Thursday, August 03, 2006

Yet Another Treo Unit Sinks Below 2004 Valuation - Treo #1700

Thanks to Dave for pointing out this Treo unit in the comments from an earlier post.

I'm using an average price to calculated the loss even though it sounds like it fell out of escrow at $750,000. Sometimes I try to look on the brightside. :)

Note that this unit does appear to be blocked by some of the future development between India Street and the Bay so this unit has lost some of it's "location location location" appeal since the last time it changed hands.

Resale Price: $789,938
Cost: $845,000

Loss@6% Sales Expenses: $102,458
Loss%: 12.13%

Purchase Date: 06/30/2004
Holding Period: 26 months and counting...

Bedrooms: 2
Bathrooms: 2.5
Square Feet: 1337

Purchase Details: view


Anonymous said...

Hey, presumably the FB got to live there for over two years, which certainly reduces his losses.

Mr. Brightside said...

anon 7:08

Based on our chatter on another entry and based on the MLS pictures this unit is and has been vacant for awhile so the loss is probably higher.

You could take the profit/loss assumptions out a long ways but I like to keep it simple and in my mind conservative.

Net net the former buyer would probably wish she rented a unit in 2004.

Dave said...

It's been vacant for 6-9 months...

dave said...

An update on this one. It could not be sold at $750K (about $95K loss before sales expenses) so the owner is now trying to rent it furnished as an executive apartment for a few weeks or months at a time. Not a bad idea in theory but my understanding is that it has to be rented out 50 weeks a year just to break even on a cash flow basis given the mortgage.

It's interesting to me the denial at work here. My guess is that this unit could be sold for $700K - $725K or so (right now, that is), which would still be a huge loss. But why drain yourself $1K-$2K per month and own a depreciating asset? Three words: Hope springs eternal.

One thing I've learned is that humans have an amazing ability to not understand things when understanding them properly will hurt their pocketbook in the short run. I suspect things will end even worse for this property down the road.