Multi-Family

I don’t write about nor even bother looking at multifamily listings. We had an experience before we moved to town in a condo that went awry. Turns out the HOA were old, crazy and hated children. There was one neighbor that was a horder and another that had three adults and three children living in a one bedroom. I guess the owner of our unit forgot to mention those items.

So before you rent or heaven forbid buy a multi-family property knock on some doors, ask around and for gods sake ask to read the HOA rules. Don’t let the reduced price fill your heart with hope. Crazy is forever….Or at least until you can recoup the 6% commission and sell at breakeven.

Anyway I stumbled on a duplex for sale and for those who just can’t make the million dollar buy-in a duplex or triplex is a good option to get started. Up to three units you only need a regular mortgage with 10-20% down. (4 units = commercial and 25% down) Anyway when you qualify for the mortgage that you couldn’t afford without a tenant the bank looks at the income from the other units to help you qualify for more. I think they take 80% of the other unit’s rental income to help offset the mortgage.

539 Penn St is a 2/2 and a 2/1 on the same lot. They say it’s a total of 2120 sqft on a 6000 sqft lot. That’s priced at $684/sqft and listed for $1.45 mil (already down from $1.5 mil).  The rub is that if the tenant in the  2/1 over the garage is only paying $1500/month you can only use 80% of $18k as your income offset. But if the tenant has already seen the backside of our ridiculous rental prices and is paying $1800-$2000 then that’s an extra $17-$19k in income to help you on your way to renting from the bank owning a home. You’re still stuck living in a tiny home and now you are a landlord but you have someone paying a third of your mortgage.

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Feb Pending Home Sales up!

Spring home buying season begins: pending home sales rise

  • The pending home sales index, a forward-looking indicator based on contract signings, increased 3.1% to 107.5 in February, up from a downwardly revised 104.3 in January.
  • “Homeowners are already staying in their homes at an all-time high before selling, and any situation where they remain put even longer only exacerbates the nation’s inventory crunch,”

LA home prices shoot up $15K in February, hit new record

Houses have never been more expensive

  • February’s median sale price in LA County was $580,000, nearly 3 percent higher than January’s median of $565,000 and well above the previous record of $575,000, where prices hovered between July and September of 2017.
  • CoreLogic has rated the Los Angeles real estate market as “overvalued,” meaning that sale prices are at least 10 percent above the level where long-term trends suggest they should be, based on the incomes of typical buyers…..That doesn’t mean there isn’t room for prices to keep growing.

Go forth and borrow. 

 

Coming soon

I’ve seen a couple of for sale signs of properties not listed yet.

226 E Maple Ave had the white post up but no realtor sign yet. It’s another small house. Zillow calls it 1129 sqft 3/1 on a 5000 sqft lot. The “Zestimate” is $1.1 mil. Just a few doors down at 308 E Maple is the same sized home on a 3166 sqft lot that has a pending offer at or near $1.1 mil. 

We know there is crazy demand near a mil so I imagine they shoot for $1.2 mil. Hell maybe they get greedy and ask $1.3 – Why the hell not?

There’s also a sign on the 700 block of Sheldon. I didn’t drive by but I think it could be 740 Sheldon. Time will tell.

I saw a for sale by Owner sign on Hillcrest near Acacia. Taking it old school with a couple red for-sale signs picked up at South Bay Industrial. There’s nothing like venturing into a legal contract for a property worth a million or more bucks with someone that’s concerned with a couple points. As much as I bash realtors for being shmarmy salesmen at least many of them have knowledge about the intricacies of buying, selling and transferring a property.  So grab your realtor by the hand and have him or her show you this house.

 

That was quick

Thanks for all the comments and notes about liking the blog. I know my flavor isn’t for everyone but I’m glad I can make a few people chuckle and hopefully I will share enough information that someone can make a more educated decision for their family.

1538 E Elm St 90245 already shows as pending.  1150 sqft for $978/sqft.

434 W Maple took $75k off the top and is now asking $1.23 mil. Priced at $619/sqft it seems like a good start if you are shopping in the $1.5 mil range. It’s big, and needs updating but on a price/sqft you are getting size.

And if last week’s market row didn’t shake you here’s what keeps me up at night.

2018-03-23_13

The wagons are circling

I guess I won the internet! I have drawn the ire of a handful of people on the El Segundo Parent’s Network. Welcome to little ole El Segundo.

I couldn’t ignore what’s transpired on my tiny little blog of 18 23 readers. I wondered why traffic jumped and saw visitors coming from Facebook. Thanks to the original Concord ESPN poster for sharing my little blog and lighting the torches! Now I have 18 happy readers and about five very unhappy readers.

I am a sarcastic jackass.

Hand to bible I will not pull any punches and swear to always use humor, sarcasm and wit to write about a very mundane topic that everyone wants to be a part of yet so few truly understand. Finance and real estate.  Am I mean for saying that a piece of property is old, a POS, ugly, outdated? Or am I just the one person in the room that can call it like I see it?

This blog is for people interested in El Segundo Real Estate, a topic I have spent many years studying. For those of us on the buying or selling end there is an infinite amount of knowledge that is not shared publicly because people are afraid of ruffling feathers.  Is the real estate agent going to tell you it often smells like a porta-potty at your million dollar home? Is the seller going to tell you the neighbor is a trust fund adult and likes to start drum practice at 11PM ? Are the rest of the tenants going to tell you that the HOA officers are crazy? PEOPLE WE ARE TALKING ABOUT ONE MILLION AMERICAN DOLLARS.

I want to know. I want the good and the bad. I want to read about every piece of information I can get my grubby little hands on before I sign a document committing myself to 30 years of servitude.  I want honesty.

I study economics and read boring financial articles only to summarize them in a palatable, yet punchy blog post. Care to have a conversation about the tax implications of the Donald’s new tax plan? Want to really sit down and learn the intricacies of the future value of money. BORING….

Am I a prick? yeah
Am I mean spirited? mmm… maybe? Depends if you are a used car salesperson realtor.
Do I hate El Segundo? Not in the slightest. There is a beginning to the blog not just the one post you are mad at.
Am I brutally honest? To a fault.

FOOTER

This is just my opinion. You know what they say about opinions….

 

 

Updates for El Segundo

1030 E Acacia closed $20k under asking at $1.275 mil – $717/sqft

535 Lomita closed at $1.8 mil or $753/sqft.

Our latest tear-down flip is at 854 Loma Vista. What was once a 720 sqft 1/1 on a 4700 sqft lot magically turned into a 2640 sqft 5/3. I wonder if the same people that wanted to put Concord on a historical registry would think the same of this classic El Segundo gem?

This “home” last sold for $800k in August 2016. 19 months later they have a listing priced at $1.8 mil or $663/sqft. Let that sink in – $663/sqft for NEW CONSTRUCTION. NEW, NEW, NEW.  If I do some back of the envelope math I’d say their cost basis is pretty damn close to the listing price. Even at $350/sqft plus the original $800k they are bumping in to $1.8 mil. So for just $360k down and about $10k a month in PMIT this lovely home could be yours.

643 Whiting is “coming soon”. A 3000 sqft 4/3 for a cool $2mil. Priced at $663/sqft

424 W. Oak is a “beautifully maintained mid century bungalow” priced at $1.2 mil or $853/sqft.  The home is a 1400 sqft 3/2. Here’s what your mid-century kitchen looks like:

713 E Maple finally posts. It’s a 1674 sqft 3/3 priced at an astonishing $1.55 mil! $925/sqft! There’s nothing wrong with the home, it’s a perfectly nice $1.3 mil home. 

Well, well well, The Klapper group finally gets honest about their overpriced listing at 655 West Sycamore. They also took a reduction to $1.25 from $1.3 mil but now their copy explains what’s behind the curtain.

The home is NOT 1300 sqft, it’s actually 984 sqft. They didn’t add square footage, they added an accessory dwelling unit.  Or maybe they didn’t even add the ADU.  I wonder if this was an illegal unit added by the previous home owner that they got permitted under the new ADU law?  Either way is this a realtor you want to do business with? The copy on the original listing did not mention an ADU nor that the home was only 938 sqft. So if it’s an ADU, then it’s not in the square footage and this home is actually priced at $1331/sqft!!!

Wonderful opportunity to own a completely remodeled home (938 sq ft) with fantastic rear accessory dwelling unit (approx 450 sq ft, buyer to verify).

Being wrong is no fun

I’ve studied the stock market and economics for a very long time and I have to admit I’m confused (or maybe I’m just wrong).

Like previous bubbles I firmly believe we are on the precipice of disaster. I am not alone in this thought. It’s not a very glamorous thesis that the media wants to share and unless you look for it you don’t read/hear much about it. I’ve been out here waiting for the shoe to drop…..any minute now…. for a long time. Will this bubble burst and how? When you get in a car accident it doesn’t matter if it was your fault or the other driver’s the damage is done. Real estate will not be the cause but it will be effected. That’s what I care about. The problem with bubble’s bursting is that everything contracts, people lose jobs, stop spending, worry about jobs and money…Not exactly the mind set you want when spending over a million dollars.

I read this from a Bill Blain, a UK portfolio manager this morning and I agree despite my sky is falling mindset:

The Fed’s message was simple: stronger growth, lower but stable full employment, modestly rising inflation, and rates set to double to double to 3.4% in 2020. Three, maybe four hikes this year, but three next year…. It should not have come as much of a surprise to the market. …They are not slamming on the breaks, but gently brushing the pedals. Powell summed it up nicely: “The economy is healthier than it has been since before the crisis…”

Say what you want about the Donald but he has set things in motion that for all intents and purposes seem to be working. I guess we won’t know for a couple years, but if people are generally happy with the tax plan and it stimulates business and the economy grows then all is well.

What does this have to do with real estate in our little southbay bubble?

I have to admit that it will be more of the same….until it isn’t.

The trickle of overpriced houses will continue to sell for prices that most people (even current buyers) can’t afford. Existing home owners will dig in and give up the idea of selling because they can’t afford to take the property tax hit and they can’t afford the inflated prices. All the while interest rates are inching up taking just a little more affordability out of the equation.

So if you are in the market for a home in El Segundo my personal opinion is that  renting vs buying makes better financial sense. (lock in 2-3 year leases!) But if I’m honest the real reason I can’t jump in is that I am unwilling to lose my life’s savings. I saw too many people lose life changing amounts of money last time and I do not want to be one of the victims.

 

911 Cedar Sreet 90245

Alex Abad’s home dujour is at 911 Cedar St. The 2347 sqft 4/3 is priced at $1.63 mil. $692/sqft.

I mentioned buyers in El Segundo should look to buy in the $700/sqft range but for larger homes the average is far less. Most of the homes over 2000 sqft  are in the mid to high $500s to low $600/sqft range.

The home is BIG, but seems big in a big for no reason kind of way. It reads like it was built in the 90s. There is nothing special about Cedar. It last changed hands in 2014 for $1.1 mil. And now less than four years later someone (Alex Abad) thinks this home has appreciated 53%! Anyone else making 50% more working the same job they were four years ago?

Inflation, schminflation.

But it will sell, just like every other overpriced home in El Segundo because it just takes one greater fool to keep the dream alive.

 

CNBCs take on the problems of California

 

Californians fed up with housing costs and taxes are fleeing state in big numbers

https://www.cnbc.com/2018/03/19/californians-fed-up-with-housing-costs-and-taxes-are-fleeing-state.html?

A USC Dornsife/Los Angeles Times Poll of Californians last fall found that the high cost of living, including housing, was the most important issue facing the state. It also found more than half of Californians wanted to repeal the state’s new gas tax, which raised fees by 40 percent.

The median monthly rent for a one-bedroom apartment in the Los Angeles area is $2,249, and in San Francisco it’s almost $3,400, according to Zumper. The median rent for a two-bedroom apartment in the Los Angeles area is $3,200 and in San Francisco about $4,500. By comparison, the median rent for a one-bedroom in Las Vegas is $925 and in Phoenix $945, and for a two-bedroom in Las Vegas $1,122 and in Phoenix $1,137.

Internal Revenue Service data would appear to show that the middle-class and middle-age residents are the ones leaving, according to Joel Kotkin, a presidential fellow in Urban Futures at Chapman University in Orange, California.

California is often criticized as one of the highest-taxed states in the nation.

 

 

Much ado about nothing on Concord

I swear, facebook has created a generation of imbeciles. The scary thing is that it’s a combination of all generations acting a-fool online. The baby boomer who calls you to ask for tech support instead of just typing the same question into Google now uses facebook on the regular. The GenX who grew up with the internet and now has his/her own personal soapbox and the millennial that has grown up with a a sense of entitlement and fairness because everyone deserves a trophy.

So now you have a bunch of locals beginning their armchair social activism campaign about a 90 year old home that got torn down. Boo Hoo.

It must have been a slow news day in El Segundo because the comments section lit up when someone complained that 503 Concord St El Segundo CA 90245 was town down.  This was my description of the $1.4 million 1400 sqft home when I wrote about it a few months ago.

Vintage spanish home. Needs new baths, kitchen and more than likely needs updating to plumbing and electric. If you love that nostalgic feeling of visiting the house your mom grew up in, this is for you. It’s like visiting Granny’s house. The hardware, walls, appliances and condition of the home will remind you each time you write that $6,000 check that you are paying to live in what would have been the coolest digs in 1974. 

There was talk of starting a historical society to preserve the look of our town. “Such a shame, we can’t let El Segundo change!” Translation:

Not In My Backyard

What the hell? People with no financial means to purchase nor take on a project like 503 California talking political action to “protect” El Segundo.  The home was a PIECE OF SHIT. Not only that, it was an expensive POS and to add insult to injury because of it’s design and lot size it would have been near impossible to improve or enlarge it economically.

I understand everyone’s concern that El Segundo shouldn’t become Manhattan, nor have McMansions door to door like Westchester, but the armchair vigilantes are killing society.

Funny how these images weren’t shared on ESPN: EVERY bath needs updating, it has no master bath, needs a new kitchen…I can only imagine the electric, plumbing, HVAC and roof needed updating….This $1.4 mil fixer was going to require $250K just to get it up to the level one would hope for a $1.4 million home. And now the lynch mob wants to handcuff potential buyers with regulations and rules on how to preserve one 90 year old spanish home? Should we protect the other 90 year old POS homes in El Segundo? What about all the quaint 1000 sqft 1940s homes?

Here’s your precious Concord.