The SFR foreclosures around North SD County Coastal are still being trickled out, relatively.
We got teased with an increased flow in January when 49 got foreclosed, but in February that number was almost cut in half, down to 26 (with the same number of business days too).
Here are the foreclosed-SFR counts between Jan 1 and March 6th:
| Town or Area | 2009 | 2010 | 2011 |
| Cardiff | |||
| Carlsbad | |||
| Carmel Vly | |||
| Del Mar | |||
| Encinitas | |||
| La Jolla | |||
| RSF | |||
| Solana Bch | |||
| Total |
It’s mentioned in this video that buying a cheaper house with FHA financing might be of interest, but it is a novel concept with attractively-priced REOs. If you offered to purchase one of these with FHA financing, you’d get sent to the back of the line, behind the cash buyers, and those with big down paymnets:
How about this one:
$1,900,000 for 1,448 sqft….beach area Encinitas!
http://www.redfin.com/CA/Encinitas/735-4th-St-92024/home/4116561
Wow!
Heres a fun little blast from the past (May 2009):
…
[ForeclosureRadar’s Sean] O’Toole, for one, believes big banks may continue to foreclose more slowly, and will “dribble out” their accumulated repo properties in hopes of a market change. “I talk to them,” he said. “It’s like, ‘If we don’t foreclose, we see the market heat up again. You get a certain number of people who believe it’s a bottom and the prices come back. Then we don’t need to foreclose. These people can sell and get out from under them and we end up OK.’ ” Dribbling them out slowly would keep prices stable, he said. But it also would prolong the housing correction.
…
Field Check’s [Mark] Hanson doesn’t buy O’Toole’s theory, even as they work off the same data. He predicts a flood of cheap repo inventory on the market this summer. “The government and bank-specific moratoriums and modification initiatives have held back the massive wave of foreclosures,” he said, “kicking the can down the road. But there is only so high the floodwaters can build before breaking the dam.”
Uhh, sorry Mark (Mr. Mortgage) Hanson – that dam was far larger and stronger than you could possibly ever have imagined…
http://sacramentolanding.blogspot.com/2009/05/repo-flood-or-trickle.html
Too consistent to be anything but a managed supply.
Must be frustrating trying to get a decent REO in Encinitas, dare I say starter home, for $586K.
I don’t think we are looking at a surge of foreclosures and even so they’ll be snapped-up by people with cash and put back on the market as flippers or rentals.
I’ve also noticed anecdotally that people have either given up or are so picky and delusional that they’ll never make a move. As prices go up eventually this paradigm is going create disgruntled apathy.
How do you figure the first house is a good investment as a rental? With 20% down and 4.625% interest rate, the PITI will be around $3000. You mentioned it would probably rent for $2500. I thought most investors valued cash flow, not appreciation. What am I missing?
Thanks for busting balls this early on a Monday!
I am human – I said the rent later, thinking that a more-conservative number if somebody was going to use it literally. Previously I was thinking $3,000/month, which is possible if you don’t mind pushing it.
The premise was that it might make for a good house to live in, and keep for a rental once you move. Just an idea, using this one as an example.
In spite of how many people I’ve black-listed here, I still get my lunch handled to me every day. It is a humbling experience, and probably why no other realtors like to blog.
Hi Jim. I didn’t mean to bust your balls. I have learned a lot from reading your blog, watching your videos, and reading the comments posted by other readers. I find your blog and the community it has created very valuable. Thank you!!
I have been working with Richard to find a house to live in. I’m not an investor, but I’m always trying to learn as much as I can to understand value in the market and to know what I’m competing against as a buyer. When I see something I don’t understand, I ask a question. Sorry if the tone came across as harsh in my comment.
Now, I’ll try some more questions… 🙂
If the rent is $3000, then the only revenue after expenses would be tied up going toward the principal on the loan (~$600 a month, initially). I don’t know whether investors consider that cash flow or not. Plus, that has not accounted for expenses like maintenance, gardener, vacancy. Do you think investors typically want cash flow beyond payment toward principal? How slim of rate of return on the down payment are investors willing to tolerate? Thanks!
Sorry, it’s me, the workload is tremendous and I’m really short on blog material.
You have depreciation of the building too, which the county has figured is 38% of the value.
SP = $586,000 x 38% = $222,680/27 years = $8,247 deduction each year to add to the other write-offs; which are mortgage payments, taxes, insurance, and capital improvements.
I’m not a CPA though, so if someone wants to clarify/improve/bust balls, go ahead, I’d appreciate it. But I’m pretty sure those are the offsets to annual gross income, and full-time investors who end up with a negative can claim these losses against regular income.
Also–Be sure not to forget their ability to depreciate the property’s improved value.
Oops–I read that again and noticed it above–sorry!
It is 12 minutes to Hwy 5 and Via De La Via 😀