdose while taking a dump).
That right there’s some funny shyt, n’ I don’t care iff’n ya are the preacher’s daughter, LOL!
It’s also some great back-handed commentary on the “hype premium” peeps pay to live in So-Cal. ;’)
well , sold at auction nov 2010 for 500k ? what bank bought to prop up prices ?
then saw no ones biting on this trash?
Bet cha, those two lots on each side of it will get scouped up to put up high density low income housing. gov funding for these projects is being dished out.
yes sir raise those taxes so we can pay for these slum projects. health department should make em tear down the whole stinking getto.
Glad I bailed la, sold it now the place one year later is 45k down. we are all renters now.
Sold in November for 500k then put up for sale less than a month later for over a 100k loss? That makes no sense.
That is most likely how much was owed on the mortgage. It didn’t sell at auction and became property of the bank at the amount owed to it. It is the way foreclosures work.
Much of Hollywood is a dump.
Hear, hear! “The bank that made this loan, simply by looking at this one example, should be dismantled and put into receivership.”
That dump literally oozes moral hazard. Meanwhile banksters, appraisers, brokers, and title companies skate with their loot, free of any accountability. So much for change. This is too far gone. What a country! Welcome to Egypt.
Please pass the QE3; I want my share.
Moral hazard? Why yes, but that place also screams physical hazard. As in make sure it doesn’t collapse on you while your in it.
Seems like a good deal. About $400K for a big lot. Get the two on each side of it for $400K each, and you have $1.2M in property in Hollywood. Build a 4 story building like the one across the street with about 40 units. Each unit is about 1000 sq ft. So you can build it for (1000 * $100 sq/ft * 40 units) = $4M + 2M Garage and 0.8M common area. So now you have $7 million invested and 40 units. Sell each unit for $400K but it’s a crap market so lets discount them to $350K for quick sale. 40 * 350K = $14M
Profit = $14M – 7M = 7 Million Profit. And everyone here is hung up on the $377K sale price. Seems like chump change for the land.
Yeah, sure Sean. EASY FUCKING PEASY 7 million profit. Hollywood is already so oversaturated and overbuilt with so many failed and failing condo complexes, yet you’ve got the answer. Good luck getting any of the necessary permits and building approvals now.
That’s why developers are handing these entire fucking complexes, some at initial stage of development and land purchased at peak, where they’ve lost millions if not tens or hundreds of millions, over to the banks left and right. Easy profit, as if anyone is in the market for a 1,000 sq ft shitbox in Hollywood when there are thousands of units far bigger and cheaper priced in Hollywood, WeHo, and all through LA city just stagnating. So have at it, please!
Foolio – have you been to Hollywood? New 1000 sq ft rentals are $2000 to 2500 month. I am very aware of prices in the area, and now is the time to invest in income properties. The condos that are sitting are due to outrageous monthly hoa fees. Also, if you think companies use banks to finance projects like this you really do not understand how all development companies work, research stocks, bonds, and private investments. I is not always a guy at a back begging for a loan.
Sean, please, oh PLEASE tell us WHO would write a construction loan for that, anytime in the next 24 months?… (’cause I want IN on the scam ‘fore the indictments catch up… ;’)
Private investors or bonds, they pay about 6% today. This is how you make money, you buy out of favor investments and wait.
Not to mention, that even in these (UNacknowledged) times of DEflation, I doubt you could build mid-rise, in So-Cal, to their current SEISMIC CODES (COLA), at anything under $170/sq. ft., so your whole scheme is DOA at the bank’s front door.
where did you get your sq ft cost? you are way off, and the ca code does not raise costs as much as people think for new build, retrofit sure. it’s concrete and wood, these go up quick, and labor cost is usually the biggest cost, and today labor is much cheaper than 5 years ago.
Thats exactly what I was trying to say, thanks for your version of the numbers break down.
even if the units are all sect. 8 the long term cash flows is great.
The construction opposite is an 41 unit condo building that is called “The Metropol”.
I went to take a look at them on a random sunday tour of open condo back in May of last year and when I called the agent (who was not there for the scheduled open house) I learned the place was being repossessed by the bank. At that point prices were set (I think) in the $500-550K range for about 1200 sq ft.
The places are back on the market as of July last year (see the attached article)
http://adnergroup.blogspot.com/2010/07/metropol-hollywood-returns-bank-owned.html
Prices look to be $150K cheaper. The units are tight and small, and as the pictures in the main post show, this is an unappealing neighborhood. I remember seeing the three houses opposite and assuming they were likely tear-downs that would make way for another condo development.
Good lord, that link is to the most blatantly obvious advertising ‘blog’ I’ve ver seen.
“Flying off the shelves” = like a RE guy I met in Florida last year who said the market was so good he was back into house flipping again.
Likely stories, indeed.
I liked that advertising hype too. That’s pretty cool subliminal on two levels; buying is as easy as peaches and if you don’t grab the sale now they’ll all be gone.
I followed the link to the LAPD crime map from that site. Pretty fun. you can scrub the time line and watch the crime hits flash around from spot to spot in the neighborhood. Looks like cockroaches running about. They even had a murder two blocks away on the 31st. All good reasons to pay half a million for 1200 sq ft condo on a run down street. Don’t forget the HOA’s. Redfin surfer: No way getting 2800 place for these. You can get a lot better for less near by I am sure.
I lived on that street, 6050 Carlton Way, circa ’97-98. It was a stand-alone 1 bedroom home (old farmhouse from the 1900’s I think) that had been redone. $700 a month back then and I thought that was a steal for my own little house that stood safely behind another duplex on the property. Until I figured out the drive to Santa Monica from there sucks, the speed freaks next door could possibly kill me during one of their trips and the condoms on the street were telling of what happens when I was asleep in my little house. Friend of mine also moved into a place on a street behind there (against my caution). Promptly moved after the attempted break in (while she was home). Oh, the glamorous Hollywood lifestyle!
http://www.redfin.com/CA/Pasadena/856-S-Marengo-Ave-91106/unit-7/home/7188645
I am wondering about the sales history for this property (click on link above.) This place was sold in 2005 for 649K; sold in October 2010 for $319,527; and listed for sale in December 2010 for 565K and price changed to 558K in January 2011 [Source Redfin.] The person who was lucky enough to find and purchase this property may be making a ton of money!
SoCal an “onstage fairytale”–yep, you got that one right, DHB:
The Brothers’ Grimm’s “gingerbread man” as performed by The Residents.
http://www.youtube.com/watch?v=2uLdiVsATfc
Don’t worry about “food, guns, and ammo.” Disaster generally means people must be mobile. Stock up on Leathermans, SOGs, Gerbers, and folding knives. Stock up on condoms and sew them into liners in all your clothes. Stock up on old gifts of the mind and spirit that will let you survive anything without turning into what Dark Ages describes. Better yet, learn how to live without stocking up on anything. Then if you have to walk away from your stockpiles it won’t come as such a shock.
For $377K you can get a lot better land than that. And you wouldn’t have to live in SoCal.
Run, run, as fast as you can!
You can’t catch me, I’m the Gingerbread Man!
See also their 1994 album of the same name.
You must be off your meds.
Residents are great, man!
I sold one of the 4 homes in the photo, all tiny crackerboxes built in the early part of the last century for railway workers. The zoning is R$ for each lot so by bundling all 4 together one can build up to 24 units total with underground parking. 1 group bought them all to build condos as you see from the reverse photo (those units are now finished and vacant!!) high density housing is coming to the area and The City is all for it, tax breaks zoning variances etc.
The irony is that the project went bust and several different banks then foreclosed separately on each home so they were broken up again. 1 buyer managed to buy 2 and is going to build a 6 plex for rental.
The real scam here is that the original group that purchased all of them together managed to take out loans on each individually so they walked off with a couple of million without turning a shovel.
PS the guy accross the street with the new building is now renting out the units instead of trying to sell them.
What’s interesting about the trifecta at 6000/6004/6008 Carlton Way is that each sold for over $1 million apparently to the same lady during the heyday. MBSs, LLCs, Trusts, MERS (whatever happened to that investigation of MERS by the 50 State Attorneys General?) — and even the City of Los Angeles in a covenant/agreement related to the 6000 property — became involved. Very murky, very shady, very Evelyn Cross Mulwray in that LA “Chinatown” way…
The Carlton Way Trifecta Plot deepens. Go to this link from 2006 to see a picture of 6004 Carlton Way before it became the monstrosity it is now:
http://www.hollywoodheritage.org/news/hhi_newsletter_09-06.pdf
Who did it: was it the Evelyn Cross Mulwray-type who bought all three adjoining properties, was it the land developers, the family trusts, the city, or is it going to be blamed on squatters? Oh, forget it, Jake. It’s Chinatown…I mean, it’s Hollywood.
Not a nice neighborhood, not worth the money then or now.
Oh, at one point or another relatives show up in Los Angeles and they all want to “see Hollywood”. You try to deter them and encourage them to see other things but no… they have to “see Hollywood”.
You explain that driving around in a tour bus looking at unverified celebrity homes, fighting off smelly street performers, homeless people and going to somewhat boring costly attractions will suck. But. They just have to go.
Then there are the studio lots, most of which are actual business places aka they don’t let you on the grounds except on special occasions.
Can’t remember how many times I’ve tried to convince people to go to Griffth Observatory and do a hike up the mountain, or go to LACMA, or the Rose Garden and science center… hell… so many different things.. but for the love of God they all are drawn to Holly fricking wood. There are occasional cool things to do in Hollywood. The halloween parade is great, some good bars, the observatory, ocasionally a film premeir or art activity…
Afterwards they are like… oh that did suck. Much like buying a 400K condo in Hollywood.
Like real estate in this town… you really have to know your way around before you do anything.
It’s true. Mine always want to see Hollywood and Rodeo Dr., two places I cannot stand.
WE were those relatives. We wouldn’t listen to experience. We had to see it.
You folks are 100% right.
So next time we come we’ll mix it up a little and do N.Beverly or N.Canon Dr. instead.
Hollywood was cool about 100 years ago, long before Bob Hope and Lucille Ball showed up, because you know by the time popular culture hypes something up, its heyday has passed. All us natives know this, it is the rest of the world that doesn’t.
Thanks Christian Stevens for telling us the true story. Now I ask DHB not to pick up examples like this one and write an article. I am asking all other hard working renters
Question 1 : What would you do if you have 200K cash ?
Question 1: Do you think cash will be king in next 1-3 years ?
Thanks
Buy a ferarri.
Dollar will continue its decline.
OR save another $100K, and buy a sweet place on the beach for cash in next year or 5…no more rent, just property tax. Maybe even a duplex so you get some rental income (to pay the taxes)
Here is another one in SOUTH PASADENA from 950,000 (2005 Price) to 315,000 (1989 price)
http://www.redfin.com/CA/South-Pasadena/2009-Hanscom-Dr-91030/home/7001971
Looks like two question 1s…..easy answer: Cash will ALWAYS be king.
Simply put, in the next 1-3 years the banks will have to start unloading the shadow inventory because otherwise the state will sell the properties for back taxes. That means a huge increase in available properties and anybody’s guess what that does to pricing but the trend will be down, perhaps as much as another %20.
So then the question is do you need somewhere to live or a home for the $200k? If a home buy now, these rates wont be around forever.
If the latter and a home for your cash then starting this year, around the 3rd quarter you can buy a property for cash and rent it out. A 200k property in a decent area will net you between 15k and 18k a year a very good return on investment. You will need a strong set of testicles to get more adventurous and become a pro and buy a 4 unit you might get a little more ROI but you now have a phone ringing all the time fix this fix that, your tenants also get to call 311 and rat you out to The City and stop paying rent till all is repaired. Not good.
I have clients in Santa Clarita, Inland Empire and East LA buying homes for 60k they rent for 750 a month, sometimes to the same folks who lost them! Point is a newer home in Santa Clarita that sold for 400k is going between 60k and 80k now, coat of paint you are good to go and get a good tenant to give you $9,000 a year on your 60k is a %15 annual rate. No appreciation for the first 5 years but as bad as it looks now, everyone will forget this in 7 years and the whole bubble will start again-IT ALWAYS DOES- and you might unload the property in 10 years for double what you paid.
Sure I am a realtor so I like property but no one lost money in CA ever if they held on long enough, just the ones that bought or refi’ed and had to walk away in 3 or 4 years. Always plan for a 7 year hold and you won’t lose much if anything. Remember Baron Rothschild’s famous axiom :”when there is blood in the streets, buy property”. We are going into the greatest buying opportunity in CA over the next 5 years if you have cash, be ready to be king. Just not yet: there is not enough inventory and prices have not come down enough to make sense. You cannot time bottom but you can get a MUCH better selection starting later this year and boy, would I like to be a buyer between Thanksgiving and Christmas NEXT year.
I was driving on Gower today, just north of Hollywood, less than 2 blocks from the “Metropol” I saw a HUGE construction site and read the sign, “Villas on Gower”. Sounds fancy. I did a google search.
“a $30.5 million housing complex for low-income families and the formerly homeless. The four-story project provides 70-units of housing on a former dusty lot near Hollywood and Vine”
http://la.curbed.com/archives/2010/07/another_day_another_groundbreaking.php
Yup, looks about right, that’s what kind of house in Vancouver, Canada goes for a cool mil right now. We are right behind you guys in a real estate correction.
A lot of people seem to think we are ‘different’ here, that we are immune to it all-there are
going to be tough times ahead for a lot of people.
Check out a funny website called Crack Shack or Mansion, see if u can guess which is which, it will blow your mind…
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