Originally posted January 29, 2007
Address: 2363 Watermarke Place, Irvine, CA 92612 (Jamboree/Campus)
Plan: 635 sq ft – 1/1
MLS: P555645 DOM: 14
Sale History: 3/14/2006: $417,000
2005?: $342,000?
Price Reduced: 01/22/07 — $439,000 to $420,000
Current Price: $420,000
This flip is located in the Watermarke condo complex located near Campus and Jamboree (right behind The Plaza Irvine high rises). The 535 units of Watermarke were built by the Sares Regis Group from 2003-2005. It was originally supposed to be a luxury apartment complex (where it would be competing with Toscana and Villa Siena/Park Place). Halfway through they decided to do a condo conversion, PISSED off some people, and started selling the units instead of leasing them out.
There are several plans and the 635 sq ft Plan A is the smallest. I believe this plan started at around $300,000 back in late 2004/early 2005. I’m not 100% sure but from the property tax records, it seems this unit was originally purchased for about $342k. It was then flipped for a quick profit to the current owner who won’t be as lucky.
The current owner purchased in March 2006 for $417,000 with a 100% financed loan. Yeah, we’ve seen this before. But by a Real Estate Broker? WTF?! There’s no way this flipper can claim ignorance. This broker knew what they were getting into with 100% financing. Why did they decide to do it? My guess is GREED! Any other opinions?
I’m not sure if they occupied it for 6 months or not but in September 2006 they rented it out (MLS S457444) for $1850/month (furnished it seems). They listed it for sale on 1/14/2007 for $439,000 and then dropped the price to $420,000 a week later. If sold at $420,000 (and assuming 3% in selling costs – they are a BROKER afterall), they are facing a loss of $9600! That doesn’t take into account the money they are losing each month.
Also there’s probably more money to be lost in closing costs because the private remarks state: “Tenant has a lease through September 07 $1,850/month- willing to vacate with 30 days notice. Shows great! Plasma TV, washer, dryer, fridge, and some furniture negotiable. SHOWS GREAT! Possible credit to buyer for closing costs. Thank you. Seller is licensed real estate broker.”
Will they be able to sell it? It’ll be tough considering the other Plan A’s listed on MLS are ALL cheaper:
- 2314 Watermarke Place – Plan A – $379,000
- 3237 Watermarke Place – Plan A – $382,000
- 3337 Watermarke Place – Plan A – $384,500
- 3216 Watermarke Place – Plan A – $389,000
- 3319 Watermarke Place – Plan A – $389,900
- 2235 Watermarke Place – Plan A – $399,999
UPDATE #1 – April 19, 2007
{adsense}
Thanks to dayday in the forums, I’ve come to learn the price here has dropped quite a bit. The MLS # is now U7000785 and this latest listing has been on the market for 59 days.
Price Reduced: 03/13/07 — $429,000 to $409,000
Price Reduced: 04/12/07 — $409,000 to $360,000
Current Price: $360,000
If sold at the current asking price and assuming 3% in selling costs, this investor is looking at a loss of about $68,000!
Here’s what the other Plan A’s are at now:
- 2314 Watermarke Place – Plan A – $369,000
- 2235 Watermarke Place – Plan A – $399,999
- 3267 Watermarke Place – Plan A – $409,000
- 3237 Watermarke Place – Plan A – Sold for $367,500 on 3/28/2007
- 3337 Watermarke Place – Plan A – Rented for $1,600 on 4/1/2007
- 3216 Watermarke Place – Plan A – Expired
- 3319 Watermarke Place – Plan A – Expired
This broker knew what they were getting into with 100% financing. Why did they decide to do it? My guess is GREED! Any other opinions?
Yea, I have. This broker thinks he/she is smarter than everyone else and they think they can market the property better and they think there is greater demand close to the university. In short both arrogance and ignorance.
—–
$400,000 for a 635 sq ft condo with no proximaty to or view of the ocean? All I can say is that anyone who would pay half of that is an idiot. Honestly, how does anyone think that the price would increase from $400,000? I am constantly blown away by the stupidity of these people and their lenders. This is example 1A of how runaway lending, fraud and stupidity have come together to create a mess that will take a decade to recover from. Every time I read a story that makes me shake my head I read another one like this that tops the last.
By the way, the fact the current owner is a realtor should not be surprising. That is not exactly an industry that attracts the best and brightest.
The cost per square feet is over $600 bucks….around $641 per sq feet. Are you kidding me? This is an ultimate joke of a place. This flipper needs to get it in the a$$…..for him to learn his lesson. $1850 a month…the person that rented this place is also a sucker….I don’t how many suckers there are in OC, but there are a lot…
If you think this is ridiculous, go to the sister site of this blog “Irvine Housing Forums” and see for yourself what people (not just realtors) are thinking that is still driving the housing mania for new construction in Irvine.
Don’t forget the HOA Dues on a condo. I hear that in this complex they are ENORMOUS.
What are the HOA fees here? Enormous to me is $1,000/month for the Marquee Towers.
It looks like the HOA is about $300/month. Nothing quite like The Marquee since that is a high rise. I imagine The Plaza will have HOA dues similar to The Marquee.
I looked at the kitchen picture and could swear it looks just like the rental apartment interior at corner of Chapman and Harbor in downtown Fullerton! Wonder if same builder built it?
Even at $360k that is still over $551 bucks a square foot….WTF! That is still a ripoff as sq ft price should be around $350 and dropping in the OC….Go to the new home builders and it is around $350-$425…..Probably will drop with the foreclosures and increasing inventory…as all these fools figure out the the resets are underway…….
If this exact plan sold for $367,500 and rented at $1,600, we are at a price rent ratio of 230. This is far better than the 270-300 we have been seeing. Of course, it is still way above the 120 it would need to be at if it is going to be a profitable rental.
If breakeven for a Rent Saver is about 160, this unit is only 45% overvalued. Although, if the fees are high here (which they probably are), the 160 number is too high. These units should sell for about $250,000 or less depending on the fees.
Yes it is still over valued but I look at it this way. Already a 13.6% price drop assuming it sells for 360k. So anyone who claims prices are not dropping is simply in denial. It would indeed be fun to go to another listing of this real estate agent owner and ask if prices are dropping and then when the say “they are stable” or some bs like that, bring up this condo.
Once price momentum starts, it is hard to stop. Just like on the way up, a 13.6% decline on the way down will tend to feed on itself.
This is a condo, 120X is too much for an investment, even at $1600, it’ll just cover interest, HOA and property tax. No other expenses and that’s with 100% occupancy and solid $1600 which Villa Siena across the street is going for $1335 (565 sq ft) or 1525 (765 sq ft) and softening. Toscana’s 1B/1Ba are 800 sq ft and going for $1565-$1635. Move a mile around the corner to Parkwest and rent a 750 sq ft 1b/1ba for $1420 and a $400 security deposit.
Factor in a little vacancy, a softer rent and you quickly head to $150K.
Answer:
If the borrower is a broker he’she probably did the financing themselves and probably had a realtor friend structure the sales contract so the our broker friend here walked away from the purchase with a substantial amount of cash in hand.
Through the purchase and financing transactions I bet that this buyer walked away with 10k + in cash.
Then he’she hoped to sit on that piggybank and sell it for profit 12 months later.
I used to live in villa siena, which is way nicer than watermarke. Why would anyone buy that box of an apartment when they can rent a 2 bedroom at villa siena for much less?
Watermarke, The plaza, and Marquee are all massive money toilets
Oh yeah! I almost forgot Avenue One
What a joke.
There is another web site that lists the number of homes/condos sold in Irvine……
http://www.ochomereview.com/homewp/chart/
Interesting that this site suggests that only 55 homes/condos sold in the first 19 days of April. This is less than half of what it was last month…….also the $ sq ft. started decreasing steadily from 545 to 515 between January and April.
If this trend of lower sales and lower prices continues at this rate….this summer will be lots of bubbleblog fun !!!!!
This is very disturbing to witness. Overall, stories like these are very poor exposure for real estate agents. I agree with the comment of “arrogance and ignorance”.
People keep reminding me that there are good, trustworthy, non-duplicitous, straight-shooting realtors out there in SoCal. But for love of God, someone please tell me who they are? All we see are sales people with personal motivations attached (both appropriate and inappropriate).
138% Percent Jump in Orange County Default Notices
http://rancid-truth.blogspot.com/
Actually Orange County Foreclosures are up 676.1% YOY
California foreclosures near record levels
http://tinyurl.com/2kxkek
What kind of moron would pay $367K for a 700 sq ft hole???
3237 Watermarke Place – Plan A – Sold for $367,500 on 3/28/2007
I’d consider $267k but not anymore!
Must read article for housing bear.
http://www.dissidentvoice.org/Apr07/Whitney18.htm.
“There are roughly 75 million housing units in the USA. About 25 million of those homes are owned free and clear. That leaves 50 million homeowners sharing (roughly) $10 trillion in total mortgage debt. The risk of “resets” (that is, monthly payments that will go up after the introductory period of time) will affect 75% of all mortgages. (Some reports have already indicated that 80% of sub-prime mortgage holders have said that they will have difficulty paying the newly adjusted payments) “
To do cash flow analysis to determine the value based on using 100% financing is more than a little off. If you want to buy housing as an investment and have positive cash flow….you simply have to put down a material downpayment. Institutional investors put about 40% to 50% down and finance with 1.2 debt service coverage and have positive cash flow. My guess on the value of this unit as a rental would be 180x rent = $288,000.