Thursday, May 28, 2009

Loco "Loft" on Locust

Address: 835 Locust Ave #118, 90813
Asking Price: $555,000
Year Built: 2005
Size: 1 beds, 1 bath, 1,578 sq. ft.
$/Sq. Ft.: $352
HOA Fee: $380
Purchase price: $524,500
Purchase date: 6/2006 (nice timing!)
MLS#: P659722
On Redfin: 229 days
Down Payment: $111,000
Monthly Payment: $3,200
Income Requirement: $160,000
Description: WOW! One of only 4 lofts off of the amazing Lobby at The Temple Lofts. Enter this thoroughly modern space and enter the pages of Dwell magazine! Some of the custom features include: hi-end track and pendant lighting, custom bookshelves in living room and library, custom hardwood floor platforms in bedroom and den area, custom kitchen island with Carrerra marble top and storage, upgraded spa bathroom using Hans- Grohe fixtures and glass tiles, huge walk in shower with 4 shower heads and an extra large custom built medicine cabinet. Kitchen upgrades include: Viking fridge, range and microwave, hi-end added cabinetry, custom built pantry for additional storage space. In the dining area you will find a 'designer' built-in 'booth'...very cool! There has also been a walk-in closet added to the bedroom with an Elfa system. And maybe the best feature....a large yard-like patio...1 of only 4in the complex...very private with lots of plants and space. Check it out!

Is this idiot for real? He overpaid for this place in 2006 ($524,500), and now, three years into the worst housing crash ever witnessed by human eyes, he actually expects to get $555,000? Wait, your property is so special that it actually WENT UP in value while everyone else's dropped at least 20%?


For the last 230 days, this delusional wonder has convinced himself that he deserves to get out of this with no loss. Yep, as far as he's concerned, he won't lose a dime.

Does he realize he's on the ground floor? Does that even count as a "loft"? The dictionary definition of "loft" includes:

4. an upper story of a business building, warehouse, or factory, typically consisting of open, unpartitioned floor area.
5. such an upper story converted or adapted to any of various uses, as quarters for living, studios for artists or dancers, exhibition galleries, or theater space.

Yeah, I'm not sure you can call this a loft. Since "loft" connotes "lofty," or elevated, should we call this a "goft" to properly describe its ground-floor location?

Either way, you have to give the realtor credit for trying to put a positive spin on it with the "one of only 4 lofts off of the amazing Lobby" line, but his attempt at making this property seem "rare" because of this immense drawback is an EPIC FAIL.

If shit nobody wants makes it "rare," then I guess Gonorrhea is the four leaf clover of STDs.

I guess if you’re in a wheelchair a first floor apartment is convenient, but other than that who the hell would shell out all that scratch for a dark, dank, practically windowless ground-floor unit? How is that a selling point?

And another "rare" aspect ("1 of only 4in the complex"!), and "best feature" according to the realtor, is the "very private" patio.

How private is it? It's so private you can look right over the wall and take a few photos!


Given these undesirable deficits, it takes a set of brass balls to ask $352 per square foot. Especially considering the going rate for sold properties is about $175 per square.

Good luck with that, buddy. Whatever this dude is smoking, he needs to hook us up with a dime bag.

Especially considering there’s some fierce competition upstairs in the form of this bank-owned property asking $299,000.


Mind you, the (much larger) bargain-priced REO (not a short sale), boldly undercutting our seller by an astounding $255,000, is still unsold after 50 days!

Our seller is doomed like a dozen donuts at Kirstie Alley's kitchen table.

On a related note, I’ve warned my readers about buying condos because the HOAs can arbitrarily levy “Special Assessments” on top of (what are usually already quite outrageous) HOA fines. Let’s say, for example, the HOA wants to repaint the building or renovate the leaky pool and it’ll run $70,000. If the HOA comes up short, it'll zap all residents with a Special Assessment. Forty residents = $1,750 each.

HOA President: "The roof needs replacing and the hallways need new carpet. The $200,000 we collected during the last 12 months won't cover it, so here is a Special Assessment for your share."

Resident: “Almost two grand?! My wife just lost her job--I don't have that kind of money!”

HOA President: “Fuck you, pay me.”

Resident: “No. It’s arbitrary and completely unfair.”

HOA President: “Fuck you, pay me.”

Resident: “No! I already shell out $400 a month to you leeches. It's not my fault you mismanaged the money.”

HOA President: “Fuck you, pay me.”

Resident: "Absolutely not."

HOA President: “Fuck you, we’re foreclosing on you.”

Does that sound fun?

Well, I just learned of “Loss Assessments.” I had never heard that term before, but apparently in situations when there is an "unexpected" shortfall in HOA funds (these days, in addition to HOA mismanagement, a big factor is the number of foreclosures and people no longer paying due to job losses), they can also slap you with a Loss Assessment.

If there are unplanned future expenses (like the plumbing system going out) or the HOA members just did a shitty job of planning, you, my friend, are screwed.
Check out this link: SIGN ON SAN DIEGO

An excerpt:

In Normal Heights, residents of an 88-unit condo conversion spent $68,000 last year on a sewage-line repair after enduring repeated sewage backups and flooding. That's in addition to the roughly $40,000 they took out of operating revenue to remove mold in four units at the 21-year-old complex.

This fall, the volunteer board overseeing a 186-unit Rancho Bernardo complex will ask fellow homeowners to finance more than $5 million in long-overdue repair projects, including painting, repaving of parking lots, new wood trim and replacement of stucco partition walls and rotted wooden arbors. Last year, the association was unable to secure majority approval for a similar proposal.

Even associations with well-heeled members, such as that of the oceanfront Surfsong condominium complex in Solana Beach, haven't escaped financial misery. Built in the mid-1970s, many of the units, with stunning, unobstructed ocean views, are valued at more than $1 million.

The 72-unit complex is in the midst of an $11 million rehab that includes new roofs, decks, railings, siding, fencing and a new sea wall. Each condo owner has been assessed more than $150,000 for the work, although the association had to foreclose on one owner who was unable to pay.

And definitely read the comments: PIGGINGTON

After absorbing all of that, is anyone still excited about buying a condo with a Homeowner's Association?

For this particular property on Locust, the construction is only a few years old so repairs shouldn't be much of an issue for a while. And as of yet there doesn't seem to be a substantial amount of loanowner distress, so not too many soon-to-be-former residents are skipping out on payments yet.

But that doesn’t provide a worry-free existence.

That’s because of the potential for a high rate of vacancy once that REO finally sells and puts the entire building severely underwater. If the underwater loft-dwellers (the real lofts, not this ground-floor nonsense) wake up and start moonwalking away from their commitments (to borrow a phrase from Dr. Housing Bubble) in droves, the remaining tenants are on the hook for any and all HOA deficits.

So, do your homework! Find out how many units are unsold in the building you're interested in, research which big repairs have been made (and which have been deferred--ESPECIALLY if the building is older, which is almost always the case with Long Beach's aging supply), and perform due diligence on the HOA, it's members, and topics of past meetings.

**If anyone has HOA tips, experiences or anecdotes, please feel free to share them in the comments.


  1. Shower with 4 shower heads?

    Orgy on Locust!!!!

  2. Gotta love those uncovered, Locust-facing windows; the perps can peep right in! El Bee, the REO you link to is unsold @$299K ($154/sq. ft.). (BTW, how the hell did this REO sell for $1,000 on Mar. 20, 2008?!?!) As I recall, there have been 3 or 4 foreclosures in this building already.

  3. Anon,

    I don't know why I typed $350,000 (even my math calculates the correct $255,000 difference between the two properties), but I've corrected it in the post. Thanks for catching that.

    As nice as some of these (real) lofts are, I simply can't imagine the feeling of being underwater, watching the foreclosures pile up, struggling to make that enormous half-million-dollar mortgage payment...all to live in this crappy neighborhood.

  4. Excellent article and of your best yet, El Bee!

  5. Thanks drjim. I think the HOA issue is something that requires a lot more attention.

    Plus, it confirms that holding out for a SFR--hassles of mowing my own lawn and all--is the right decision for me.

  6. Carl you dog haha. I must confess though, I had a similar thought when I read that.

    El Bee would you please be my realtor? (hope my mom isn't reading this)

    I'm not gay or anything, but I think I'm falling in love with you...

    Anyways, thanks for schooling me even more, in regards to the HOAs.

    I actually had pondered such things, but am so much of an amateur, that that's all I can go on (my hunches). Now I have someone confirming my common sense hunches.

    Have a great weekend!

  7. And El Bee, speaking of HOAs, that must a big part of why the prices have dropped so low in buildings like Aqua, and 525 E Seaside Way....

    I wouldn't mind buying in the Seaside Way building, but who the heck wants to throw an extra $500 a month out the window?!?!?!

  8. I would add to the HOA advice:

    IF (very strong if) you decide to go with a Condo, and thus an HOA, do not just do what you think is due diligence. Go far and beyond. Request to attend an HOA meeting open session and ask the Board any and all questions you have pertaining to past assessments, building condition, planned assessments, etc.
    Often times, vital information is omitted from the past HOA newsletters you will be provided as part of the disclosure package. When you get an inspection as part of closing on the place, do not just get your condo inspected. Pay extra if you have to in order to have the inspector look at the common areas, building plumbing, laundry, anything you can think of. You are not just buying your unit. You are buying the building. You are in fact buying your neighborhood.
    HOA's are a tremendous and phenomenal pain in the ass, and can turn into a tremendously expensive pain in the ass. Think long and hard. Bottom line- el bee is right about SFRs.

  9. Yeah, I agree totally about the joys and heartaches of owning an SFR. My favorite hobby is Amateur Radio, and to live somewhere that won't allow antennas would just about kill me!
    No HOA Nazis for me!

  10. Anton Chigur (great handle, by the way),

    "You are not just buying your unit. You are buying the building."

    GREAT point. And espeically considering the ability for homeowners to "move-up" based on home appreciation is dead and gone for a decade or more, condo buyers are going to be stuck in that place with that HOA for a very long time--buyers have to get it right!

    Not to mention, HOA fees (although they DO include some conveniences such as landscaping, pool maintenance, insurance etc. that you would have to pay for separately with a house) can add HUNDREDS OF THOUSANDS OF DOLLARS TO THE LIFE OF A LOAN. None of which--NONE--is tax deductible.

    Anton, thanks for the great advice.