How is the market in Temecula/Murrieta?

[temeculaguy]

[quote=henrysd]The biggest problem to Temecula/Murrieta is lack of good quality tenants. House price are dirt cheap there, so those with good credit and stable income have bought their own homes. This leave predominantely junk quality tenants on the market. Investing in Temecula rental house is similar to investing in junk bond – high yield and also high default rate.[/quote]

Henry do you own a rental here? My immediate family has a number of them and has had them here going back about ten years. The sun city rental, the san jacinto rental, your description is accurate. The Temecula and Murrieta rentals, we’ve found the opposite to be true. But those places are further in distance than La Jolla is to El Cajon. In certain zip codes, the tennant quality is equal to better than many Sd cities, but then again I have no idea where your rentals in Temecula are.

The crappier the rental neighborhood, the crappier the tennants. When I was renting and waiting out the market, I was picky about renting. I rented in that first complex I linked. Eventually a family member bought a rental in there and it has been the best one. In the years I was there, nothing was “for rent” for more than a few days. Like everything, you need to do your research.

[paramount]

I own a rental in what I would call a ‘premium’ location in Central Temecula (Paloma del Sol), and I had a hard time getting the house rented out even though it is in pristine condition and in a community with lot’s of amenities.

Were talking a 1500 sq ft house about 200 yards from a 9 ranked elementary school (API well over 900).

I went through a management company and priced it slightly below market based on other local/comparable rentals.

1st of all housing prices in Temecula are still falling, maybe not as steep as 3 years ago, but they are still falling.

The problem I found is that there is a high inventory of rentals available, meaning it’s a renters market.

I suspect rents are falling as well.

On the other hand a lot of Marines rent in Temecula which is good.

On a side note my rental has turned into a nightmare IMO – there’s got to be a better way!

[paramount]

By the way I’m getting about $1.07/sq ft.

[Coronita]

[quote=paramount]I own a rental in what I would call a ‘premium’ location in Central Temecula (Paloma del Sol), and I had a hard time getting the house rented out even though it is in pristine condition and in a community with lot’s of amenities.

Were talking a 1500 sq ft house about 200 yards from a 9 ranked elementary school (API well over 900).

I went through a management company and priced it slightly below market based on other local/comparable rentals.

1st of all housing prices in Temecula are still falling, maybe not as steep as 3 years ago, but they are still falling.

The problem I found is that there is a high inventory of rentals available, meaning it’s a renters market.

I suspect rents are falling as well.

On the other hand a lot of Marines rent in Temecula which is good.

On a side note my rental has turned into a nightmare IMO – there’s got to be a better way![/quote]

How has your rental turned into a nightmare if you don’t mind me asking? Thanks for sharing

[paramount]

[quote=flu]

How has your rental turned into a nightmare if you don’t mind me asking? Thanks for sharing[/quote]

I’m glad you asked.

1st of all I put my house on the rental market in early August, and it wasn’t occupied until almost November.

The house was pristine, carpet was very new; but I still had to spend $500 for ‘professional’ cleaning.

So at this point I’m down a good $3500 (roughly).

By January the furnace was fried – 2k.

At 1st I had arranged for the tenants to call me when there was a problem – and believe me it felt like my phone never stopped ringing.

The gas company then red-tagged my house for various code violations as another example.

The rent doesn’t quite cover my costs – close but not quite.

Oh, and why did I get red-tagged: one issue was that the fireplace flu was still in place. That was code when the house was built, but not now.

On top of that I’m 50k underwater (including selling costs) and still sinking (even though I bought nearly 10 years ago).

[temeculaguy]

paramount, how are values still sinking? Post an example of a house that could be had in 2009 for a certain price and can be had for less today. An actual sale, not what you thought it was worth. I can post numerous exact models or even exact houses that could be had for less in 2009 than can be found today. This isn’t me calling you a liar, but what you say is contrary to what I see, especially friends who are looking to buy and are frustrated when it’s actually time to submit an offer and contrary to my recent appraisal. Not list prices or pending short sale prices, but closed prices. For example, something like this.

For example, I’ll use a house I tried to buy as a short but it ended up going as a repo then add the neighboring houses, three houses, same street, same side of the street, all within 6 houses of each other. I apologize for the lack of pictures as the older sales have no pictures but the square footage is identical and you can stand on the sidewalk and throw a rock at all three, it’s a close as you can get.

exhibit A, sold march of 2009 for 330k

http://www.redfin.com/CA/Temecula/44993-Silver-Rose-St-92592/home/12506860

exhibit B, sold June of 2010 for 330k

http://www.redfin.com/CA/Temecula/45023-Silver-Rose-St-92592/home/12508140

Exhibit C, closed escrow 3 days ago for 370K

http://www.redfin.com/CA/Temecula/45033-Silver-Rose-St-92592/home/12508337

throw in exhibit D, the only non short sale, non pending home in that tract currenlty listed, it’s smaller than the three model matches on the same view side of the street and it has no view, listed for 395K (overpriced in my opinion, but that’s your only option).

http://www.redfin.com/CA/Temecula/33827-Flora-Springs-St-92592/home/12506862

2009 and 2010 were flat, right now things are up, this is what an appraiser lookes at, they look at model matches on the same street with the same view. This is how my house is gone up more than the sum total of all of the payments I’ve made, I’m going up over 2k a month for the last three years, and my evidence is getting out of PMI even though I put 5% down and an the lender’s appraiser says I’m at over 30% equity. Maybe there are circumstances that cause us too see things differently, but the bank agrees with me, despite the redfin chart (which just shows cost per square feet or total cost and doesn’t look at specific location or condition). How is it that my friend cannot buy a house for what I paid, no matter how hard he tries and he is trying, he cannot even get close and it’s getting worse. The new construction is smaller and more expensive

http://www.redfin.com/CA/Temecula/44967-Kelham-Ct-92592/home/22545620

If you look into it, I’ll bet there other factors adn what you thought you could sell for last year may not have been totally accurate, the only way to tell is to actually sell it or look at sold data in a very tight format, same street, same side of the street, same square footage.

Here’s another example of a neighborhood and a model I am very familiar with and livved in at one time.

http://www.redfin.com/CA/Temecula/32208-Corte-Mataro-92592/home/6254732

they sold new in 1998 for 185k, it obviously got heloced to death and repo’d, then sold at auction for 237K in December. Someone put some money into counters and flooring and flipped it, now in escrow for for 324K, after 8 days on the market. That’s someone who did their homework. Ask any realtor, it is possible for two different people in the same zip code to get different results from real estate within that zip code.

For fun I looked at one of the few tracts in paloma I’m familair wiht, having dated a resident in this particular tract in the past. It’s far from paloma’s finest, it’s probably the worst.

excluding pending shorts (which can be misleading) the only listed standard is pending and lasted 8 days on the market

http://www.redfin.com/CA/Temecula/42975-Corte-Colucci-92592/home/6236389

it’s pending for 225, looking at a dozen or so that sold of that model in that tract, it’s the highest price in recent times and it’s in escrow.

3 houses away went for 55k less just 8 months ago, albeit on the cross street

http://www.redfin.com/CA/Temecula/32085-Calle-Ballentine-92592/home/6236419

and I found 4 or 5 at the same square footage in the last two years in the 170’s and 180’s. but today the only one in escrow is 225k. I just don’t see what you are seeing. An aside is that I do not reccomed these as rentals, this is monstertruckville, tiny houses, rent on par with cheaper condos, tennant with big dogs choose this because it is the cheapest place they can have and still have their big dogs, the make for bad neighbors, she was pretty cute though.

[as]

Thank you all for the useful info.
Tguy, you are the expert in that area. Sorry to hear your bad rental experience, paramount. I am worrying about that part, too.

It seems that price near south of Temecula has gone up a bit already. How about Murrieta hot spring and west of 15 Murrieta area? Tguy, any suggestion about that area? I am thinking to get something below 200k, condo or house and rent it out first, then later I might retire there or sell it when price it up.

SDR, I like your idea: get the loan at low interest rate and save the cash for other investment later or pay it off later.
thanks again for your time!

[Ren]

We’re over the apex of a bounce. Prices are higher than they were in 2008/09, but lower than 2010 (mine is down 5% from 2010). It’s hard to tell what prices are doing now – I’ve seen some great buys and some oddly high prices.

I bought at the 2010 mini-peak, but my place would still have $600/mo positive cash flow.

Still a good place to invest, IMO.

As for quality tenants, the bubble created a ton of them – maybe not the sharpest tools in the shed for buying at the peak or pulling money out, but that doesn’t matter as long as they’re stable. For example, the renters next door to us are very nice, non-redneck, employed strategic defaulters with a couple of their own rental properties out of state.

[Ren]

[quote=as]Sorry to hear your bad rental experience, paramount. I am worrying about that part, too.
[/quote]

His situation is very different from yours. Maintenance issues would seem like a nightmare to a landlord who is barely breaking even. With significant cash flow (which you would likely have), it wouldn’t be so stressful, and you can choose a newer property that won’t have immediate big expenses like heating/AC/roof/flooring/fencing/etc.

[ocrenter]

Thanks to TG for the market update. I do have to say the $370k sale looked a lot better and had more bells and whistles. Adjusting for inflation and the added upgrades, prob just slightly up. Still sucks big time for folks that bought in a over 600k.

[Coronita]

[quote=paramount][quote=flu]

How has your rental turned into a nightmare if you don’t mind me asking? Thanks for sharing[/quote]

I’m glad you asked.

1st of all I put my house on the rental market in early August, and it wasn’t occupied until almost November.

The house was pristine, carpet was very new; but I still had to spend $500 for ‘professional’ cleaning.

So at this point I’m down a good $3500 (roughly).

By January the furnace was fried – 2k.

At 1st I had arranged for the tenants to call me when there was a problem – and believe me it felt like my phone never stopped ringing.

The gas company then red-tagged my house for various code violations as another example.

The rent doesn’t quite cover my costs – close but not quite.

Oh, and why did I get red-tagged: one issue was that the fireplace flu was still in place. That was code when the house was built, but not now.

On top of that I’m 50k underwater (including selling costs) and still sinking (even though I bought nearly 10 years ago).[/quote]

Paramount, I have to say first off thank you. You realize you’re one of the few people on this board would would ever openly sharing a very negative RE experience… Most people only like to share the green grass side of things, and conveniently love to shove the brown side under the covers.. (Kinda like one would say how they made a crapload on stock trade X while not disclosing they got their asses handed to them in stock trade Y)…
You openly discuss this takes a lot of courage and balls, and I really appreciate you doing this…

Looking at what you posted, I’m not so much worried about your initial $5500 “loss” because well shit happens.. I’m thinking more over time…My concern is you mention rent not covering cost… If you don’t mind me poking and proding, how bad is this deficit? And what exactly is your cost structure right now on the rental (any change of a refi or something to make you whole?) I’m asking because trying to learn what has happened. If you’d rather do it via PM, that’s fine too…
Thanks in advance.

[scaredyclassic]

A cool organic farmers market type restaurant just opened in temecula which I believe makes it 1.7 percent less corporateysuburban.

[paramount]

[quote=temeculaguy]paramount, how are values still sinking? [/quote]

TG: I’m not cherry picking data, and to be honest I’m relying on zillow for most of my data.

Take a look at this chart:

[img_assist|nid=15901|title=92592 Trending|desc=|link=node|align=left|width=1055|height=600]

As far as monstertruckville, I think that pretty much describes most of Temecula; but yes there are parts of Paloma with smaller houses, but we do have a fairly strict HOA so no trailers, etc…. When I was talking with potential tenants last summer, most of the feedback I got was that 1500 sq ft wasn’t enough space. Mind you most if not all of these potential tenants were going through a foreclosure. That’s a different subject that deserves it’s own thread.

There are cheaper communities for rentals than Paloma del Sol for sure around Temecula.

[paramount]

[quote=flu]

Looking at what you posted, I’m not so much worried about your initial $5500 “loss” because well shit happens.. I’m thinking more over time…My concern is you mention rent not covering cost… If you don’t mind me poking and proding, how bad is this deficit? And what exactly is your cost structure right now on the rental (any change of a refi or something to make you whole?) I’m asking because trying to learn what has happened. If you’d rather do it via PM, that’s fine too…
Thanks in advance.[/quote]

In 2011 Wells Fargo offered me a free refi even though I was underwater. I took advantage of that even though all it really did was reset my loan back to 30 years and slightly lower my rate to 4.75 from 5.1.

With this refi I thought I would be in a position to move to a larger house (which I did) and then at least break even on renting my old house.

The break down is approx. as follows:

1100 P/I
225 Tax
58 Insurance
100 HOA
93 for management fees
15 for evict insurance

I do my own landscaping on the property.

Later today I’ll post some details on my recent conversations with Wells Fargo about this stinker.

[sdrealtor]

In a market like Temecula there should be a very good pool of tenants as long as you have a nice newer home. There are lots of well employed folks up there that had to walk away from deeply underwater homes. I know firefighters, teachers, doctors, nurses, policeman, retirees on good pensions and yes Realtors who have done so. With the exception of the realtors they all have great recession proof incomes. What they dont have any more is good enough credit to buy homes so they will be renters for many years to come. If they could buy they would be buying some of the nicest homes up there but they cant. Thats why they dont want paramount’s smallish old house. They want nice newer homes in places like Wolf Creek and Harveston as rentals.

[Author]

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