Monday, February 2, 2009

Enough to Make Your Vomit Vomit

I'm back from my worldly travels. I'm tired, sunburned, and most importantly, clear-headed.

Nicaragua, as I'm sure you're aware, is a very poor country. The people were incredibly nice and were laudably patient as I stumbled my way through poorly-conjugated verbs and an endless stream of "come se dice?"

When you see how Nicaraguans live, you gain instant perspective about our lives in America and just how ridiculously fortunate we are. I mean, deciding between granite and Corian counter tops is a legitimate, keep-your-ass-up-all-night concern back home.

"Damn it, Bryce, they're out of the maple cabinets! Now our stainless steel fridge won't look right! Why, God, whyyyyyyyyyyyy!"

Nicaraguans, on the other hand, are at their happiest when they have a glass of potable water.

For those of you who believe I'm too hard on used house salesmen, loose lenders, gold-bricking government "leaders" and materialistic greed-heads, you have to realize that to some of our fellow humans, the Great Housing Bubble and our unchecked materialism is a complete fucking joke. I criticize HELOC-abusing pricks who tried to live like millionaires, but to most Nicaraguans WE'RE ALL FREAKING MILLIONAIRES.

Believe me, this isn't some anti-materialist conversion. I haven't sold my car or my suits, and I haven't donated all of my down payment money to charity--I'm still a Southern California boy bitching about condos that don't feature in-unit laundry.

My point is that this site is all about perspective. I don't want anyone to get the idea that this blog is dedicated purely to laughing at the misfortunes of others. Well, it is dedicated purely to laughing at the misfortunes of others--but those that deserve the ridicule (either through reckless lending, taking on insane debt-loads, or acting like a holier-than-thou prick when I run into you at Schooner or Later and you brag endlessly about the "toys" selling used houses got you).

And before someone carts out the guy who got cancer and was "forced" to take out HELOCs to pay bills or the single mother who lost her job and could no longer keep up with her mortgage as examples of why we shouldn't have senses of humor, I'll remind you that they're not being taken out back and shot. They're just calling U-Haul and moving their shit to an apartment they can afford. And the life they're living in rental unit #38B is 80,000 times better than the lives being lived in the plantain fields of Nicaragua.

With that said, check out this disgusting shit pile!

Address: 3245 Santa Fe Ave #68, 90810
Asking Price: $49,900
Size: 2 beds, 1 bath, 730 sq. ft. (built in 1965)
$/Sq. Ft.: $68
HOA Fee: $215
MLS#: P664998
On Redfin: 79 days
Down Payment: $9,980
Monthly Payment: $500 @ 5.5%
Income Requirement: $15,000 @3.5X
Description: Affordable 2 bedroom Westside area condo. Located in a security complex with nice landscaping, this property is in need of a cosmetic upgrade. Priced to sell.

First of all, a $215 HOA fine? WTF for?

Second, at $68 per square foot, this is one of the least expensive properties in Long Beach. And there is a distinct reason why.

"In need of a cosmetic upgrade" is sure one way to describe the filth and horror about to befall us. I guess he just wasn't feeling honest enough to say the truth:

This dump is awful enough to make your vomit vomit.

Kids, get on your hazmat suits because we're going in!

Ugh. I can smell it from here. This place is truly, truly awful.

And, the agent included one of my favorite listing photo trends:


And it's a toss-up for the Most Meaningless Listing Photo Award, so I'll let you decide:

Photo #1: Just in case we didn't believe them about the unit number.

Photo #2: Assuming you can afford a car, I guess it's nice to visualize where you'll be parking it?

Photo #3: Safety first?

And although the following picture may initially seem pointless, a security door in this neighborhood is more desirable than a rock pool in Newport Coast.

Hell, you might need two!

Anyhow, this borderline tenement housing is obviously only intended as an investment property. People who live in these conditions aren't concerned with "building equity" or climbing "The Property Ladder" (unless by "Property Ladder" you mean eventually living in a place that doesn't involve roaches shitting in your coffee mug)--they just want cheap rent.

The good news is that with a monthly nut of only $500 (40% of which is your HOA fee!), as an investor you would easily be cashflow positive on this one-step-up-from-a-cardboard-box apartment.

But it's clear that you'll have to dump $10,000 to $15,000 into it right away to keep the health inspectors away. Plus, I very seriously doubt you could get financed on this deal, so it's most likely going to be an all cash transaction.

I guess the question is, if there's still no action at this rock-bottom there any price at which this place will move?


  1. Welcome back! Yes, we sure have it better here than in most of the rest of the world.
    I looked this place up on Redfin, and went right to the road map. YOW! true "West Side" LB, with all that entails. I used to work at a place by the 405 and 710, and would occasionally take a different route back to my place in Torrance. A couple of times I went right by that area, and it gave me the willies.
    Two security doors? Better have a 12ga and a 45 to back them up!

  2. okay! I'm laughing! I shouldn't be laughing but I am! Now, where are the pics from shitty Nicaragua? I was waiting the whole time to see a pic comparison ie: toilet vs "letrina." That's the one thing your post is missing. I'm sure some of your readers have no idea what you mean by "Nicaragua is a very poor country"neither they understand the standards of life down there.

  3. I think you would have to budget in 25% for insurance, vacancy and maintaining this place, due to the renter profile for a $700 2bd in this area.

    so...$700x12=$8400, then -20%=$6300, then -$2580HOA=$3720. if you pay cash, that is ~a 7.5% cap rate. decent, but I predict that managing that place will feel like you are really working for that rate.

    And just wait until the HOA goes up due to deadbeats. But don't hold your breath for the 40 year old apartment to appreciate...

    Why not just take your $50k and invest it in muni bonds for a 5% tax-free return with zero hassle?


  4. Anon,

    Don't get me wrong, Nicaragua has some very nice areas. It's not all destitute. The "socialist" leaders sure as hell aren't living in mud huts! I added a picture (not my own) to provide an example of what I drove by for miles and miles.

  5. FreedomCM,

    "I predict that managing that place will feel like you are really working for that rate."

    You hit the nail right on the head, pal. I mean, think about the type of people that would have to SPLIT $6-$700 in rent! Odds are they're not the most reliable, employable bunch.

    And investors know this, which is why it's still not selling despite being priced at the equivalent of a down payment on a $250,000 house.

    I am honestly starting to wonder if there are LB properties that are in such disarray, and in such bad neighborhoods, that they are simply "unsellable" in this type of economic environment.

  6. I'm sure there are such properties, but I'd guess it depends on your definition of "unsellable". I've seen signs go up on things in decent neighborhoods that were in dire need of repair, and overpriced as a result. With credit being so tight even a low price wouldn't sell them as you'd still need to put $20~30k of repairs into them to get them up to the asking price.
    I think it's going to get worse, but my crystal ball has never worked very well!