February 23, 2011

Get a home Renovation Loan on this great opportunity

imageLet’s welcome Burbed reader sonarrat to the front page again with another amazing find.  This submission came about after sending in a few listings for us to write up, and one went into particular detail. So here it is for all of you to enjoy, even though it is (amazingly) pending (but with release, so there’s still a chance!).

All Burbed fans are invited to submit listings for us to put together, or write it up yourself if you feel inspired.  Send them to burbed or madhaus at this site (your choice, because you deserve one!)  We reserve the right to edit your submission into something your own mother wouldn’t recognize while leaving your name on it.


Great for a first time home buyer. A Huge lot to build more home or get a home Renovation Loan on this great opportunity.

3370 Kettmann Rd, San Jose, CA 95121
$330,000

image

BEDS: 2
BATHS: 1
SQ. FT.: 1,182
$/SQ. FT.: $279
LOT SIZE: 0.25 Acres
PROPERTY TYPE: Detached Single Family
STORIES: 1
VIEW: Neighborhood
YEAR BUILT: 1948
COMMUNITY: Evergreen
COUNTY: Santa Clara
MLS#: 81037698
SOURCE: MLSListings
STATUS: Pending With Release
ON REDFIN: 191 days

Great for a first time home buyer. A Huge lot to build more home or get a home Renovation Loan on this great opportunity.

imageSo, I took a pretty long look at this place. Big lot, not on a busy road, walk your kids to the library, blah blah blah. Seemed like at the very least, a decent investment, seeing how it was the least expensive house in Evergreen and it had tenants living in it until fairly recently. Let’s just say the house comes with a couple caveats.

There is nowhere to put laundry facilities. No gas hookup and no 220V electric in the “laundry” area, which consisted entirely of a big washbasin in a moldy and rotting addition to the rear of the house.

imageOriginal 1948 kitchen with a very dirty green and yellow lino floor against red and yellow tiles, then white cabinets and a counter insert on the left in the fakest granite-look finish you can imagine. One of the worst color combinations I’ve ever seen.

The bedrooms are both on the left corner of the house and couldn’t be more than 10×10 each. No offensive colors there, just newer beige carpet and windows with bullet holes in them. From the inside.

One working furnace out of two.

Bathroom is extremely pink. New vanity and curtain rod installed in an improvisatory fashion.

image

There was so much termite damage in the attached “den” area that I was left with no doubt the whole kit and caboodle would need to be razed, and that I was happy to continue renting.

Comments (34) -- Posted by: madhaus @ 5:10 am

34 Responses to “Get a home Renovation Loan on this great opportunity”

  1. anon Says:

    Bullet holes, rot, mold, and termites, oh my!

    Perfect for the typical silicon valley DENKS (dual engineer no kids) with $110,000 in yearly income.

  2. nomadic Says:

    DENKs making $110k jointly? Now you’re in fantasy land.

  3. madhaus Says:

    Pride of pwn3rship, sonarrat! And if you had bought this place, you would definitely have dealt with pwn3ge.

  4. anon Says:

    “DENKs making $110k jointly? Now you’re in fantasy land.”

    Think that’s high? I don’t. What I do think is that a household making 110k a year isn’t going to want to touch this shitbox with a ten foot pole.

  5. nomadic Says:

    High? LOL. No, I don’t think it’s high for a two-income couple with engineering degrees in the Bay Area. I do agree that this ain’t “where professionals would want to live.” To be fair to sonar, I don’t know the specific area. It’s probably a lot safer than EPA (which is what the house pic reminds me of).

  6. SEA Says:

    Where did anon suggest dual income?

  7. madhaus Says:

    #6, meet #1.

    I think it’s an allusion to DINKs, Dual Income NoKids. DENKs are merely well-paid but socially awkward DINKs.

    As to the substance of #1, I’m still wondering why our resident curmudgeon went all Karl Marx on our collective butts in the other thread. I would have expected that from Mr. Patchouli Sandals.

    Also I believe this house fails the POS test as well.

  8. SEA Says:

    I took it slightly differently: dual engineer, but no longer dual income, with at least one who is displaced by the current state of the economy.

  9. nomadic Says:

    SEA, if that were the case, we’d have to revoke their “engineer” title and rename the disaffected party “deadwoods” until such time he/she began contributing to society once more.

    (snicker)

  10. The Gilroy Alex Says:

    God, that’s dreary.

    Given, I live in a wreck of a trailer in gilroy. I have a fine corrugated steel roof tied down with ROPES, there’s more animal droppings in my life than yours by a factor of oh, I dunno, a million or so, and while we’re discussing droppings, mine go in a bucket (humanure) and my golden juice ‘o’ goodness goes into a jug, and eventually thence to the garden. I’m living a 2nd world life is not third world and yet my life is pretty damn good.

    I think if I lived in this POS though, I’d shoot myself. There’s something about this house that makes you just want to give up on living.

  11. anon Says:

    Sometimes I don’t read the main post posts very carefully.. I just make a snide comment on the house and move on but this house is a great example thanks the the fact that sonar’s checked it out.

    This is what I mean by:

    Perfect for [a/the] with (asking price / 3 ) in yearly income.

    With a wishing price of 330k, the costs are:
    $66k down
    5% mortgage rate
    %264.2k 30 year LOAN

    Which would really be about 88k required income.

    The monthly costs would be:
    $1,418 mortgage
    $275 1% of house “value” for maintenance
    $275 minimum property tax (jarvis gann) + bonded indebtedness (whatever the case may be)
    $120 Homeowners Insurance
    $1100 Interest on the note
    -
    $3,188 a month

    Never mind the costs of furnishing, move in, closing, blood to the bankers (POINTS), and necessity of having an emergency cash reserve.

    What would this rent for? $1200? $1500?

    So where would this leave a buyer? Well, it would leave them tying up 66k + furnishing, move-in, closing, blood to the bankers (POINTS) and an emergency cash reserve (AT AN ABSOLUTE MINIMUM) for the privilege of paying double the cost to rent.

    Where I come from that’s called a “bum deal.”

    Remember, those costs are the minimum acquisition costs.

    The issues sonar pointed out would obviously cost money to remedy. These are clearly all wild guesses but…

    $1.5? to wire up 220 into the laundry
    $5k? to remove the mold in the laundry area?
    $10k? to replace or remove furnace (why would a house an 1100 sqft house have 2 furnaces?)
    $10k? redo the kitchen
    $2k? remove pink from bathroom?
    $20 bucks (lol) fix “vanity and curtain rod installed in an improvisatory fashion”
    $15k to tent the thing for termites (which, at best would leave you in a position where your house is made of rotted weak termite eaten-wood.

    That’s another 50k to… still.. be… living… here.

    Sonar, did you actually look into the costs of making the place habitable? If you did, I’d be curious to know what your numbers looked like… Perhaps I’m completely off.

  12. sonarrat Says:

    Anon, the place is a teardown. Which begs the question, why did anyone pay $575,000 for it? But apparently, it was listed at $625,000!

    http://www.southsanjose.com/realtydetail.php?Status=3&Region=3&SubRegion=332

    Can you BELIEVE that?

  13. sonarrat Says:

    No wait – $649,000!

  14. anon Says:

    Why? Well, I would imagine it is because they thought it was their turn to juice the property for 10% appreciation a year plus rental income.

  15. nomadic Says:

    anon, most of your numbers are high, but not as high as the appraiser who allowed the dumbasses to get a loan for $575k to buy the place during the bubble years. Even if you’re off by a factor of 2 or 3, your rationale still holds.

  16. madhaus Says:

    #11, you have a $1418 mortgage and an *additional* $1100 for interest? Isn’t the interest built into the mortgage payment already?

    Let’s figure the bonded indebtedness takes the property tax from 1% up to around 1.3%. I don’t live in San Jose so I don’t know if comparing to my property tax bill is valid.

    1418 mortgage
    275 light bulbs and Drano
    375 property tax
    80 insurance (I think 120 is high given I don’t pay that much for my shack, I’d say mine is 100)
    50 protection money to neighborhood toughs
    150 utilities (if you’re a homeowner, you pay them, no question)

    1930 total monthly payment

    Not twice rent, but defintely a lot more than rent. Way more than the purported tax deduction for the mortgage interest or property tax. In fact, the family with the $88K income may not even itemize, which means they won’t get to deduct either.

    As to fixing the house, I think your furnace number is too high. I replaced a furnace a few years ago and it cost around $4,000. It shouldn’t cost $10,000 unless you have to completely reduct the house.

    Removing pink from bathroom… I had both bathrooms retiled but I am blanking on what that cost, it was longer ago than the furnace, so it’s not as useful a number anyway.

    You’re right, the biggest problem is going to be the sheer amount of rotted wood throughout the house once the termites are dead. Still, the repairs are cheaper than scraping this place to the ground and starting over. That would cost around 200 a foot.

  17. sonarrat Says:

    Yeah, but if you did all that, would the house be worth anything to you? It did have one nice feature: concrete walls. It’s as close as you’ll get to an adobe outside Santa Fe.

  18. madhaus Says:

    My math sucks. My monthly total should have been 2348.

  19. The Gilroy Alex Says:

    “Removing pink from bathroom” LOL.

    Like in the original Cat In The Hat book where the crazy cat takes a bath in the tub, and leaves a pink “cat ring” in the tub, and it takes VOOM! to get it out.

  20. anon Says:

    “you have a $1418 mortgage and an *additional* $1100 for interest? Isn’t the interest built into the mortgage payment already? ”

    No? Your payments merely service the debt. The outstanding debt accrues interest. Obviously it’s not a static number. As you pay the principal off, this number would go down.

    Yes, it is still “built in” to your payment – that is why you end up paying much more back than you originally borrow. In the example above, you would pay back $510,578 when you borrowed $246,378. Over 30 years you will pay $264,200 in interest.

    Another way too look at it is to divide the interest paid – $264,200 by the number of months – 360. Interest cost per month calculated that way is $733 a month.

    Maybe I’m high. I try to be realistic. And I still can’t figure out why this place needs two furnaces.

  21. anon Says:

    Oh – what am I thinking? In #11 I calculated the interest for the first month. In #20 I calculated the average interest charge per month over the 30 years.

  22. madhaus Says:

    #20, I never heard of calling out additional interest in computing monthly costs when you already have a monthly loan payment. Of course borrowing money costs more than what you borrow, that’s how the banks get more blood, heh heh.

    But look, this loan you drew up, $264,200 30 year loan at 5%, here is the very first payment:

    1 $1,418.28 $317.45 $1,100.83 $263,882.55

    Is that where you got the $1100? From the interest payment the first month? You already paid it out of pocket, as the $1418.28 mortgage payment.

    Here’s how you should account for that interest hit:

    Cash: – 1418
    Home equity: +317
    Interest paid: +1100

    So basically, you have thrown that $1100 out the window and should have bought a plasma-screen TV. But you’re moving from the out-of-pocket expense list over to the balance sheet, which is a different kettle of wax.

  23. madhaus Says:

    Maybe I’m high. I try to be realistic. And I still can’t figure out why this place needs two furnaces.

    One is for burning all the money you spave by being a homeownerdebtor.

  24. anon Says:

    lol…

    re #22, You are right. Thanks for catching that.

  25. anon Says:

    “Is that where you got the $1100? From the interest payment the first month? You already paid it out of pocket, as the $1418.28 mortgage payment.”

    No.. I derived it by hand and figured that it was an exponentially decreasing summation and just used the initial value as an estimate because it will stay high for a while and decrease more quickly as time progresses.

  26. madhaus Says:

    #25: You derived that number by hand? Don’t tell me. You built your entire internet connection by hand, too. There’s a router in your Section 8 rental translating bits and bytes into bubbles in a malt liquor. And back. It must make it very difficult to stay current on burbed when you keep drinking your IP server.

  27. SEA Says:

    anon- Instead of “$1100 Interest on the note” you should have simply included “$1100 Loss on sale.” You know, pay an extra $1,100 per month to help ensure that you won’t be underwater when you go to sell, especially on this very non-RBA place.

  28. nomadic Says:

    Just a note on adobe construction around here (#17). There are quite a few adobe abodes (heh) down in Almaden Valley. The historic houses built by the miners in the mid-19th century have walls more than a foot thick.

  29. sonarrat Says:

    Oh, I actually forgot the best part. See that garage at the end of the driveway? It has no back wall and the roof is caved in. It’s nothing but a husk.

  30. madhaus Says:

    #29, talk about burying the lede!

  31. Richard Wicks Says:

    If you think that is bad:

    http://www.redfin.com/CA/Santa-Clara/1350-Benton-St-95050/home/1200243

    The roof is caved in.

    I’m just kind of disgusted with Silicon Valley. Hmm, I’ve enough money to buy an average quality house that’s about 1/3rd the size of the house I grew up in, OR I can buy a 16-32 unit apartment complex back where I grew up and more or less retire…

    Hmmmm. What should I do?

    The only thing keeping me here, is I like engineering – but I only like it, I’m not going to pay $800,000 for the honor of continuing to be one.

  32. nomadic Says:

    But Richard, it takes money to make money!

    And the bay area is special.
    ;-)

  33. madhaus Says:

    #31, that house was featured on Burbed in our Black Friday sale, as the cheapest house in Santa Clara.

    Looks like it’s be delisted and relisted a number of times since April ’09. Our favorite troll said this was rock-bottom pricing. Obviously it isn’t, because it hasn’t sold in 22 months.

  34. sonarrat Says:

    Sold for $321,000.


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