Tuesday, July 18, 2006

Another Downtown Condo in Trouble - La Vita #1909

Here's another downtown condo that has a serious negative cash flow problem. Purchased for $810,000 on 4/15/2005 it's now for rent for $2,750 with owner paid electric bills. The rental listing also talks about $30,000 in owner upgrades - the pictures show a nice unit, no question on that.

Let's run some numbers on this, for this analysis I'll assume that the $840,000 "rents" for 4.35%, the same rate that you can get from ING Direct with and Orange Savings Account.

$840,000 @ 4.35% = $3,045 monthly
HOA is $395 monthly
Assume property tax of $200 montly

Total Monthly Cost: $3640
Rent $2,750 - 200 agency fee = $2,550

The unit is losing $1,100 per month.

To make matters more painful La Vita #1802 which has a superior bay view just sold for $725,000. La Vita #1802 unit was also featured on this blog. These units are virtually identical and make great comps. Assuming an identical sales price for this unit and standard 6% selling expenses the loss is a painful $158,500

Rental Listing: view

Purchase Details: view


bobbyj0708 said...

So why assume taxes at such a low rate? $200 per month doesn't come close.

Mr. Brightside said...


I actually try to be conservative with the numbers, however the tax rate is very low. I'll work on a better estimate in the morning.

It's pretty clear that this unit is in rough shape from an investment point of view.

Anonymous said...

San Diego County tax rell shows $3790 for 2005/06 tax year, which translates to $315/month.

Mr. Brightside said...

Thanks for the information. Can you tell me where you found that?

Anonymous said...

You forgot to add in the cost for the electric.

Thanks for showing all these examples.

Mr. Brightside said...

I'm thinking this person is an SDG&E or Sempra employee (they get free or discounted electric) since there isn't a rational reason for giving free electric. Just my humble speculation.

I do try to be conservative about the numbers, that said this investment is in rough shape.

Anonymous said...

I thought property taxes were 1.25%.

If so, 1.25% of $810K is $10K or about $840 per month.

What am I missing?


Mr. Brightside said...

anon 11:19,

That is an excellent question. Can anyone here shed any light on what is going on here?

Anonymous said...

Has the condo actually rented?

That rent seems insanely out of whack for the size of the place.

Mr. Brightside said...

The rent in my view is slighly out of wack, a decent deal is about $2,300-2,400 or so.

The unit does look pretty nice.

Anonymous said...

Why anyone would buy a condo in San Diego right now is beyond me. Why buy if I can rent it for 2/3 or even 1/2 the cost of owning?