Under $800K Inventory Per Zip Realty

This is my crude attempt at tracking "low end" listings in 90403 - 90405. I checked in with Zip Realty roughly every 2 weeks and jotted down the number of listings under $800K.

Purple - 90404
Blue - 90403
Yellow - 90405

I only started this in early August but here it is anyways. All hitting highs. Happy Halloween.

6th Street 1 Bedroom Condo Battle

First off we have the reigning champion... Link To Listing

Address: 908 6th Street #1 - 90403

Listing Description: Just reduced!!! Don't miss out on one of the lowest priced units just south of trendy montana! This charming 1+1 condo is a front unit w/ just one common wall. Condo features an open flrpln w/ wood & tile flrs, redone kitc cabinets, stainless refrigerator&stove along w/ modern fixtures. Very clean w/ample storage. Low hoa! One parking space. Incredible location central to montana shopping, restaurants&3rd street promenade.

Square Feet: 534 = $822/sq ft

Previous Purchase: 5/3/04 - $364,000

Listing History: 3/30/07 - $474,000
Reduced: 07/20/07 - to $464,000
Reduced: 08/24/07 - to $450,000
Reduced: 10/13/07 - to $439,000


Next, we have the CHALLENGER!
Link To Listing

Address: 908 6th #8 - 90403

Listing Description: Reduced! Best location! Beautiful top floor 1 bed 1 bath. Bright north & south exposure, hardwood floors, close to beach, 3rd street promenade & montana ave. Open and airy courtyard building. View overlooks trees in courtyard. Shows great.

Square Feet: 632 = $669/sq ft

Previous Purchase: 6/21/02 - $269,000

Listing History: 9/24/07 - $439,000
Reduced: 10/20/07 - to $422,500

So here is how things look to have played out: "Reigning champ" bought back in 04 with 10% down and decided to list in early 07. After almost 4 months, it finally dawned on the seller that things were "different" this year and that the market had turned...so they cut the price a whopping $10K. But the potential buyers must not have been paying attention because no sale was made and further price cuts ensued. After cutting the price 3 times, this reigning champion is currently listed at a lofty $822/sq ft.

"CHALLENGER" bought back in 02 and appears to have put down 20%. After seeing reigning champ (in the same building of course) struggle to sell their similar 1/1 unit, CHALLENGER decided to undercut reigning champ. Even though CHALLENGER's unit was listed for less and was almost 100 sq ft larger than reigning champ's unit, no sale was made. CHALLENGER then cut its price after less than a month and had learned from reigning champ that $10K just isn't going to get any attention. CHALLENGER is now sitting at $669/sq ft.

We aren't trying to pick on any specific sellers here but we are showing that "reality" takes time to set in. It may be hard for some people to grasp the idea of price declines but once your neighbor undercuts you, it really hits home.

Oh, and in case you wanted to see some blood (its almost Halloween, right?), then we can take a look at unit #9 (in the same building of course). Unit #9 is also a 1/1 condo and is listed as being 571 sq ft. It was purchased on 4/25/06 for $540,000, or $946/sq ft!! This translates to roughly a 30% decline on a sq ft basis or a 22% decline without adjusting for sq ft.

So when SM real estate gets brought up at your next Halloween party, feel free direct your fellow disbelievers to this site and show them these large declines taking place after only 18 months.

High End Townhouse = Early 2005 Rollback

Link to listing

Link to property's own website

Address: 1172 Centinela #4 - 90403

Listing Description: After your clients have seen everything else in the area north of wilshire in the franklin school district, bring them to see this magnificent town home. Nothing can beat it! Dramatic high vaulted ceilings, brazilian cherry hardwood floors throughout, new kitchen with stainless appliances & french doors that open to private patio. Huge loft/den w/fireplace, master suite with walk-in closet & fireplace, separate guest bedroom & bath. Powder rm. Laundry. Direct access to parking. Extra storage.

Purchase Info: 3/23/05 - $949,000

Listing Info: 7/12/07 - $989,000
Reduced 9/26/07 - $969,000
Reduced 10/10/07 - $945,000


This is a high-end 2 bed/2.5 bath townhouse which is listed as being 2,000 sq ft big. It looks really nice, and it is "high end"...but it has still had 2 reductions and after more than 100 days on market it has not sold.

Most importantly, this is an early 2005 rollback. The owner appears to have put down about 12% so there is some "skin in the game" here.

Once again, an original post by yours truly (as always). Have a nice weekend.

Another Agent/Owner 2-Year Loss

Link to listing

Address: 2441 14th - 90405

Listing Description: Adorable cottage with original hardwood floors, quaint fireplace in living room, formal dining room, updated features, all appliances included. Nice size lot and room for expansion. 1/2 block to elementary school and 1 block to junior high school. Also can walk to grocery store and restaurants. Ready to move-in. Freshly painted and updated. Owner is licensed california real estate agent.First showing and open house 10/2/2007. Great buy in good area of santa monica.

Previous Purchase: 6/24/05 - $850,000

Listing Price: 9/27/07 - $899,000

Once again we have found an example of a real estate agent who bought a property approximately 2 years ago and is now trying to sell (and is acting as their own listing agent). We aren't quite to the point of a nominal loss here, but if you include the costs of "updating" the structure as well as taxes, interest, etc you will be seeing a loss here...the only question is how much. And yes, there is something at stake here because it appears that these people put 10% down. Taxes and interest/opportunity cost alone come to about $140,000 for the past 28 months of ownership.

Maybe this real estate agent and the last one actually lived in these houses and did not have any extra properties during the last few years. It is hard to know. But we are speculating that more than a few people in the "real estate industry" got a little too bullish, drank the kool-aid, and went ahead and bought multiple "investment" properties. This activity would have helped fuel the buying frenzy on the way up and should now be helping fuel the selling frenzy on the way down. This is another reason why we are short term bearish. The speculators have not cleared out of the market yet...they have to be able to sell first.

Lets try to keep the comments clean and avoid real estate agent bashing please.

Ashland Architectural Rollback

LINK TO LISTING

Address: 1621 Ashland Ave - 90405

Westside Bubble already did a post on this property HERE

Anyways, we are doing a brief update because we are getting closer to a late 2005 rollback on a single family home.

Original Purchase: 10/31/05 - $1,450,000

Asking Price: 8/13/07 - $1,675,000
Price Reduced: 09/06/07 - to $1,650,000
Price Reduced: 09/20/07 - to $1,610,000
Price Reduced: 10/17/07 - to $1,585,000

This place is also for rent furnished or unfurnished for $6,850. The owner appears to have a $1 million first mortgage and a $305,000 second. The owner is also the realtor selling it. Spare us the negative comments on realtors, we get it already.

When taking into account holding costs (taxes + interest/opp cost) we get to about $220,000 over 2 years. The kitchen may have been upgraded and of course we aren't including any insurance, maintenance, closing costs, etc. We also are not including any tax benefits or selling fees (maybe these roughly cancel each other out). It looks like a loss will be occurring here no matter how you break it down.

It also seems just a little too convenient that the property was purchased almost exactly 2 years ago. That will make any nominal gain here (assuming final sales price is over the purchase price) tax free. How convenient. Happy Halloween.

90405 Flip and 90402 Spec Update

Address: 1741 Maple - 90405

Details: 3 bed/2 bath 1,368 sq ft house on a 7,800 sq ft lot...some upgrades?

Description: "Low Security Deposit, No down-payment-OK! Perfect seller financing possible. Will consider all offers. Need fast sale. Visit KlondikeInvestments. com for full list. Notice your commission. Seller credit for closing cost! House is all remodeled."

Previous Sale: 4/5/06 - $1,300,000

Listing Date: 10/15/07

Asking Price: $1,590,000

Asking Rental Price (per Klondike page): $4,000/month

Holding Costs To Date: Approx. $150,000
Selling Fee: $79,000
Profit: $60,000 MINUS any money spent on any upgrades. This could already be negative (i.e. a loss) or very close to it.

We aren't quite sure what is going on here but this situation looks dicey (unless we are missing something?). The description says "house is all remodeled" but from the pictures it looks like an updated kitchen and maybe some other minor upgrades.

What is up with this no down payment, seller helping with financing thing? And what is the story with Klondike Investments? I don't see how money is going to be made here but maybe I am missing something? Also, we can't tell if it is for rent or not...the asking rental price seems low.

Lastly, jumping over to 90402, 333 14th cut its price for a second time and is now down to $4,595,000 with a DOM of 114. Also anyone know what happened to 239 14th? I can't find it anymore and it had been the most aggressively reduced spec house ($4 million asking price, which was a reduction of over 10%).

Playing Monopoly

Listing Source

Address: 1238-1254 14th, 90404

Description: Major reduction!! 1238 through 1254 14th street are four adjoining parcels totaling approximately 30,000 sq.Ft. Seller's plan was to develop 25 upscale townhouses. An excellent location just south of wilshire blvd. In prime santa monica close to everything. Preliminary plans are in process- see listing agent for additional information.

Listing Date: 6/14/07 (127 DOM)

Asking Price: $8,295,000
Price Reduced: 09/07/07 -- $8,295,000 to $7,995,000

Individual Lot Purchase Info:
1254 14th - 8/2/04 - $1,400,000

1248 14th - Unknown

1244 14th - 12/3/06 - $1,430,000

1238 14th - 6/9/04 - $1,300,000

Total (estimating the unknown lot at $1.4): $5,530,000

Ever dreamed of playing Monopoly in real life? Here is your chance. I thought this was pretty cool, but also a sign of the times. Would you want to be into a big project like this and needing to sell 25 units in 1-2 years from now? Even if this seller can get anything close to his asking price, a nice profit could be possible (don't know how much money has already been spent on permits/planning).

Who knows...maybe the city will pony up the funds and build "affordable" housing...

90405 - Flippers Under Pressure

Address: 834 Maple - 90405

Details: 3 bed/2 bath house with a pool, pool house, and guest house...on a 6,600 sq ft lot

Description: Stunning spanish showplace in sunset park that has it all! Exquisitely remodeled 3br+2ba home w/a guest house,pool house & beauty salon/ofc. Home features dark wood flrs, fpl, arched doorways,arched ceiling, surround sound, recessed lights & more! Open kitchen highlights top of the line thermador stainless appliances.Gorgeous master bath has steam shower.Master br w/french doors open to the pool.Permitted pool hse has its own bath.Legal guesthse has a full kitchen & full bath.

Purchase Date: 8/4/06

Purchase Price: $1,200,000

Listing Date: 8/24/07 (55 DOM)

Asking Price: $2,100,000
Price Reduced: 09/29/07 -- $2,100,000 to $1,975,000

This house has been completely redone and it is pretty nice both inside and out. A substantial amount of money must have been spent to get it in its current condition.

The problems arise when you realize that apartment buildings are right behind you and you are one short block away from Lincoln (and subsequently a do-it-yourself carwash and an Arco gas station). And you have less than 2,000 sq ft on the main house and everything is jammed onto a 6,600 sq ft lot.

The property has been held now for 14 months and carrying costs are likely around $8,000/month for taxes and interest (or opportunity cost) on the initial purchase amount. That comes to a total of around $200K if we add these up and include a 5% selling commission. That leaves $600K that will be split between remodel costs, interest/opportunity costs on remodeling funds, and of course, profit...of course this all assumes they can get their current price.

New Photo And Listing Date

OLD PHOTO............................................... NEW PHOTO
Old listing date: 6/9/07 .........................New listing date: 10/8/07

Address: 311 Ocean Ave. #104 - 90402

Details: 3 bed/2 bath condo - 1,400 sq ft, Corner of Ocean and Georgina

New Description: From ocean to garden, and elevated above the street, this first-level condo has location, layout and fabulous ocean views! Enter a light filled home, where all main rooms and master face the ocean. Beautiful and warm contemporary touches abound, as these living spaces flow into a large open terrace, surrounded by greenery and flowers. Hardwood floors, clean lines and a wow kitchen create an entertainers delight! Dream or play in this creative space. Motivated and easy to show.

Old Asking Price: $1,799,000
Price Reduced: 07/10/07 -- $1,799,000 to $1,725,000
Price Reduced: 07/25/07 -- $1,725,000 to $1,695,000
Price Reduced: 07/28/07 -- $1,695,000 to $1,635,000

New Asking Price: $1,595,000

Purchase Price: $1,627,500
Purchase Date: 5/31/07

Here we are seeing the "re-listing" game occur once again. From our discussion last time, we don't know if the current owners did any of the remodeling to this unit or not. Either way, they are now at a loss no matter what they do.

Interestingly, the buyers are listed with an address 30 miles away up the 101 freeway and one of them appears to be a licensed real estate agent. We suspect this is more likely a failed flip than a corporate relocation, but of course this is sheer speculation (ironic that we are speculating that a speculator speculated, eh?). Any help with loan info would be appreciated.

Lastly, we are also seeing that there is another 2/2 unit for sale (#207) in the SAME BUILDING and although it is 130 sq ft smaller, it is currently asking $1.3 million...that is $300K less...

Sadly for the owners of #207, someone forgot to tell them that we have rolled back past 2006 values. They bought their unit for $1.1 million in May of 2006.

...or you could always rent the penthouse (#303) which is a 3 bed/ 1.75 bath with "the best location in the building" for $5,000/month.

Falling 90402 Lot Values?

Address: 611 14th - 90402

Details: 3 bed/1.5 bath, Semi-upgraded, livable fixer/tear down on 7,500 sq ft

Description: Reduced to sell! Fantastic opportunity to live n. Of montana with future expandability! Vintage charm, single story home features built-in custom cabinetry, new hardwood floors, central heat and air conditioning. Kitchen with new appliances, matchstick mahogany cabinets and cozy breakfast nook. Newly landscaped front. Large functional backyard with room for pool. Close to montana avenue shops & restaurants. Trust sale, no court confirmation required.

Listing Date: 9/7/07 (38 DOM)
Asking Price: $2,198,000
Price Reduced: 10/13/07 -- $2,198,000 to $2,049,000

This home was discussed initially on Westside Bubble's blog. I thought we should look at it again because after just about a month on market, the price was reduced by $150K, or just under 7%. Funny thing is, when I went to the open house, I heard the listing agent say to someone "This house is VERY well priced if you ask me". Looks like mr. market says otherwise.

Anyways, we have been of the opinion that as high end specs languish and don't sell at their asking prices, demand for new "raw material" (i.e. tear downs) would fall. This house is just above tear down quality but it is rapidly approaching the $2 million mark. I remember not too long ago, tear downs would sell for $2.1 or $2.2 million...

This house was purchased at the end of 2003 but we can't find the info on how much it was bought for. Anyone want to help with that or help with some loan info?

Traffic Jam

These three pictures of 23rd street were taken from the Water Garden this past Thursday evening. The first two are looking south towards the entrance to the 10 freeway and the third is looking north towards Santa Monica Blvd.
The traffic imbalance is one of the reasons why we are so BULLISH on Santa Monica real estate (taking a longer term view of course). Lots of folks work in SM but can't afford to live here. The 10 freeway is a death zone if you are trying to go east at almost anytime on a weekday after 2pm or so. If you are lucky enough to be coming west in the afternoon/evening, there is very light traffic.

When out taking these pictures, I also observed people from the city on the major intersections taking some types of readings or observations on the traffic. I asked one of them what they were doing and was told that they were counting the number of cars going in each direction as well as the number of pedestrians and bikers. They then said that the city was studying the traffic in order to possibly reprogram the software controlling the lights, widening streets, or implementing any other congestion management schemes.

Even if you are lucky enough to live in SM, there are still occasional times when the traffic affects you. This year, when going to a Dodger game with some friends, it took us 2 hours to get from Santa Monica to Dodger stadium thanks to this traffic.

Yes, we know about the light rail plans in the works but is there anything else that can/should be done? Could SM try to implement a congestion charge like London? What does all of the traffic mean for property values? Am I the only one who thinks that the traffic has gotten much worse as the years have gone by and that the city should have considered this a bit more when approving major new building/development plans? Can it ever get any better or will it always be getting worse?

Re-listed Yale Spec House

Address: 823 Yale - 90403

Details: 4,500 sq ft new spec house on an 8,000 sq ft lot...you get the picture

Website: Here...do I get some commission now if this sells?

Description: Bask in the light-filled enchantment of this new construction beautiful 5+5.5 home located in santa monica. Gracefully arched doorways invite movement through this home's romantic, open & flowing floor plan. Spacious family room that opens to the kitchen w/ center-island, & large pantry. Spectacular finishes throughout, including granite countertops, walnut flooring, & travertine tiles. Beautiful infinity pool, spa, & lush landscaping. Also available for lease.

Original List Date/Price: 3/28/07 - Asking $3.8 million

The price was then reduced at some point to $3.6 million (zillow still has this price)

Then since it wasn't selling, they played the re-list game.

New Listing Date: 10/4/07
New Reduced Price: $3,295,000

But wait, it is also now for lease...

Lease Price: $16,000/month

Hey, not bad since at 7%, it would cost just a bit more than $19K/month to own. They are likely asking way too much for the lease price because we heard that one of the north of Montana specs that was asking near $4.5 million was asking a mere $17K/month for lease.

Anyways, this spec house was bought as a tear down on 1/20/05 for $1,345,000. The original buyer is listed as "823 Yale Street LLC" and is shown as having an address in Irvine, CA. The title then switched hands a few times between a family trust and some individuals also listed at the address of the original LLC.

Here at the distress monitor we don't particularly care for these spec houses. They are the McMansions of the westside and we find them gaudy and ridiculous. Sure, you could likely make a few arguments about why they aren't that bad, but overall we are highly critical of them. What do you think?

Anyways, this is still the most expensive single family house listed south of Montana and it is not selling. They have cut the price over 13% now and we suspect it will have to get closer to $3 million to get any nibbles since there is always competition from the lingering spec house on 25th for sale now at just under $3 million (reduced twice from $3.35 million...a 10% reduction). So does anyone still think that the ultra "high end" is immune from market weakness?

PS: Anyone else go to the open house for this place and hear how LOUD the motor/pump is for the "infinity" pool?? Wow, that was a builder fumble.

Thanks to those of you who have been supporting the blog and thanks to everyone who has been commenting and e-mailing.

Have a nice weekend.

Where Are Prices Right Now??

Address: 1040 4th Street - 90403

This 42 unit building is the "Dorchester House". We are going to look at 3 similar units in an attempt to find out where the condo market is in terms of prices. We all know prices aren't going up right? Ok, then how far have they "rolled back"?

Unit #111 is an 852 sq ft condo with 1 bed/1 bath and has been on the market now for over 100 days. Here is the pricing:

Price Reduced: 08/23/07 -- $550,000 to $530,000
Price Reduced: 10/02/07 -- $530,000 to $510,000

This unit was purchased on 4/10/07 for $555,000 so we are already looking at over a 14% loss here including commission.

Unit #115 is a 968 sq ft condo with 1 bed/1 bath and is our next comparison.

It sold on 12/1/05 for $510,500

Unit #101 is an 885 sq ft condo with 1 bed/1 bath and is the final comparison.

It sold on 2/28/05 for $497,500

Here we have a chart:




We have seen numerous examples of condos rolling back to early 2006 and late 2005 prices. Here we are back to late 2005 or even earlier to adjust for the 100 sq ft difference. We aren't that far away from early 2005 prices. Sorry for the crappy graph, I just wanted to fool around with Google spreadsheets...

Oh yea, and of course, we are maintaining that we are at the beginning of a cyclical decline.

Foreclosure Battle - **Update 1**

This dumpy little building is located at 1824 20th and we featured it twice in previous posts. There are two units (#E and #G) which were both bought by the same individual at about the same time (March/April 2006). Both units are 2 bed/1bath and were purchased for $512-$520K. Both entered foreclosure less than a year after purchase.

Now here is the really important part. BOTH UNITS ARE TENANT OCCUPIED and the rent control policies of the city of Santa Monica prevent the tenants from being kicked out.

So this one guy bought both units for over $500K each with tenants in them that were legally paying below market rent which could not be raised more than a nominal amount each year (determined by the city).

What we have just found out is that the rent for unit #E is currently $474/month. If you run the numbers, that comes to about a 1.1% cap rate even before ANY expenses...THAT IS HOW MUCH YOU PAY IN TAXES ALONE!!!

How could a lender approve a loan on a unit like this? How could they allow the same person to buy two units within a one month time frame?? How can this not be some type of fraud?

Anyways, both units were foreclosed on after less than a year. Lets see where they stand now. Remember, both were bought for between $512-520K.

Unit #G: On market 19 days, asking $299,900...that works out to a loss of over 42%

Unit #E: On market 150 days...wasn't selling and then #G undercut them so they have now struck back.

Price Reduced: 06/21/07 -- $399,900 to $385,900
Price Reduced: 10/02/07 -- $385,900 to $250,000

...this works out to a loss of over 51%

If we use the $474/month rent for unit #E and look at the current asking price, we are still only looking at a cap rate of about 2.3% before taxes. After taxes, it comes down to about 1.2%

So would you agree with the description of this property where it is described as "Great opportunity for income property sold as-is"?

It looks like the banks are now fighting. This will be an interesting situation to watch. Any realtors/loan folks want to help out and give us the details on this situation?

90405 - Townhouse Rollbacks **Update 1: Also For Rent**

Address: 2615 6th #L

Details: 2bed/1.5bath - 934 sq ft townhouse

Description: This stylishly designed, recently updated Ocean Park townhouse with loft will delight your fussiest buyers. Quality kitchen features Downsview Cherry cabinets with built in Sub Zero fridge, Bosch convection range with 5 burner cooktop, Gaggenau hood and granite counter with mosaic glass splash. Master bath has 32" spa tub and molded glass sink and counter. Red Oak floors throughout. Private garage with direct entrance and lots of room for storage. Close to beach and Main St.

Previous Sale Date: 6/2/05
Previous Sale Price: $791,000

Listing Date: 8/22/07 (44 DOM)
Listing Price: $799,000

Asking Rent: $3,500/month
Holding Costs: $5,400/month

We featured this townhouse a couple of weeks ago as part of our 90405 townhouse rollback series (different photo). Well, we have just found out that we can now add it to our rent vs. buy series. What better way to evaluate a property could we ask for?

With a $300/month HOA and using our standard interest only at 6.5% and 1.1% property taxes, holding costs come to about $5,400/month. But if we assume a 35% tax benefit on the mortgage interest, we can get down to about $3,800/month which doesn't look so bad. There are other costs involved (PMI, closing costs, repairs?, insurance included in HOA?), and I think our 6.5% interest rate is way too low for jumbo loans right now...but still, this isn't horribly out of whack is it? At what price do you think it makes sense to buy this over renting assuming this is the true market rent?

Bulls and bears, have at it and let us know what you think.

Have a nice weekend.

Rent vs. Buy - 26th Street

After spending some time looking at rent vs. buy scenarios at 23rd and Idaho we will now travel 3 blocks east to the corner of 26th and Idaho. First, the rental choice:

Address: 2530 Idaho - 90403 (corner of 26th/Idaho)

Details: 4 bed/4 bath - 3,130 sq ft home (2 stories) on an 8,350 sq ft lot

Asking Rental Price: $8,000/month


Now for our "buy" comparison we will look at a home just 3 houses north which is also on 26th street and has 4 bedrooms. We are still just 2 blocks from Franklin School here.

Address: 848 26th - 90403

Details: 4 bed/3 bath - 2,130 sq ft home (1 story) on an 8,350 sq ft lot

Date Sold: 6/8/07
Price: $1,890,000

Monthly Holding Costs: $12,000/month (interest+taxes)

We definitely need to make some valuation adjustments here because the house that is up for rent is 1,000 sq ft bigger, has 2 stories instead of 1, and has an extra bathroom. All around it is a much nicer home than the one that recently sold. Even without any adjustments, it is still 50% more expensive to buy than to rent ($8K vs $12K). In addition, $8K/month seems like pretty steep rent for a house on busy 26th street...maybe they are too optimistic here? The "For Lease" sign has been there for a while now...

If we adjust for the large size and better quality, a more realistic rent (when comparing to the house on 26th that just sold) would likely be closer to $6K/month in rent. Again, it seems to be twice as expensive to own as it is to rent.

One other note: 819 26th is listed as a 4 bed/4.5 bath single family home for lease and is asking $5,400/month. However, I am not sure I want to include it in our comparisons because there may be an extra unit on the property so this would not be a true single family. However, it is another option for a large family and is a bit cheaper (and has a pool and bathroom for every bedroom).

Should the next post be on houses again (90402 maybe?) or do you want to see some condo/townhouses with negative cash flow?

Rent for 42% the cost of owning...across the street

Lets start by finding a 2 story house near Franklin school for rent...
Address: 859 23rd - 90403

Details: 4 bed/2 bath - 1,860 sq ft home (2 stories) on an 8,000 sq ft lot

Asking Rent: $6,000/month

Now what if we wanted to buy...across the street

Address: 2320 Idaho - 90403 (across the street from rental)

Details: 4 bed/3 bath - 2,080 sq ft home (2 stories) on a 4,750 sq ft lot

Purchase Date: 4/4/06
Purchase Price: $1,335,000

Asking Price: $2,195,000 (currently on its second listing...first listed in March 2007 for $2.4 million per Westside Bubble Blog)

Basic Holding Costs If Purchased: $12,000/month (interest) + $2,000/month (taxes)


The house for sale on Idaho was upgraded inside and out (new paint, floors, counters, appliances, roof, etc). The house on 23rd which is for rent does not have upgraded surfaces or appliances. It does however sit on a lot that is almost twice as big. The house on Idaho only has a master bed and bath upstairs while the house on 23rd looks to have a larger upstairs. So just be aware there are some "quality" differences here. But most importantly, location is the key on the westside and these houses are ACROSS THE STREET FROM EACH OTHER.

Anyways, here you can spend over $14,000/month just on interest and taxes to own, or you can spend a guaranteed fixed rate of $6,000/month to rent...that makes it more than twice as cheap to rent...and its not like you will be missing out on rising values anytime soon.

90403 - Negative Cash Flow (Part 2)

Address: 1015 25th - 90403

Details: 2 (*maybe 3) bed/1 bath house (1,108 sq ft)
*Westside Rentals is claiming 3 but Zillow shows 2

Description: Brown, patchy lawn special!! It looks like a dump, but hey! Its north of Wilshire so who cares?...Ok so I didn't have a description. Basically this is a tear down with little/no upgrades inside (or out).

Purchase Date: 1/12/07
Purchase Price: $1,200,000

Asking Rental Price: $4,500/month

Holding Costs: $6,500 (interest/opportunity cost) + $1,100 (tax)

Negative Cash Flow: $3,100/month

This gem was built in 1942 and appears to have been someones home for a long time. Earlier this year, it was purchased by a developer/builder/investor who appears to have been planning on either remodeling or building a spec house.

The house sat vacant for over 8 months with no work done to it at all. The lawn turned brown and now weeds are taking over. During this time, the market got weaker and weaker.

After no activity for many months, a dumpster was spotted out front recently so we have to assume some minimal work was done inside to make the place livable. Then a Westside Rentals sign appeared (blown down in picture).

A loyal reader has supplied us with info that this owner does not want to rent it out for an extended time period. Maybe plans and permits are being cooked up while we speak, or maybe there is hope that the market will "come back" next year. Who knows? How many other units sit vacant on the market hoping for someone to rent them out to stem the bleeding? How much would the neighbors prefer that a nice young family BUY this place at a discount and fix it up themselves rather than living next to a brown lawn and those "low class renters"?