RMHC 2013 SD Raffle Dream House- The Crosby RSF

[timtoomey]

Hi everyone,

I was wondering your thoughts on the house up for the 2013 SD Raffle. Obviously I would need a hefty bank account to afford the taxes and costs that come with the house if I were offered the option. However, I looked at another house for sale in the Crosby for about the same price (3.2 million) and the MR is over $4000 semi-annually! How long does this usually go on for and would it be a sound investment to pay the high fees if the house were free?

http://www.sdraffle.com

[spdrun]

At $3.2MM wouldn’t property taxes ex Mello Roos and HOA fees be close to $40k/yr? $8000/yr isn’t huge as compared to that.

[timtoomey]

This is the house I am comparing the estimated MR and HOA fees

http://www.northcountyluxuryhomes.com/idx/residential/130005303/details.html

Is this a reasonable comparison? Also, how long does the MR go on for in that neck of the woods?

[earlyretirement]

[quote=timtoomey]This is the house I am comparing the estimated MR and HOA fees

http://www.northcountyluxuryhomes.com/idx/residential/130005303/details.html

Is this a reasonable comparison? Also, how long does the MR go on for in that neck of the woods?[/quote]

Well, just looking at the property tax records it looks like in the Crosby they have these CFD’s below. $7077 per year on the Mello Roos taxes.

You can check out how long they are scheduled here: http://208.179.148.84/tax_charges.aspx

SOLANA BCH CFD2000-1 858-794-7118 1540.50
RSF CSD-CFD#1 760-479-4150 5537.68

I live in the same zipcode 92127 as those houses but I live in Santaluz not The Crosby so my CFD’s are different. One was scheduled to go on until 2030 and the other until 2041 and keep in mind these can get extended.

I opted to prepay off my Mello Roos and glad I did. No one can tell YOU if it’s worth it for you to live in a MR area and pay them. That will be for you to decide. I found them well worth it as I have young kids and the school district is excellent so it’s well worth it to me vs. sending them to private schools. But it may not for you.

Personally, I always thought anyone buying a multimillion dollar house if they have to worry about the CFD taxes they probably can’t truly afford it. In the grand scheme of things they aren’t too much relative to the cost/value of your home.

Does anyone know the APN or address of this McDonald’s House?

[no_such_reality]

Let’s get down to brass tacks.

Take the home, pay the nearly 49.9% (probably about 47% effective) income tax on it, financing the $1.6 million into a mortgage.

Sell it, pay the 5% commission and net something?

Or just take the $1.6M cash and pay probably north of 45% effective income tax, netting close $900K.

Which is better? If you turn to sell that place, will you get anywhere near the $3.2?

[timtoomey]

Great info and commentary. I agree that if you have young kids the schools are great and it would be an investment in their future.

When you prepay the CFD, can you use that to sell for a higher price or is it just to save $$ if you plan to live in the house at length?

[timtoomey]

Well put. Are prices for The Crosby going up soon so you can take the house and sell it when the price increase?

In the contest rules http://www.sdraffle.com/Rules.aspx it states that the $1.6 million is an annuity over 20 years. Cash value is $1.1 million. At the 39.6% tax rate =$664K

[all]

The odds of you winning $1.1MM are 1/51K, assuming all the tickets are sold.

You could take $150 to roulette the next time you go to Vegas and hit two singles + first five. You would end up with the same amount of money if you tip $2,500 and the odds are 1/7350.

[no_such_reality]

Those are payout odds; the odds of hitting two singles and a five are 5 in 54872 or roughly 1 in 10974.

You also won’t be able to make your second bet as it needs to be $5250. The biggest inside bet I’ve seen for table limits is MGM at $1000.

As a high roller, you might be able to get an exception provided you front the bankroll.

[earlyretirement]

[quote=timtoomey]Great info and commentary. I agree that if you have young kids the schools are great and it would be an investment in their future.

When you prepay the CFD, can you use that to sell for a higher price or is it just to save $$ if you plan to live in the house at length?[/quote]

Yes, we purposely decided to buy where we did because we have young kids and the schools are excellent in this area. We weren’t crazy about paying Mello Roos taxes but I felt it was well worth it.

I don’t regret my decision to live where we live for one second and in fact we wake up almost every day so happy we decided to buy where we did. The location is GREAT, the weather is perfect. We avoid the marine layering of nearby Del Mar yet the temperatures are really great and don’t get too hot like once you go further inland. We are literally about 10 minutes from the beach.

I honestly believe that Santaluz is one of the best lifestyle communities in all of Southern California. Nothing like this will ever be duplicated so close to the coast again. We looked at some houses at The Crosby and I MUCH preferred Santaluz.

I didn’t pre-pay the CFD taxes because of any possibility to sell the house more easily in the future. Quite the contrary. I paid them off because we plan to stay in the house for the foreseeable future until my kids are out of high school. They are only 3 and 4 years old now and we probably will have more kids.

And to be honest, even when they graduate, I don’t plan to sell this house. Either we will stay in it for a few years longer after they graduate or I’ll hold it as an investment property and rent it out. I have NO doubt at all we will have NO problem renting it out either on a long-term lease or via a furnished short term luxury rental property. We spent a small fortune furnishing and renovating it and I’m sure any potential renter (long term or short-term) would love it.

Also, important to consider is BOTH of the CFD’s that we had were already refinanced at lower interest rates. With interest rates so low it’s not likely they will be able to refinance even lower. So felt this was a good time to pay it off.

Under those circumstances, completely pre-paying the Mello Roos taxes was just a smart financial decision and a no brainer, IMHO. As mentioned, one of those wasn’t going to be paid off until at least 2041. The other not at least until 2030. Once you pay it off, it ends your CFD obligations forever. Even if they extend the pay off date. From a pure numbers side considering our situation, it was a wise investment of $61,000 to forever rid ourselves of this obligation.

We posted quite a bit about it on this link if you want to read more about it:

http://piggington.com/paying_off_mello_roos

Also, with this Ronald McDonald House CHARITY raffle it’s very important to note that not everyone buys these just because they want to win a house. It’s a great cause and they do wonderful things with the money. Sure, it’s not tax deductible but I’d rather spend a few hundred dollars donating to a good cause vs. putting it on a roulette wheel in Vegas. I think it’s very important to distinguish between the two.

My wife and I donate to several good causes. Many times not even for the tax deduction but because they are good causes and we know great things will be done with the money. The same can’t be said for Vegas.

[all]

[quote=no_such_reality]Those are payout odds; the odds of hitting two singles and a five are 5 in 54872 or roughly 1 in 10974.

You also won’t be able to make your second bet as it needs to be $5250. The biggest inside bet I’ve seen for table limits is MGM at $1000.

As a high roller, you might be able to get an exception provided you front the bankroll.[/quote]

True (for the odds, no idea on the limit, but I believe you). The point I was trying to make is that the odds are not that good for those who enter the raffle.

[Author]

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