Flipper alert: Costa Mesa

Yes, some people are losing their shirts as the real estate market is tanking. But there are still those intrepid few who think - no - know that there is still plenty of money to be made in Orange County, Calif. by flipping real estate. We'll keep our eyes on this one to see what happens:
2662 Redlands Drive, Costa Mesa, Calif., 92627
Size: 3 bed, 2 bath, 1,245 sq ft (built in 1950)
MLS: U7002748 (35 days on Redfin)
Current asking price: $899,000
Purchase price: $730,000 (4/24/2007)
Other price history: 11/19/2004: $687,500
ZipRealty price tracker: No reductions
Other info: Stories: 1
Type: Single Family Residence
County: Orange
Neighborhood: East Costa Mesa
From listing: Fabulous remodel with a 'grandfathered in' office/study. All new windo ws, some doors, bathrooms, kitchen, stainless steel and black appliances, decorator tile thruout, off white carpet, hardwood floors, builtins around the fireplace, chandelier, paint inside and outside, separate indoor laundry room, landscaping, garage door, wrap around front porch, large wood deck off of the kitchen and master bedroom, and more.

This flipper stands to make $115,060 assuming they receive full asking price and pay 6 percent selling costs. Not bad at all for a little more than three months' work. This property has been on Redfin for 35 days so far.

But is this price realistic? I personally think it's completely insane to pay the $722 per square foot that this seller is asking. Could you imagine paying $4,428 a month (not including insurance and property taxes) to own this 1,245 square-foot place with a 20 percent, 30-year fixed loan at 6.25 percent? I sure couldn't. Granted, it's in a nice part of Costa Mesa that's close to Newport Beach Country Club.

Let's check the competition:

Just around the bend is 2644 Riverside Dr. This has to be the most modest-looking $1,199,000 house I've ever seen. Click the link if you want to see for yourself. The property has one extra bedroom (4 bed/2 bath) and is 1,750 square feet. For the life of me, I cannot fathom anyone who would willingly spend this much money for this 57-year-old house.

2680 Redlands is newly on the market. It's a 3 bed/1 bath, 1,200 square foot, for sale at $839,000. Hmm....would you pay $60,000 for one extra bathroom and 45 square feet?

2651 Redlands is also for sale. Asking price is $950,000 for 3 beds, 2 baths and 1,800 square feet. Nothing too special here, which might help explain why the house has been on Redfin for 145 days.

So far, things don't look all that bad for the above flipper, since their price seems fairly competitive with these two. Nearby condos, by the way, are asking in the high $500,000s. They are newer (around 25-30 years old) and larger than the flippers' property. Does the fact that the flippers' smaller house is a single family home justify a $300,000 premium in this new market?

My alternative selection:
You can live a short distance away at 2418 University Drive, get a "tricked out" (I'm not making this up, click on the address to see the listing) property with a lot of great features in a Newport Beach ZIP code (if you're into that thing), but most importantly pay $250,000 less for a larger single family house with the same number of bedrooms and bathrooms.

Life's all about choices.