We haven't been spending nearly enough time following what is going on in some of the more inland areas of South Orange County...so here we go with today's subject property in Lake Forest (Portola Hills).
As you can see, we have yet another property purchased during the bubble with virtually no risk to the borrower. Not a happy ending, and now after the foreclosure process this home is bank owned and looking for a new owner to step in.
28651 Pendleton Rd, 92679
Asking price: $469,900
Asking price/ sq ft: $301
Income requirement: $117,475
Peak purchase price: $600,000
Peak purchase date: 8/18/05
Size: 3 beds, 3 baths, 1,561 sq ft (built in 1994)
MLS: S534628 ( 3 days on Redfin)
Zillow Zestimate: $788,500
2007 property tax: $7,534
HOA dues: $117
Type: Single Family Residence
Style: Contemporary
Stories: 2 Levels
Lot size: 7,087 sq ft
From listing: Honey Stop The Car!!! Great location and ready for a new owner. Secondary bedrooms have a jack and jill bath and did I mention that the rooms are a nice size? Master is on the other side of the hall. Master bath is just waiting for your decorative touches to make it your very own relaxing bath. It has serious potential. The high ceilings add to the already nice floor plan. Needs a little TLC but bring your creative eye and save!!
No kidding the place is ready for a new owner. Let's look at how things went with the previous one:
- 8/18/05: Purchased for $600,000 in August 2005. Financing was in the form of a $479,900 first loan and a $119,950 second. Buyer put down a whopping $150; First Franklin financed the rest.
- 11/1/07: Notice of default in the amount of $14,157.
- 2/6/08: Notice of trustee sale posted, $508,829.
- 3/13/08: Property goes back to the bank (Deutsche Bank) at auction for $417,084 (discount off NTS amount did not attract any action).
- 5/31/08: Listed on Redfin as an REO.
Judging by nearby rentals, this one could probably rent for around $2,500-$2,600 per month considering larger, 2,100-sq ft models seem to be going for about $2,800 per month. So, if we aim low and assume this rents for "only" $2,500, our target breakeven price for an owner-occupant would be about $400,000, using a GRM of 160 (160 x rental rate of $2,500/month).
If we assumed a rental rate of $2,600, then we as an owner-occupant would want to aim to stay at or below $416,000. This one is still priced high by this logic, but is at least in the rental parity ballpark.
Assuming this property can be sold for the full asking price, it would represent a depreciation of $130,100, or 22% off the peak purchase price in 2005.
6 comments:
The listing information says it shares one wall. If this is a paired house the photo is deliberately misleading. Sharing a wall with a neighbor is like condo living.
Good catch - it is misleading. Definitely not a SFR, from what I can tell.
Real Estate agents are so desperate these days they will do anything just to get their phone to ring.
Off topic I'm sorry but amazed by this I saw today Redfin MLS P634627.
I don’t know if you have seen this one, but it appears to be a flip – the thing is, I can’t understand how they expected to make $150 000 between December and April – what would you put into the house to make this much on it?
My first thought when seeing that was it had to be a foreclosure, mostly because it's been a number of months since I've seen a potential flip in the area.
I can't find it on the foreclosure lists, so that means it most likely in fact a flip. Very good find.
I can only guess that the thinking there was that they were able to buy the property at enough of a discount (36% off peak pricing) that they would still be able to beat the market by putting enough into it and still being able to sell for a profit.
The question is whether they will stay ahead of the market, or whether they will chase it down. It does look like they are serious about reducing the price and selling, which is good. Still a very risky move. You have to appreciate the guts. I will track this and see what happens. Thanks again for posting.
At the risk of being accused of being an apologist for the agent, single family attached homes also known as paired homes are not like typical condo living. Lot size is usually much bigger. Streets are usually wider. Usually you wouldn't be able to tell you are in a paired home community except for the adjoining walls. I know . . . big except.
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