Yesterday, we profiled a property in Laguna Niguel that is a good real estate investment for an owner-occupant because the monthly cost to own is roughly equal to the monthly cost to rent a comparable property. Guess what: Today's condo is even more attractively priced.
23732 Hillhurst Dr #71, 92677
Asking price: $218,500
Asking price/ sq ft: $218
Income requirement: $54,625
Purchase price: $405,000
Purchase date: 8/29/06
Size: 2 beds, 2 baths, 1,000 sq ft (built in 1975)
MLS: S526568 (48 days on Redfin)
Zillow Zestimate: $327,500
2007 property tax: $2,334
HOA dues: $295
Type: Condominium
Stories: 1 Level
Lot size: 1,050 sq ft
From listing: Don't miss out on a Golden Opportunity to own this magnificent condo with the well planned layout for living ease. 2 Master Bedrooms, 2 Bathrooms. Part of the living room has been converted in a small sleeping room.(maybe illegal) Close to Shopping Center, Bus Stop, Freeway and just a few minutes to the Beach, excellent for this summer time. Community swimming pool. Washer and Dryer hookups. The best of everything. Easy to show. Won't last long. And have you check the price?...Oh what a price!
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"Oh what a price" is absolutely right, because in today's market this property is an excellent value for an owner-occupant. The property is already priced below the $240,000 mark we believe a non-investor should target as a value for this condo, (using a GRM of 160 and a rental value of $1,500 per month). Actually, this property has a GRM of about 146 as it is currently priced.
This means by our rough math, rental parity has been achieved: An owner who puts down a legitimate downpayment would be paying about the same each month to own as they would to rent. Can you believe someone paid more than $400,000 for this place not too long ago?
If we were to instead assume the property could rent for as much as $1,600, then the math gets even better - the property would have a GRM of about 137 as it is priced now. An even better deal! Just be careful - we wouldn't want you to get in trouble for the small sleeping room that is "maybe illegal."
The question is whether you can get this 2003 rollback for the asking price and successfully complete a sale. That certainly is no given considering the trouble with closing short sales - particularly ones like this that are priced significantly below the previous sales price.
Assuming the property does get sold for the current full asking price, the loss would be $199,610, including 6% sales costs. Not including sales costs, it would equal a depreciation of 46% in less than two years.
Wednesday, May 14, 2008
Another good deal in Laguna Niguel
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6 comments:
hmm. with 20% down @ 6%
$1187.11 mortgage
$295.00 HOA
$181.00 property tax
$1663.11 total monthly outlay
given the age of the complex, i would expect annual HOA special assessments as well, but i can't calculate what those would be. plus you have to factor in the cost of fixing the possibly illegal partitioning in the living room and whatever other renovations will need to be done.
but on its face, that's attractive pricing.
I can't believe we are seeing this kind of pricing in mid 2008. I expected deals like this in late 2009 after the foreclosures have really pounded prices, but to see them now suggests we will have significant downside overshoot of prices.
I agree, IR. I never imagined prices would come down this low, this fast. We might be able to get into a home sooner than I thought. People gave these homes Cinderella status, but the clock has struck 12. Back to what they really are.
I'm currently a renter in Hidden Hills Apts... I've been watching the Laguna Niguel market for several years and it gives me hope to see these prices dropping so fast. However, both yesterday and today, the properties are in what I would consider "less desirable" complexes... as in: high percentage of renters... families in one-bedroom units... old cars. When I see prices like this on properties that are actually comparable to a well-maintained apartment complex, THEN and ONLY THEN will I buy. With the local job market in the doldrums, this correction will most likely overshoot on the downside as well. Don't forget, south oc is fairly affluent, even now but incomes do not support these prices on condos!
Me thinks that you also need to consider that the current fair market rent of $1,500 may be a bit steep.
So if rents decline by 10% maybe 15%, then is this really a good deal?
I feel With the population on the rise and the economic indicators signaling growth, one would assume that real estate should be on the cards of any investor
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