San Diego Housing Bubble News and Analysis

"offering them for $30,000 complete"

"turnkey complete and out the door"

"preforeclosure value $50,000 to $120,000"

"ask about our simple millionaire in 32 months program"

~

wow, where do you even begin?

anyone who would part with $30K on this deal must have ridden a VERY short bus to school

These homes are not in CA...

My favorite is the scam in the lower right hand corner. "Ask about our simple "Millionare in 32 months" program. Now is the time you have been waiting for!"

Sign me up! I can rent a place in RB from some nice people in Nigeria AND be a millionare by 2011! Thanks Craigslist.

LOL

These homes are not in CA...

My best guess would be Detroit.

I for one would steer clear. It's not because I think it's a scam, but because I'm afraid that my character would be corrupted by all that money. I don't think 32 months is enough time to adjust to the lifestyle changes that being a millionaire would almost certainly bring.

As the "perpetrator" of this "scam" - let me add some comments.

These properties are in the midwest. Nothing in Detroit though, yet. There will be properties worth buying in Detroit someday, too.

It is not for a real estate investor who wants to hold and touch and feel, and fall in love with, and micro-manage his/her property. It is for someone looking for a little diversification. There is a component of "Socially Redeeming Value" in the transactions as well.

We have no problem enduring the slings and arrows of dicussion boards. I would encourage you to email me at palmboss [at] yahoo [dot] com or call me personally at 760.809.4666 to get the details before you comment pro - or con!

Sincerely,

Richard Worcester
President - The Hilltop Group of Companies
Phone - 760.809.4666

get the details before you comment pro - or con

Now, by "con," do you mean...

It is not for a real estate investor who wants to hold and touch and feel, and fall in love with, and micro-manage his/her property. It is for someone looking for a little diversification. There is a component of "Socially Redeeming Value" in the transactions as well.

I have recently seen similar concepts being floated around. I have invested in real estate in the past and still own an investment property. The primary reason I have individual real estate as part of my portfolio is that (in addition to diversification) it is an investment that I can touch and feel and that I have control over. I have the option of moving into it if I want to move back to the SD area or I fall on rough times move back in because my payments are signficantly cheaper than renting. I also could use it as a second home or retirement pad once it is paid off.

If I want diversification into real estate or cash flow I buy REITS. If I buy single family homes or a condo, it is because I have a vision for changing the property in the future or have flexible plans for that property.

That said, assuming 30K, these would be tempting if one could actually clear $400 per month cash flow. That's equivalent to 16% yield. My main worries in that situation are vacancy rates and job stability in the region. Supply of vacant/foreclosed properties and ...

But, the biggest issue I have is maintenance costs. It turns out that a 1000 square foot home in the midwest has about 70-80% of the maintenance costs of a 1000 sf home in San Diego. However, that house might be 50-100K in the midwest (or 30K in this case) versus 400K in San Diego. SO, if I spend 2000 per year on maintenance for my 400K home it's no big deal. But, if I spend $1500 maintenance on my 30K home somewhere in Ohio. Well that's significant and cuts into cash flow. My maintenance figures are probably on the low side, too.

As for where these properties are located ...
I would assume that these properties are most likely in the states of Ohio and/or Michigan.

We have no problem enduring the slings and arrows of dicussion boards. I would encourage you to email me at palmboss [at] yahoo [dot] com (palmboss [at] yahoo [dot] com) or call me personally at 760.809.4666 to get the details before you comment pro - or con!

If you don't mind being "scrutinized", please answer the following questions:

1. For $30,000, does an investor get a 20% equity in a property somewhere in the midwest ?

2. Or is this situation similar to that of a mutual fund where properties are bought instead of stocks/bonds ?

3. Are these properties single-family houses, or are they mostly condos ?

4. How long are investors obligated to commit ?

Thanks.

In answer to your questions:
1- The $30,000 buys the house complete, including escrow fees . Out the door.
2- You are not mutual or partners with anyone. You get the "pink slip" to your property.
3- The properties are all single family homes.
4- How long are you expected to commit? The day after you buy it you can do with it what you please. Again, you are the owner and can rent it or re-sell it. In my mind there are at least 3 good exit strategies, but probably many more.
I hope this helps.

Let me just answer your main objection/point - maintenance costs. The ideal play with these properties (in my opinion) is to re-sell immediately by way of land contract for $500 a month. (we handle this for you for 10% a month - about $50) The contract buyer is responsible for repairs, taxes, et al.

Do you think there are thousands of buyers out there who can't get a loan any other way in this ridiculous credit market? I don't mean a serial deadbeat, but instead a young couple with a baby who may both work at Wal Mart or McDonalds? Or maybe someone who just lost their house in the same neighborhood because the payment went from $700 to $1700? This is my point about the socially redeeming quality of the deal. Consider that you write a 10% note, $500 a month, = a note face value of $51,000. After those payments have been made for 6 months or a year, you can sell the note at a discount. 75% of 51k = around 38k. Add the $500 month cash flow you have made along the way and you get back $40k for your $30k investment.
We understand REIT's, and mutual funds etc. Again, these are not for everyone - but they are a good option in a diverse portfolio. Creative? Yes. Guaranteed? No. In this market, guaranteed investments pay about 2%. The plan I just showed you pays about 33%.

Richard Worcester
Phone - 760.809.4666

Let me just answer your main objection/point - maintenance costs. The ideal play with these properties (in my opinion) is to re-sell immediately by way of land contract for $500 a month. (we handle this for you for 10% a month - about $50) The contract buyer is responsible for repairs, taxes, et al.

Do you think there are thousands of buyers out there who can't get a loan any other way in this ridiculous credit market? I don't mean a serial deadbeat, but instead a young couple with a baby who may both work at Wal Mart or McDonalds? Or maybe someone who just lost their house in the same neighborhood because the payment went from $700 to $1700? This is my point about the socially redeeming quality of the deal. Consider that you write a 10% note, $500 a month, = a note face value of $51,000. After those payments have been made for 6 months or a year, you can sell the note at a discount. 75% of 51k = around 38k. Add the $500 month cash flow you have made along the way and you get back $40k for your $30k investment.
We understand REIT's, and mutual funds etc. Again, these are not for everyone - but they are a good option in a diverse portfolio. Creative? Yes. Guaranteed? No. In this market, guaranteed investments pay about 2%. The plan I just showed you pays about 33%.

Richard Worcester
Phone - 760.809.4666

This may sound like a stupid question but do you own any real estate in SD County? I couldnt find you name on any as the owner. A 2nd stupid question. Why does the address of your business show up in the tax records as a 1200 sq ft mobil home, errrr manufactured home. Is that for a quick exit?

That is o.k. - Glad to see you do due diligence. I do own 5 properties in CA, and 7 more across the country, all in trust(s). You can scour county records if you like or just call me and I'll tell you about them.
The address you are referring to is where I live. Be careful what you say there, my family and I are very happy here.
To save you the time of going to the DRE, I have been a realtor, let my license expire, done it again, and let my license expire again - 3 times in 25 years. Just can't get the hang of floor time...
My father, brother, and son are all decorated war veterans. I spent 6 years of my life in the Navy and 10 years in the Skunk Works at Lockheed in Burbank, and I will defend your right to say anything you want about me, Hillary Clinton or anyone else.
Just try and keep it clean.

I already checked the DRE site first. In my world, one of the first tests of someone I trust/depend on is finding someone with shared values and a history of success doing what they are doing. Having been in and out of RE 3 times is not something I would be comfortable with on a personal level but thats just me. Working with someone that was content or had no choice but to live in rented a 1200 sq ft mobil home would not inspire my confidence either. Lastly, the link to some multi-level marketing operation on your website is the 3rd strike. Your military record and that of your family while honorable says nothing about your track record of real estate investment success. It's a non-issue to me.

Sorry but I'm a stickler for due diligence and nothing I have seen would inspire my confidence enough to write a check to you. Nothing personal, but I would run away from you as fast as I could. But again thats just me.

"I would encourage you to email me at palmboss [at] yahoo [dot] com"

You own a domain for your business. You are president of the company...and you are using a yahoo address for business purposes?

Alarm klaxons are going off in my head right now. Is this like keeping a packed overnight bag in the back seat of your car?

I was born in Oceanside - been in North County most of my life and will probably die here. I have a car seat for my 6 year old in the back of my car, and golf clubs in the trunk.

You got me on the email issue. If you think I do it to hide, then fine.

Did not say I had been in and out of real estate 3 times. Just did not fit into the agent community. I find them a little closed minded. Not you though, I am sure. I have been involved in real estate investing consistently for 26 years.

Yep, I am content in my home. My kids love their friends, they are in good schools, and I am "dug in". By the way, it's a manufactured home and we even have indoor plumbing!

Out of respect to Rich Toscano and the forum, I will let you have the last word. Nice talking to you.