443 Las Tunas Dr.
Arcadia, CA 91007

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

I actually referred to this property in a weekend post earlier in the month. Looking at the numbers again, I think the listing deserves its own WTF you-gotta-be-kidding-me post.

Location
I drive by this property every other day. It’s located just East of Baldwin Ave. where, although traffic isn’t heavy, cars constantly blow by it at above-average speeds. Right down the street is the Big Lots and H.K. Cafe shopping plazas. I wouldn’t say it was a bad location, but it’s not anything stellar either.

Property
For $775,000 you’re getting a 1,020sf 67 year-old home. At $760 per square foot, there is no question that this listing is way overpriced. As an extra bonus, this property comes packaged with the “EXTRA AMENITIES OF WORKSHOP, GREENHOUSE AND ENCLOSED PATIO.” Personally, I don’t have a green thumb so I don’t quite understand the benefits of a greenhouse. But hey, there are probably folks out there who would really appreciate one.

Purchase & Financing

This property was purchased in January of 2008 for $600,000. No, that date wasn’t a typo. After holding onto it for just under 4 months, the owner has now put it back on the market for $175,000 over his/her purchase price. There was a 10% downpayment that was most likely required by the lender. I’m certain the buyer would have gone 105% financing if they were allowed to but someone forgot to inform this flipper that we’re now in a housing and credit crisis.

Not only is the $775,000 asking price ridiculous, I am amazed at what kind of profit this flipper is trying to make.

Downpayment – $60,000
Loan amount – $540,000
Asking Price -> $775,000 – $60,000 – $540,00 = $175,000

I deal with extremely risky real estate investments and a projected 30-40% return is already very tempting to my investors. Based on this flipper’s $60k investment, he/she hopes to make a 290% return in just 4 months!

Day in and day out we profile properties in Arcadia and constantly remind ourselves how much money people would spend for good schools, good location and a generally a safe and welcoming neighborhood. Sometimes we forget that there are cities surrounding Arcadia that may offer more, or even less, home for the same price. I can see how empty nesters may not require the best school districts or young professionals choosing to pass on the maintenance that comes large lots.

Let’s pick a random value, say $759,000, and see what you can buy in Arcadia, Sierra Madre and Temple City.

#1 Arcadia – 3bed/3bath attached townhouse 2,340 sqft. Built in 2005.
209 S. Third Ave. #A

While this property lacks in lot size, it is made up by offering more living area square footage and a new construction.

#2 Sierra Madre – 3bed/2bath SFR 1,567 sqft. Built in 1967.
290 W. Laurel Ave.

To the North of Arcadia is Sierra Madre. For $744,900 you get a 40 year old home that’s greatly in need of remodeling. But it’s generally in livable condition and you’re just a few minutes drive from the Santa Anita Mall.

#3 Temple City – 4bed/3bath SFR 2,447 sqft. Built in 1924.
6019 Agnes Ave.

To the South is the small town of Temple City. TC has its fair share of new McMansions sitting next to traditional homes. For $759,000 you can buy an 84 year old property that’s been very well maintained and tastefully upgraded.

225 E. Longden Ave.
Arcadia, CA 91006

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

This is one of the worst listings I have ever come across. It is so bad that I feel compelled to call the seller and tell him that it’s time to get a new real estate agent. Correct me if I’m wrong but there is no absolutely no reason to enter property descriptions in the following manner:

RERELY SEEN HUGE LOT IN PRIME. ARCD & ARCD SCHOOL. LOTS OF FRUIT TREES. NEEDS SOME TLC OR BUILD YOUR DREAM HOME. DRIVE BY ONLY. CONTACT L/A FOR SHOWING.

Are Realtors so busy these days that they have no time to type up a decent listing?

Chicken-scratch aside, this property is also a WTF listing. $1,200,000 for a 63 year old rundown home. Even if you’re buying it for the half acre lot, is Longden and 2nd St. where you imagined your DREAM HOME would be built?

Applying our appreciation table, you can see that $1.2MM isn’t even close to what it’s worth.

Purchase price: $473,000 in 2000.

3% $599,182
4% $647,333
5% $698,836

For around $1,200,000, I would rather pickup the mildly overpriced 1714 Highland Oaks Dr. You get a fully remodeled home, 2,788sf of living space, beautiful oak trees and a canyon view. SavedbyGrace profiled that property just last month.

If an equivalent sized home cost $334,000 to build ($120/sf), it would bring your total to $1,534,000 ($1.2MM + $334k).

Here at AHB we have seen some horrible listing descriptions, koolaid drinkers and downright WTF listings. I would say this property qualifies for all 3 of those.

535 W. Duarte Rd. #41a
Arcadia, CA 91007

*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%

Another “motivated seller” listing. I would be motivated too if I had put a $180,000 down payment (47%) on this property right before the peak of the bubble (which this buyer did). If this property were to sell for its asking price, the seller would essentially break even after 2 years of property taxes, monthly mortgage and paying sales commission.

To sell for anything lower than asking price and the owner will start seeing his/her equity being chipped away. Assuming there are no HELOCs, I can tell you that this is one property the lender doesn’t have to worry about going into foreclosure.

Sales History

July 07, 1992 $165,000 —
Nov 04, 2005 $380,000 6.5%/yr

This looks like another apartment complex that was converted into a condominium during the early 90s. Similar sized units can be rented for around $1,700/month so the $428,000 asking price is nuts:

Mortgage Payment: $2,164
Association dues: $248
Property Taxes: $392

Cost to own = $2,804 vs $1,700 to rent

Although it’s obvious to us now that this property is not worth $428,000 or even the $380,000 it was purchased for, logic and reason were thrown out the window during the height of our real estate bubble. As long as real estate appreciated at double-digit figures, any kind of property was worth purchasing; desirable… or not!

I see very little chance of this property selling when its neighbor at 585 W. Duarte is going for $30,000 less, a bit bigger and still unsold after 2 months. This is surely a race to the bottom where there will be no winnerers.

For those readers on AHB who have actual property management/investment experience; I have one question for you folks: If comparable units are renting for $1,700/month, at what price would you realistically jump in to buy this condo?