There is a popular saying among wannabe real estate gurus,

There is nothing you can buy in desirable Los Angeles cities that will cashflow.

Maybe they are right. Maybe they are wrong? How low will this property have to drop in order to align itself with comparable rental rates?

1022 W Duarte Rd #13
Arcadia, CA 91007

Price: $415,000 ($315/sf)

• Beds: 3
• Baths: 1.75
• Sq. Ft.: 1,316
• Property Type: Attached, Townhouse
• Year Built: 1971

This is an old property located on a section of Duarte Rd. that’s home to rows and rows of similar type town homes and apartments.

At $415,000, this townhome will require a 20% down payment of $83,000 and a True Cost of Home Ownership (TCHO) of $2,500 per month. But wait! There’s a $205/month HOA fee; bringing your final total to $2,705/month.

What would it cost to rent an equivalent home or apartment?

$2200 / 3br
$1495 / 3br
$1980 / 3br
$2300 / 3br – Single family home
$1725 / 3br – Single family home

Would you spend $83,000 in addition to $2,705/month to own this place? At least the rooms comes painted!

1160 W Orange Grove Ave.
Arcadia, CA 91006

Price: $3,000,000 ($875/sf)

• Beds: 3
• Baths: 3
• Sq. Ft.: 3,427
• Lot Size: 1.3 Acres

This home has a lot going for it: 1.3 acre lot, large 1-story home, 1,100sf guest house and the desirable Santa Anita Oaks community (aka “Upper Rancho”). This is as close as an Arcadia home will get to being”A magnificent Spanish-style estate.”

There is almost enough land on this property to build 4 decent sized homes but the owner did well by maintaining its current condition. Although it’s being listed at $875/sf, my opinion is that 1.3 acres for $3,000,000 isn’t too bad. Compare that the the 1/3 acre property on 2428 S. 2nd Street also going for $3MM+:

Remember this property? $3.2MM and you get the convenience of no privacy.

Let’s just hope that a flipper doesn’t get a hold of this Orange Grove home and pack it with overbuilt McMansions.

It was by coincidence that I  profiled 4 freeway-loaded properties this week. We did not go out of our way to find them and they are all new or refreshed listings. So it did not surprise me to find another unfortunate seller on the market. 13 days running… any guess when the first price drop with come?

Oh My Poor Katherine

750 Katherine Ln.
Arcadia, CA 91006

Price: $850,000 ($392 per sq. ft.)

• Beds: 3
• Baths: 2
• Sq. Ft.: 2,169
• Lot Size: 9,620 Sq. Ft.

Oh poor poor Katherine indeed. This seller purchased the home back in 2006 for $800,000. They put 20% down and took on a conventional 30-year mortgage. Unfortunately, prudent borrowing will not save this family from losing money on their home.

At $850,000, this seller will most likely break even on their purchase (minus 2 years’ interest payment). To purchase an overpriced property sitting next to the freeway was a bad decision:

My Evaluation:

$300/sf – $650,700
$270/sf – $585,630

At minimum, this home is $200,000 overpriced.

Other freeway profiles from this series:

• McMansion for $301/sf
• Uninformed on Oxford
• Freeway loaded. Kool-aid loaded.
• Knife catcher on Oxford

Two days ago I profiled a decent property on Oxford Drive that was overpriced by $200k. Today we have a home on the same street. It lacks the charm and desirability but asking for over $500 per square feet.

481 Oxford Dr.
Arcadia, CA 91007

Price: $850,000 ($502 per sq. ft.)

• Beds: 3
• Baths: 2
• Sq. Ft.: 1,692
• Lot: 0.32 Acres

This property is literally 1 block West of Tuesday’s profile:

From the photos, it looks old, cheaply remodeled and lacking any desirable landscaping for its third-acre lot. This is a knife catcher hoping to find another knife catcher. The seller purchased this home for $680,000 four months ago. At $402/sf, it was overpriced to begin with. Do you think the “newly remodeled” 481 Oxford is now worth $502/sf after four months?

So what should we value this property?

$350/sf – $592,200
$300/sf – $507,600

Oh yea, did I mention this was located right next to the 210fwy?

Some of you might think that I purposely seek out undesirable overpriced properties in Arcadia for the sake of bashing them. This is absolutely not the case.

SavedbyGrace and I have profiled many homes that we love along with highlighting some of the best neighborhoods in the city. It just so happens that while many of these properties are great, they are not worth the $1MM+ price tags that come bundled with it!

I will go ahead and profile one of the newest Arcadia listings. Listing price? A cool $980,000.

1031 Loma Verde Dr.
Arcadia, CA 91006

Price: $980,000 ($450 per sq. ft.)

• Beds: 4
• Baths: 1.75
• Sq. Ft.: 2,180
• Lot Size: 10,112 Sq. Ft.

A decent sized home sitting on 10,112sf of land. From the photos it looks well maintained and 9 out of 10 local Realtors would tell you that its North-of-the-210 location commands at least $900k – $1MM.

Except for one thing – It’s virtually standing on top of that freeway!

This is the third listing the past week that features freeway-loaded properties. Are these sellers just realizing that the market is tanking and their properties will be significantly impacted?

The current owner bought this home back in 2004 for $758,000. Now he’s trying to unload it for a $222,000 premium. Unfortunately, he’s a little late to the party and I expect to see multiple price reductions in the near future.

This home isn’t worth more than $700,000 ($321/sf). With an adjustment back to 2002/2003 prices, $650,000 ($298/sf) seems like a realistic value 2-3 years from now.

348 Oxford Dr.
Arcadia, CA 91007

Price: $990,000 ($430 per sq. ft.)

• Beds: 3
• Baths: 1.75
• Sq. Ft.: 2,300
• Lot Size: 0.32 Acres

I really like this home, its ranch design and location. Although the property is sitting on a third of an acre, the 2,300sf home is built in such a way that it maintains curb appeal and still has room in the backyard for entertaining family and guests. Its landscaping is pretty simple but very well maintained. My only complaint is the proximity to the 210fwy.

And yet, as much as I like this property in the Colorado Oaks community, I would not spend $1MM for it. It last sold for $420,000 in 1997 and if we applied the standard appreciation table…

$420,000 after 11 years

3% $581,378
4% $646,570
5% $718,342
6% $797,285

So it would take an above-average appreciation rate for this property to be worth just $800,000 today; still $200k less than the current asking price. That gives us a $347/sf valuation.

Given the location and condition of this home, I’d say $800k is a fair asking price and would definitely attract many interested buyers.