What they need to do is sell the house now before they lose any more money. $800k homes in Temecula are going to get nailed even worse than the $880k homes in San Diego.

What’s even stranger is that the amount of the purchase option of 875K after three years comes to about 1777 per month over the three years, exactly what they have in negative cash flow (excluding expenses). Even if the price appreciated at a rate that would make sense for the renter/buyer to purchase at the end of the three years, the original buyer would not have made any money.

Smells fishy.

I looked at the pictures on Shutterfly and i think this house is in Morgan Hill based on the view and the maroon trashcan (the unincorporated areas use that color, city uses black,green,grey). Morgan Hill did sell some in the 8oo’s at the absolute peak but has been one of the first to fall because it has the highest taxes in the area and HOA. From memory it was 2.4% overall. I have found Morgan Hill houses at 499 for small one and could get this one for 650 so they are screwed. Morgan is one of the more expensive areas because it is on the extreme south and you can get to San Diego via Raimbow Canyon avoiding the checkpoint and the traffic, almost all of the southern residents are SD commuters. A search of rentals on the MLS showed the highest priced was 2500 and from my searches in person and online almost anything can be obtained for 2500. So why would their renter pay 3k plus over 1.5k a month in taxes, I just can’t believe it ever existed, even at the peak. The ods that the dumbest investor that ever lived managed to find the dumbest renter that ever lived is staggering. My guess is that it appeared on the S.D. craigslist and not the inland empire one to find someone who is thinking about SD numbers that may seem justifiable, but for this area it is not. It has to be a scam of some sort.

http://www.immobel.com/personal/1_3_1/searchLocation.do?la=EN&per=mrmls

use zip code 92592 and check the leases and the sales prices, you will see they are off 200k for value and the rent is double.

Creative help? Maybe Casey has some ideas.

Seriously though:

1. If he/she can’t afford the carrying costs now, he/she couldn’t afford the carrying costs three months ago.

2. One more reason not to rent from a flipper.

3. One more reason to avoid lease-option deals. (As if there weren’t enough reasons already.)

4. Credit score of 735 isn’t “great.” Good, but not “great.”

5. “Trying to work on other deals” you say? *bangs head against wall*

Also, the combined prop tax rate is approx. 1.9% and the HOA changes monthly, based on phase releases. It’s been anywhere from approx. $80-150 monthly in the last 2 years, but is estimated to be $85 at build out.

Whatever, that’s a lot of $$$…I get the impression lots of neighbors are living paycheck to paycheck.

Don’t know how they do it, especially with all the BMW, Mercedes, and Hummers…oops, I do know! I check all the new listings tax records, and the refi’s (above basis) and the Helocs are always there.