Trojan's return to home ownership in Irvine

[davenlei]

Given today's home home climate would you recommend buying new or get a better deal buying old and cosmetically change everything and still comes out ahead with a good yard, setbacks, front yard and driveway and possibly no HOA or master association?

You know, it really all depends on the buyer and different buyers have difference preferences and must-haves.  I would say that I'm in the minority of buyers out there because I don't mind a remodeling project (from having gone through in the past and having the referrals to handle most everything).  A new home was my plan B option but deep down I was hoping to get a re-sale home with a decent sized lot for a good price.  I'm very fortunate that the short sale worked out as the larger yard and pool/spa were a nice bonus.

the challenge is that while your purchase price is lower than a new house, is it really less when you add in all the costs of repair and remodel?  how much would a las venetas with a decent sized lot cost compared to your total outlay?  obviously you would need to spend money on las venetas as well to upgrade to your liking but my math for many properties has put the difference at less that $50K. 

You need to factor in the prop tax costs over XX years between the lower/higher purchase price as well.......  The remodel will be a one time cost (unless you are a serial remodeller) without the additional tax assessment (usually) where the higher purchase price tax will hit your wallet every year as long as you own the property.

+1  That's also the benefit of buying a bit of a fixer and getting it up to speed.  The good part is that I have no HOA but the sorta bad part is that the cost of the pool/spa basically becomes an monthly HOA fee for me (additional utility and service costs).  That being said, you can't beat the privacy of having your own private pool/spa. 

Why do I get the feeling that USC likes to go skinny dipping....

 

[usctrojancpa]

You guys will get a kick out of this.  The listing agent dropped by the house to see how it looked.  She told me how it looked like a completely different home.  Then she goes on to say...."you know, you should list the home and flip it."  I ask her what she would list it for and she said at least $100k over my purchase price.  I laughed and told her that I didn't buy the home to flip it and make a few bucks, but that I wanted to live in it for a while.

 

[irvinehomeowner]

I give credit to BKShpr back on IHB for educating us on what we should be looking for in a home.  And he was so right.

Except for 3CWGs. He hates those things... but now you know why I love them so.

 

[usctrojancpa]

Given today's home home climate would you recommend buying new or get a better deal buying old and cosmetically change everything and still comes out ahead with a good yard, setbacks, front yard and driveway and possibly no HOA or master association?

You know, it really all depends on the buyer and different buyers have difference preferences and must-haves.  I would say that I'm in the minority of buyers out there because I don't mind a remodeling project (from having gone through in the past and having the referrals to handle most everything).  A new home was my plan B option but deep down I was hoping to get a re-sale home with a decent sized lot for a good price.  I'm very fortunate that the short sale worked out as the larger yard and pool/spa were a nice bonus.

the challenge is that while your purchase price is lower than a new house, is it really less when you add in all the costs of repair and remodel?  how much would a las venetas with a decent sized lot cost compared to your total outlay?  obviously you would need to spend money on las venetas as well to upgrade to your liking but my math for many properties has put the difference at less that $50K. 

You need to factor in the prop tax costs over XX years between the lower/higher purchase price as well.......  The remodel will be a one time cost (unless you are a serial remodeller) without the additional tax assessment (usually) where the higher purchase price tax will hit your wallet every year as long as you own the property.

+1  That's also the benefit of buying a bit of a fixer and getting it up to speed.  The good part is that I have no HOA but the sorta bad part is that the cost of the pool/spa basically becomes an monthly HOA fee for me (additional utility and service costs).  That being said, you can't beat the privacy of having your own private pool/spa. 

Why do I get the feeling that USC likes to go skinny dipping....

More like the pantless backyard option like Pat has over in the 818.  haha

 

[davenlei]

I give credit to BKShpr back on IHB for educating us on what we should be looking for in a home.  And he was so right.

Except for 3CWGs. He hates those things... but now you know why I love them so.

I have to say, going from a 2CWG to a 3CWG was a (home) life changing experience.  I don't think I can go back.  You know what they say, once you go 3CWG....

 

[irvinehomeowner]

agreed but you also have to factor in more repair costs in an older home.  my inlaws house is 20 years old now and things are starting to show wear...its hard to model all these but i think a house thats 5 years old or less will have less annual repair costs than a house closer to 20 years. 

While this is probably true... it also depends on the types of repairs and whether or not you use a home warranty plan.

It's hard to believe but those nicer 3CWG homes in Westpark II will be approaching 20 years soon and I don't think you can say that repair work on those homes are going to be significantly higher than homes built now or in the last 5 years.

 

[socal78]

I saw the before and after and all of the work done to the house was very good and the material he selected all look very good.  With that said, the best improvement to the house was the automatic lazy boy recliner 

As long as we're bragging, I was kindly invited to see the house, too. That was before remodeling began. So, I stick my tongue out to all of you.  I didn't have a chance to stop by at that time but I might like to see it eventually. *Creepy voice* Martin, I know where you liiive.*

 

[zubs]

Say you bought your house for $600,000 and you put in another $150,000 remodeling it.  The property taxes is $600,000.  The city won't know that you put $150,000 more into it right?  So you can still pay taxes at the $600,000 rate.

I was thinking of this because if you buy an "as is" house and put a lot of money into it, your tax rate should be lower than if you bought a fully remodeled house because now you are paying taxes on the remodeled part too.  Is this correct?

example 1:
$600,000 house + $150,000 remodel = $750,000 house
prop taxes still $600,000

example 2:
$750,000 house + $0 remodel = $750,000 house
prop taxes now $750,000

 

[usctrojancpa]

Say you bought your house for $600,000 and you put in another $150,000 remodeling it.  The property taxes is $600,000.  The city won't know that you put $150,000 more into it right?  So you can still pay taxes at the $600,000 rate.

I was thinking of this because if you buy an "as is" house and put a lot of money into it, your tax rate should be lower than if you bought a fully remodeled house because now you are paying taxes on the remodeled part too.  Is this correct?

example 1:
$600,000 house + $150,000 remodel = $750,000 house
prop taxes still $600,000

example 2:
$750,000 house + $0 remodel = $750,000 house
prop taxes now $750,000

That is correct, except if you start pulling permits from the city then you might be subject to a re-assessment.

 

[davenlei]

Say you bought your house for $600,000 and you put in another $150,000 remodeling it.  The property taxes is $600,000.  The city won't know that you put $150,000 more into it right?  So you can still pay taxes at the $600,000 rate.

I was thinking of this because if you buy an "as is" house and put a lot of money into it, your tax rate should be lower than if you bought a fully remodeled house because now you are paying taxes on the remodeled part too.  Is this correct?

example 1:
$600,000 house + $150,000 remodel = $750,000 house
prop taxes still $600,000

example 2:
$750,000 house + $0 remodel = $750,000 house
prop taxes now $750,000

That is correct, except if you start pulling permits from the city then you might be subject to a re-assessment.

I also believe IUSD charges percentage one time fees on the homeowner if you add sq. ft. to the house.  I kinda recall that being said to me when I was thinking about adding a loft to my house when I lived in Irvine.

 

[usctrojancpa]

Say you bought your house for $600,000 and you put in another $150,000 remodeling it.  The property taxes is $600,000.  The city won't know that you put $150,000 more into it right?  So you can still pay taxes at the $600,000 rate.

I was thinking of this because if you buy an "as is" house and put a lot of money into it, your tax rate should be lower than if you bought a fully remodeled house because now you are paying taxes on the remodeled part too.  Is this correct?

example 1:
$600,000 house + $150,000 remodel = $750,000 house
prop taxes still $600,000

example 2:
$750,000 house + $0 remodel = $750,000 house
prop taxes now $750,000

That is correct, except if you start pulling permits from the city then you might be subject to a re-assessment.

I also believe IUSD charges percentage one time fees on the homeowner if you add sq. ft. to the house.  I kinda recall that being said to me when I was thinking about adding a loft to my house when I lived in Irvine.

The city and county have no real way of finding out if you've done cosemtic upgrades to a home (flooring, paint, tiles, kitchen cabinets/countertops, etc).  The value difference between the worst home on the block and the best home can be 15-20%. 

 

[zubs]

This just goes to show that buyers should not be buying remodeled houses, because they would end up paying property taxes on the remodel.  I have seen flippers buy $555,000 house and are now selling it for $920,000.  That $360,000 plus remodeling difference is about $3,800 per year in extra prop taxes. 

 

[socal78]

Say you bought your house for $600,000 and you put in another $150,000 remodeling it.  The property taxes is $600,000.  The city won't know that you put $150,000 more into it right?  So you can still pay taxes at the $600,000 rate.

I was thinking of this because if you buy an "as is" house and put a lot of money into it, your tax rate should be lower than if you bought a fully remodeled house because now you are paying taxes on the remodeled part too.  Is this correct?

example 1:
$600,000 house + $150,000 remodel = $750,000 house
prop taxes still $600,000

example 2:
$750,000 house + $0 remodel = $750,000 house
prop taxes now $750,000

That is correct, except if you start pulling permits from the city then you might be subject to a re-assessment.

See page 2 of this link for a guide of what is and isn't taxable.
Property Tax Tips For New Owners ~ Courtesy of The Orange County Assessor's Office

Well, there are some benefits to buying a new construction or remodeled home. At least you get to roll those costs into your loan rather than fronting the cash or arranging other financing at a much higher interest rate!

 

[tracy]

Congratulation on your new home purchase.
Short sale and remodeling took a lot of time and effort.
Enjoy your new house.

 

[The Motor Court Company]

Exactly. if buying from flippers you are paying
1. raw material cost and labor cost; materials are usually low in cost/durability but good in appearance
2. sales tax on the raw materials
3. hefty profit margin for their "hard" work
4. extra property tax every year

FCBs or FOB Asians are not very comfortable with DIY or hiring contractors to do home improvements, so they are being taken advantage by new home builders or flippers

This just goes to show that buyers should not be buying remodeled houses, because they would end up paying property taxes on the remodel.  I have seen flippers buy $555,000 house and are now selling it for $920,000.  That $360,000 plus remodeling difference is about $3,800 per year in extra prop taxes.

 

[usctrojancpa]

I saw the before and after and all of the work done to the house was very good and the material he selected all look very good.  With that said, the best improvement to the house was the automatic lazy boy recliner 

As long as we're bragging, I was kindly invited to see the house, too. That was before remodeling began. So, I stick my tongue out to all of you.  I didn't have a chance to stop by at that time but I might like to see it eventually. *Creepy voice* Martin, I know where you liiive.*

I'm not scared! 

 

[freedomcm]

Late to the party, but wanted to add my congratulations too!

Looking forward to the reveal (if I didn't miss it in scanning the thread)

 

[IndieDev]

USC doesn't have to get my approval. I think he got an ok deal. Now when is the house warming party?

 

[irvinehomeshopper]

That group should include Slumdog Indians. This group of buyers buys a brand new homes but then decorate the interior with crappy Big Lots, Marshall, Ross, And Home Goods furniture. I have been inside of many homes and all of them looked like Trojans home before he bought it.

Exactly. if buying from flippers you are paying
1. raw material cost and labor cost; materials are usually low in cost/durability but good in appearance
2. sales tax on the raw materials
3. hefty profit margin for their "hard" work
4. extra property tax every year

FCBs or FOB Asians are not very comfortable with DIY or hiring contractors to do home improvements, so they are being taken advantage by new home builders or flippers

This just goes to show that buyers should not be buying remodeled houses, because they would end up paying property taxes on the remodel.  I have seen flippers buy $555,000 house and are now selling it for $920,000.  That $360,000 plus remodeling difference is about $3,800 per year in extra prop taxes.

 

[rkp]

you are feeling extra nice today arent you