Tuesday, April 03, 2007

Downtown Condo at Acqua Vista #424

This is yet another Acqua Vista unit that's listed for a loss. I doubt this unit is worth more than the original developer price of $267,705.

Type: Listed on MLS(#076020008)

List Price: $275,000
(Range priced $275,000 to $275,000)
Cost: $307,000
Loss@6% Sales Expenses: $48,500
Loss%: 15.80%

Purchase Date: 04/12/2006
Holding Period: 12 months and counting...

Bedrooms: 1
Bathrooms: 1
Square Feet: 628

Purchase Details: view

13 comments:

downtownrenter said...

Wow if the price in Acqua Vista falls much further you may be able to be cash flow positive on a rental.

Anonymous said...

Acqua Vista has $500+ HOA fees and no self parking.

The interior is cheap like rental apartments so few buyers will want to pay luxury prices for standard apartments.

Cash flow positive? Not with the HOA and property taxes.

PL Willy said...

Just have to get the purchase price low enough, and the property taxes automatically drop with the new lower price. Mr. Brightside, what do you think the purchase price needs to be here to make this unit a positive cash flow. The rental value of this unit looks to me to be $1000 to $1300, per month. The homeowners fee of $500 gives you $500 to $800 to service the mortgage and taxes. I guess you also have to anticipate an increase in the HOA fees due to the numerous defaulting and foreclosed units. Would it be possible that the HOA fees would exceed the rental value of the units? At that point the unit would literally become worthless and could not be sold at any price.

Mr. Brightside said...

I think there would be some sort of residual value even if half the units stopped paying HOA fees assuming they were bankrupt/vacant. I doubt the banks will let that go on too long as there is a big reality check that would happen. Vacant real estate does nothing for anyone so there would be a strong bias to get someone in the units.

In terms of making sense as a rental here is the breakdown:

Rental value: $1,300
HOA: $500
Taxes: $300 (est)

This leaves a mere $500 to service the mortgage. A $500 payment assuming a 30 year fixed at 6% can carry $83,000 mortgage. Yes that's $83,000. Look at the older buildings downtown and you'll see sales for under $100K not that long ago.

I'm not including anything for tax benefits just like I'm accounting for time or any interest on money down. I think the numbers speak for themselves.

The HOA is very painful on the small one bedrooms with no view or any compelling reason to live in except shelter, etc.

Anonymous said...

One way to lower the HOA fees would be to switch to self-parking with assigned spaces rented at a high monthly rate. It would reduce costs and create an alternative revenue stream. It would also make the units relatively more attractive to people who don't own cars, which ought to be a target market for a centrally located mid-range apartment complex (which is what this place really is).

Of course, a change like that depends on the residents going for it, which they probably wouldn't in the short term because it is contrary to what they bought into. If the prices go low enough, that could change their minds, or turnover of units to stingier buyers could drive a change.

(Posting anonymous because Blogger won't let me log in. It says something about blogs being moved.)

PL Willy said...

If you buy this unit for $100,000, then your property taxes would be $1,000 a year, or less than $100 per month, not $300 per month, based on 1% of assessed value with the new purchase price. Of course, you would have condo owners insurance costs as well. For this size unit, do you think that you could get $1300 in rent? It's a pretty small space and it is on the 4th floor. You do get free water, hot water, trash pickup for the HOA fees, so as a renter you don't have those costs-- just electric. In any event, you are looking at a drop to $100,000 in value for this type of unit, per Mr. Brightside's math. How could anyone believe this unit is worth more than this value is beyond me.

Anonymous said...

Another thing to remember is as more and more rentals flood the market, the rents will go down.

Adults are moving out of San Diego so I believe that we'll see rents move downward in the next year.

Anonymous said...

I'm not sure about the interior of this unit but the listing only shows one picture.

I'm always suspicious of listing with no pictures of the interior. Do they have something to hide? I would dare to say that this unit does not show well, in pictures or in person.

Anonymous said...

Mr. B,
Have you ever done the downtown tour by CCDC? Is it worth it or a waste of time?

Mr. Brightside said...

I have never done the CCDC tour but since I live downtown I pretty much know what is going on so I wouldn't need it.

If you haven't spent a lot of time in the city it might be worth it. If f you go on it and it's not stimulating you could always leave and go on your own.

Probably the best thing to do is just walk through the city a few times on the weekend.

dave said...

brightside,

An interesting datapoint. Solara Lofts will be ready for move-in in a month. Three units are pre-sold. Three. That's straight from a colleague that knows the developer personally.

Mr. Brightside said...

dave,

Thanks for the read on that, I am not surprised by that low number as I wasn't compelled when I went through by either the product or of course the prices that were discussed.

The sales guy was also using "buy now as the prices are going up" tactic which was pretty embarrassing to listen to besides being completely unrealistic.

Did you read about the price protection plan that was discussed in the sdlookup.com forums? It doesn't go far enough in my view and since it wasn't talked about on the first few days when the open houses started I'll assume that it was a reaction to the very slow sales pace. Nice concept though.

realestatejunkie said...

>.Another thing to remember is as more and more rentals flood the market, the rents will go down.

Adults are moving out of San Diego so I believe that we'll see rents move downward in the next year.<<

On the contrary- the abundance of fence-sitters will easily push rents up strongly as new demand rapidly fills up the space. SD is still a VERY desirable market. Just not to own at $600/sq. ft.!