How is the market in Temecula/Murrieta?

[scaredyclassic]

We rented 1500 sq ft for 5 years before buying w three kids and it was totally fine. In fact I think it was better than the double that place we live in. We were all so close then. I liked it. The kitchen was a little small tho just one chef at a time

[sdrealtor]

Yes but there is only one of you in this world:)

[scaredyclassic]

i feel the same about our outdoor table. for a few years we were eating almost every meal outside around a small table. it was wildly fun and tight with lots of candles. I bought a much bigger teak table and I feel we are seated too far from one another. it doesn’t have the same laughing energy, we need a tight crowded table for maximum hilarity. although it kind of drove my wife nuts.

[bearishgurl]

[quote=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.[/quote]

TG, I just saw your lengthy posting about the large tract sales in 2009 and recent sales of model matches in Morgan Hill. I have a couple of observations.

1. Tenants who are seeking a 1500 sf rental home (such as paramount’s) are a completely different lot than tenants who are seeking a 3100 sf rental home.

2. I can’t tell from your old $330K sold comps because of no pics, but your recent sold comp for $370K that DID have pics shows custom paint & windowcoverings, crown moulding (not sure if that was there orig), stamped back patio, travertine MBR floor, wrought iron room divider and what appears to be a separate gazebo in the BY. And this is only what I could surmise from the pics.

We also don’t know if the 2009 sales were distress sales and if they were dirty and/or stripped with kicked in doors and holes in the walls, for example.

Not only did these (VERY underwater) sellers of the $370K recent sale put their own (or HELOC’d) cash into the property ($25-$30K over the years?) but they ended up short-selling the property for $228K less than they paid in 2006.

TG, how much would one of these 3100 sf models rent for today (if in decent condition) and if purchased today at $370K, would the buyer have a positive cash flow every month? More importantly, do you think there are enough potential tenants seeking rentals in TV who are qualified to rent such a property?

I don’t know but I would think it would be much easier to rent paramount’s (1500 sf) house than a 3100 sf home. It seems like folks who would be able to rent a 3100 sf home would be able to buy it, unless of course, lots of former underwater SD County home-debtors who still have good jobs but lost their properties to foreclosure/SS in recent years are truly flocking to Temecula to rent, as sdr is indicating.

edit: paramount’s Redfin graph for Temecula looks as though values there have remained relatively flat since spring of ’09. Good for TG to have recently gotten out of his PMI! Perhaps his new (larger) appraisal was due to what HE did to his property since he purchased it rather than overall values there actually rising. That was the point I was trying to make here.

[henrysd]

I own rental in Temecula and it was somehow difficult experience to find quality tenants there.

I know one guy who owns 7 homes in Temecula and he went through 2 evictions over last 2 years. One eviction was particularly tough and cost him $20K in lost rent, legal fee and clean-up cost to the property. A few months ago he had another tenant could perform 2 months into lease term and he felt fortunate that the tenant agreed to leave by themselves when they couldn’t pay rent. This owner is a professional real estate developer/investor. He also has a realtor to list and screen tenants.

In Temecula my definition of good quality tenants:
>700 credit score and >$80K annual income.

In San Diego the definition is > 700 credit score and > $100K in annual income or even higher depending on the rental neighborhood. Generally the tenant pool can easily satisfy the requirement in San Diego.

[as]

Thanks for you inputs, Henry.

The more you have, the more headaches you have. Not a surprise to see that guy has to go through since he has 7 homes.

What do you think about the rent price there? How much can a 1500sqt condo or SFH rent for?

[Coronita]

[quote=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.[/quote]

What’s your equity loss right now if you don’t mind me asking? And how much is rent going for?

[Ren]

[quote=as]What do you think about the rent price there? How much can a 1500sqt condo or SFH rent for?[/quote]

Somewhere around $1,400-$1,500, maybe $1,600 for a small house. Check Craigslist for the going rates. My 2,100sf 4-bedroom house will go for around $1,800 or a little more (backs to private park, which sold us, and will sell prospective tenants).

Tenant problems can be kept to a minimum by getting the best quality tenants, who can be picky, which means your property has to be the best deal/most appealing in the area.

[temeculaguy]

thanks henry, now I understand. My definition of a good tennant is different from yours, I have lower standards and our rentals are small or cheap. It would be harder to find people with over 700 fico and 80k income because they often just buy their own place.

paramount, I know you didn’t cherry pick the data, I just think you are overly pessimistic, but I’m overly optimistic so the reality is probably somewhere in the middle. I do not think your rental is a “stinker.” It’s not ideal, but it’s not terrible. That is how it often is, you lose a little money each month for a few years in the beginning. Even if values were to rise, rents don’t usually rise with values, so this will not get better quickly. But in my experience, I regret letting two houses go in the past that were very similar to your situation. I would have lost $200 a month for a few years on one of them and then broke even for a few years and then made a few hundred for a few years and it would get better and better. Had I kept it, right now the rent would be double what the payment was, I would only have 9 years left on the loan and I figure I would owe less on it than most people pay for their cars. In 1991 I paid 130k for that house, the value has ranged between 90k and 400k in those 21 years, it’s probably worth 180-200k now. It would have been a lot of work, there would be years of losing money, but that’s what rentals are about, they are an “investment.” But only you can decide if you can stomach a few years of losses. In the scenario I just gave, over the first four years I would have lost about 10k. By about year 10, I would have gotten that back. But right now I would be making 10k every year off the thing, I would owe less than 50k on a rental that rented for 1500, I would have 150k in equity. If I followed my dad’s theory, once it starts turning a profit, I’d put those profits into improvements and paying down the loan, in all liklihood it would be paid off by now and the real fun would begin. I think he has 2 or 3 with no mortgage, but it takes 20 years. In 20 years there are a lot of things that break, there will be bad tennants and there will be lots of carpeting. They are retired and older so they turned those rentals over to a management company, now they just get checks in the mail, but it’s a long road to get to that place.

The other house I regret not keeping was purchased in 1998, the bottom of the previous cycle, so that one would have been a winner from day one. That just would have been lucky, you don’t always get lucky. It is a rental right now, but I don’t get any money, my ex-wife does. If you ask her I’ll bet she’s real happy about it.

BG, unfortunately redfin usually drops the pictures once they’ve been sold for a while but almost all of the houses in this tract look like that inside, they were built during the era of excess. I agree paramounts house is easier to rent, I do not think the larger and nicer ones are good rentals, they do not pencil out as well. They rent for about 2000 to 2500 but there aren’t many for rent and there arent many renters in that price range that wouldnt just buy since it’s actually cheaper to buy. But to address your question of my value having risen, it is true mine was thrashed, I did fix it and improve it. I did the work myself, but if I paid someone else I’d guess 20-30k. I probably spent hundreds of hours and maybe 10k or so, hard to tell, I did it one thing at a time. But that’s not what prompted getting rid of my PMI. My longtime friend/college roommate who is in the mortgage biz and lives locally told me that he had done loans recently in my neighborhood and he said my house was up between 80 and 100k. That I should refi out of my fha and dump the pmi and get a rate of about 1% less. I told him he was nuts, he said his computer program is slightly better than zillow and it confirms it. I was afraid of risking the 3 or 4 hundred dollars on the appraisal if he was wrong. But I’ve trusted him for 25 years and he ended up being right, the appraisal came back showing I was up 90k or thereabouts. It is true I have made some improvements, nothing near 90k, but even if you take that out, it’s still makes me think the market is not dropping. At the very worst it’s flat.

[TemekuT]

Just a couple of corrections:

[quote=bearishgurl]

Not only did these (VERY underwater) sellers of the $370K recent sale put their own (or HELOC’d) cash into the property ($25-$30K over the years?) but they ended up short-selling the property for $228K less than they paid in 2006.

[/quote]

1. This was not a short sale. Nowhere in the listing detail is there any reference to a short sale.

2. Another model match REO, 44968 Silver Rose, closed 12/09/2011 at $292,000. Property was a rental and although in need of carpet, paint, and rear yard landscaping, was not trashed nor were the appliances missing. This was an arm’s length transaction.

Sorry to skew your statistics TG!

[as]

Thanks, Ren.
I searched in Murrieta area and found some condos. Price range is from 100k–170k. a 1550sqt bank owned condo is for 135k, but you have to change the whole carpet and paint the whole wall, which may cost another $4000-5000. do you guys think this is a good buy? HOA is over 200. It is pretty close to I15.
If I pay cash, can I offer 5% lower than the asking price?

[paramount]

[quote=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.[/quote]

The paragraph above illustrates perfectly the pandemic disease of materialism that exists in southern California.

A nice newer home? What is a newer home? If a home is 10 years old, should it be torn down and replaced with a new home? Are homes like cars now, after 5 years/100k time to get rid of it? This mentality makes no sense to me. Older homes often have better locations; perfect examples of this are Wolf Creek and particularly Harveston (both newer homes/communities in less desirable locations).

And these so-called well employed people are the primary reason I’m so underwater, not to mention the considerable damage they’ve done to the economy.

They should never be allowed to own a house again, but we all know it’s just about as easy to get a mortgage now as it was 7 years ago. They win, I lose. Well not quite, because I have no intention of letting those fools take me down with them.

What these so-called well employed fools need is a reality check. But they feel entitled to a McMansion.

Yah, I want a house in Morgan Hill looking down on the proletariat – but of course I live within my means so I don’t.

Pea Brains (these ‘well employed’ people).

Did I just say that out loud?

[temeculaguy]

paramount, you are already taking advantage of the pea brains. You are probably living in their house, renting them your old house and driving their car that they leased. All things they just had to have new and couldn’t afford. We need these people, now we need to figure out what they are going to do next, then figure out how to get that too. I’m particularly fond of the wives they couldnt afford any more.

[paramount]

[quote=temeculaguy]paramount, you are already taking advantage of the pea brains. You are probably living in their house, renting them your old house and driving their car that they leased. All things they just had to have new and couldn’t afford. We need these people, now we need to figure out what they are going to do next, then figure out how to get that too. I’m particularly fond of the wives they couldnt afford any more.[/quote]

TG your a genius and so damn right! LMAO!!

BTW, the one thing that’s keeping me sane is something you said a few months ago: Today’s neutral cash flows are tomorrows cash cows…

[bearishgurl]

[quote=temeculaguy]paramount, you are already taking advantage of the pea brains. You are probably living in their house, renting them your old house and driving their car that they leased. All things they just had to have new and couldn’t afford. We need these people, now we need to figure out what they are going to do next, then figure out how to get that too. I’m particularly fond of the wives they couldnt afford any more.[/quote]

Luv it, TG. So true … :=D Except I don’t believe we really still need “these people.”

These discarded “wives” you speak of (no doubt in favor of “big boy toys” and younger models, etc), I’m sure are “fun” to have around. After all, they’ve likely lived lives you haven’t become “accustomed to” yet and KNOW how to party!!

As far as what “these people” (aka pea brains) are going to do next . . . they’re going to go find a rental with a landlord desperate enough to accept their 590 FICO score. It may not be the custom-decorated mcmansion they’ve become “accustomed to.” OR, they can move in mom and/or dad’s back bedroom (if they’re still alive, cooperative and still own the family homestead). OR, if locally unemployed, “these people” will pack their free-and-clear luxury SUVS and a U-Haul filled to the gills for middle America, where a nice used mobile home awaits them in a park with a space rent of less than $200 mo, IMHO.

The above is what “these people” in coastal CA did when they were foreclosed upon PRIOR to the “millenium boom” (commencing 2004 forward). Why should this time be any different??

[Author]

Posts