Tuesday, February 5, 2008

But it's a dry heat

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).

83386 San Asis DR Coachella, CA 92236,

This is a 6 bedroom home in La Colonia. It's 2653 sq/ft. It was built in 2004, the last sale is listed as June 2005 for $450k. It went back to the bank in Nov 07 for $361k. The bank is currently asking $269k. 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.

15 comments:

Anonymous said...

2600 sqft cut into 6 bdrms??? Jez, didn't realize they made whole developments for the twin bed-challenged.

wierdAl said...

I remember a tract I looked at that had a house you could configure with 11 bedrooms. It was about 4000 sq ft. the model home had 6 or 7 plus a couple of large open areas. Who the hell needs 11 bedrooms? The Waltons...

Anonymous said...

Hey Golfer_X

I have been considering moving to Corona from La Habra. Are there any bad areas of Corona to avoid?

golfer_X said...

Oh yea, every city has bad areas. Avoid the home gardens area (ghetto). Central corona is kinda old and run down too. I'm not a big fan of the Eastvale area but some folks seem to think it's ok. It's too close to Mira Loma which is gang infested. The smell from the dairy farms can get ripe and the flies are the size of small birds. Oh, and it's foreclosure central. Most of the areas along the hills to the south are nice. The area on the Northeast corner of the 91/15 interchange is nice.

Briar said...

Mira Loma is gang infested? Seriously? I'm not disagreeing I'm just surprised. I mean, Mira Loma seems so rural. I thought gangs were a city thing. (Remember, I just moved here and unless you count growing up in the countryside 35 miles from Baltimore, I've never been near a gang-infested area my whole life.)

I go to the post office in Mira Loma all the time and it just seems like a really poor little country town. There's gangs there? I never even see anybody out on the street.

How do you know all this stuff? Did you grow up here?

mr_moppy said...

About ten years ago when I was in the local music scene, my band played at a house party in Mira Loma. Next thing you know, a gang crashed the party, knocked out a few guys and left. I am assuming they were from the neighborhood. This was a long time ago and is not exactly a comprehensive study, but it taught me to stay away from Mira Loma. I believe there is a meth problem in that area as well. Drugs and gangs usually go hand in hand.

Anonymous said...

READ THIS

http://www.knowgangs.com/news/jan07/0116.php

Anonymous said...

Looks like he will only lose he's holding expenses when he comes around to conclusion that he has to walk away. The longer he waits, the more money he bleeds. the only smart thing he did was put very little downpayment. That is the next foreclosure/inventory wave coming that no one will be able to bail out. People who are making their payments, and continue to do so, but put very little down on signing, and as soon as they realize that they will be underwater for a long long time, will just walk away.

golfer_X said...

That whole area from Rubidoob through Pedley into Mira Loma is pretty rough. Lots of Latino gangs over there. I've lived in the IE for the last 20 years and have read numerous newspaper reports on the problems in that area. I've never personally encountered any but then again I don't go over there. It's uncomfortable just driving through some areas over there.

Interesting link anon, it gives some insight into the area.

Snob from Morgan Hill said...

Anon 10:40 hit it on the nail...These people will realized that there is almost no consequences other than a bad credit history for 7 years, and....(fill in the blank)

Anonymous said...

Now we are going to start bashing each others cities in the IE and we all live here. There are gangs all over the IE. Some place more than others. If its not the Latino gangs its the white trash assholes with Dickies, baseball caps, big sideburns and 20 foot lifted trucks invading the neighborhoods. Let's face it, we are all fucked. If any of us had any game we would be living in the OC.

Briar said...

wow, thanks for the info.
I guess I never see anything because I never go over there at night. In fact, I barely go anywhere at night. I'm very much a home girl.

I've heard that bad things happen in Swan Lake which is right next door. (I live in Homecoming at Eastvale.) Any truth to that?

I keep hearing about the OC like it's some sort of Mecca. To me it's simply a matter of distance to work. It takes me 20 to 30 minutes to get to work from Eastvale and that is about my max (unless I buy in Palm Springs, but I'm pretty sure the commute would kill me). I have a low tolerance for commuting.

golfer_X said...

the OC ain't heaven either unless you live in south OC. North OC has areas that are full of hispanic and asian gangs. Every area has it's bad spots. Nearly every city has it's problem areas. You just need to identify those areas and stay away from them. Anytime you are looking to move to an area that you know little about it's a good idea to make your first stop the police station. They will usually be quite happy to show you the areas of town to avoid.

Where do you work briar?

briar said...

I work in Ontario.
If I need to know about an area, I think you guys are the first place I'll check!

colleeeeen said...

we have gangs here in south OC, too (i was born & raised in the IE, that's why i follow this blog). we just had a major gang injunction filed for San Juan Capistrano & surrounding areas. we occasionally get gang-related graffiti in our neighborhood. but it's no Pomona or Compton, that's fer sure.