Here's a tale I'm sure many will be familiar with. Back in 2005 an acquaintance of mine from the golf course started to talk about the home he was buying in La Quinta. He figured that this would be his big score and finance his early retirement. Of course I mentioned that I thought it was a bad time to be investing in real estate. His reply was laugh it off while insisting that I would be sorry.
When he closed the sale (July) of his financial future he was as excited as a kid on xmas morning. He had his home and it had already gone up $40k since he put his deposit down in April. He paid $450k for a 6 bedroom, 2600 sq/ft home in La Quinta (so he said). Of course he financed nearly 100% (he said he put down $2500) and his payments were only $1800/mo. (His plan was to rent this to snowbird in the winter to pay for it).
I spoke with him again late last summer. Of course I had to ask "how is the house in La Quinta going?" He looked at me like a little kid that just pee'd his pants. Not so well, he admits. The rental thing did not work out (duh). He admits his house is not in La Quinta but in a development close to there in Coac-hell-a called La Colonia. He is tired of making the payments and the value has fallen. He figured he could sell it for $400k and only lose $50k. I said, "wow, bummer dude". I was thinking, man you are a complete tool. Haven't spoken to him but his name came up today and I thought I would check in on La Colonia.
I will assume this is a model match to his (hell it might be his, but the dates don't match).
A loss of $180k in 2 years
Here's another one in the same tract, 50161 San Solano,
This is the same plan as above and sold last in April 06 for $465k. This home went on the market only a few months after it was purchased for $499k. A year later the price is down to $279k. Roughly the same loss as the home above.
So, how did that "investment" work out? Eh not so well as we have seen. One word of advice. If you ever do "invest" in a tourist area. Try to keep your property IN the tourist area. Coachella is NOT La Quinta. That was his second mistake. The first being buying in 05.