Crackhouses, garden sheds and shacks might be amusing, but condo conversions are evil. They are invariably overpriced and threaten to lure naive investors towards financial disaster.
Yesterday, I received an email from ARMMAT, who sent me details of a typical new development in Brentwood California, which is currently on craigslist. Prices range from the mid-400s up to the mid-800s.
The featured apartment is a particularly tasteless and unimaginative conversion. The kitchen has overdosed on granite; there is even some plastered onto the walls. Why have bay windows, when the view is of a wall? The bathroom had some uninspiring wall-to-wall tiling. The ad also goes very heavy on financing options; "We have in house financing and work with first time home buyers. We can get anybody financed."
That last sentence could be an epithet for this bubble. "We can get anybody financed". It doesn't matter the credit history, income levels, or financial IQ of the borrower, there is a financial institution out there ready to write the mortgage check.
ARMMAT took the initiative to send a quick email to the realtor, who goes by the name of Timothy Lo Bello. Here is the exchange, (without edits):
ARMMAT - Regarding your ad for the above property. At $530K and a 6.25% APR, we're looking at around $3270, 30yr fixed loan at best. Plus $552 for p.tax, and another $2-300 for insurance; grand total being around $4-4.1K per month...FOR A CONDO?
The boom is over...adjust the prices...anyone paying that much for a condo where they don't even own the land is an outright idiot. If they fall for such crookery, then they deserve to be stuck in a $4K payment.
Timothy LoBello - I agree. Were 100% sold out. Go and figure? We have 3 new projects on tap and most are pre-sold. enjoy
ARMMAT - Of course you are...I'd be rich for every single time a broker told me that one...Hurry up and buy! You'll miss out!
If in fact it were true, then there are even more idiots out there than I initially thought...I hope they can sustain their mortgages you put them in as their ARMs run out. Perhaps you're fit for American's Overvalued Real Estate Blog....might be worth the exposure.
The realtor says "Go and figure". I have gone and figured, and I reckon that purchasing this condo is financial madness. What I can not understand is why others can't figure it out as well.
Thanks to ARMMAT for the email and the recommendation. Have you had a similar surreal moment with a Realtor recently.