WHO'S AFRAID OF THE BIG BAD MELLO?

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akim997

New member
You talk about Irvine RE, and you automatically hear "no way, mello-roos.. ridiculous..."  but I think people really have a misconception.  I hear people talk about 1.8% this and 2.0% that... and these are people who have closed minds and who don't know what they are really talking about.  Yes, the new homes as part of the NHC have their assessments and some of them are quite high ($6-8k per year depending upon apportionment).  However, people don't realize that the mello assessment varies substanitally based on the CFD.  People need to understand for a house built in let's say 2001, the 1.7% then is not going to be 1.7% today.  Let's take this place for example... http://www.redfin.com/CA/Irvine/106-Spring-Vly-92602/home/5812694  a quick look at the taxeshttp://tax.ocgov.com/tcweb/search_page.asp
and you can see the mello is a bit north of $3,000 per year for this home.  So on an 800K house you are talking .4%.  So you are at 1.4+.... not 1.8-2.0%.  You also had someone else pay 10 years of the payments so you have a shorter time frame too.  Drive through Northpark (if you get past the gate)...  it's a nice place with great amenities...  and in my opinion probably worth paying for.    You go to Northwood Pointe, some of the Mello is even cheaper.  Bottom line is, do your homework first, and you might find out that some newer places in Irvine are not as crazy as you think.  This doesn't even account for the fact that the bonds can be refinanced as well. 
 
Well some areas of woodbury and PS have 2 melaroos.

Are you saying the Melaroos goes down every year? I didn't think so. And this whole 1.6-2.0% is true for right now. You may need to wait 30 or more years before the bonds get paid off and in some cases the bond is more than the melaroos.... So, i'm not sure what your point is with the 2001 cost to now. Cost will probably be similar unless you wait 30 or more years.
 
What akim is saying that MRs in newer (not brand new) are lower percentage wise than when they were first sold (because prices have gone up) and that MRs are actually fixed rather than something that is an actual percentage.

Like when Westpark II was first selling, factoring the MRs was about 1.6-1.8%, now it's more like 1.2-1.3%. So buying in a newer area isn't as bad MR-wise.
 
Tell them to go look at an area without mello roos and ask where they rather live.  Good, cheap, safe.  Pick two.

 
Just don't buy in a retarded area like you know where.  25,000 homes and only 1 shopping center?  What kind of "master plan" is that?  I know, they're going to build another shopping center south of Trabuco, but then to get there you'll have to take the dreaded Sand Canyon.
 
akim997 said:
You talk about Irvine RE, and you automatically hear "no way, mello-roos.. ridiculous..."  but I think people really have a misconception.  I hear people talk about 1.8% this and 2.0% that... and these are people who have closed minds and who don't know what they are really talking about.  Yes, the new homes as part of the NHC have their assessments and some of them are quite high ($6-8k per year depending upon apportionment).  However, people don't realize that the mello assessment varies substanitally based on the CFD.  People need to understand for a house built in let's say 2001, the 1.7% then is not going to be 1.7% today.  Let's take this place for example... http://www.redfin.com/CA/Irvine/106-Spring-Vly-92602/home/5812694  a quick look at the taxeshttp://tax.ocgov.com/tcweb/search_page.asp
and you can see the mello is a bit north of $3,000 per year for this home.  So on an 800K house you are talking .4%.  So you are at 1.4+.... not 1.8-2.0%.  You also had someone else pay 10 years of the payments so you have a shorter time frame too.  Drive through Northpark (if you get past the gate)...  it's a nice place with great amenities...  and in my opinion probably worth paying for.    You go to Northwood Pointe, some of the Mello is even cheaper.  Bottom line is, do your homework first, and you might find out that some newer places in Irvine are not as crazy as you think.  This doesn't even account for the fact that the bonds can be refinanced as well. 
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Haiku - if you are out there feel free to respond to akims comment. Im not sure what his point is, you seem to understand him well and maybe can clarify what he means :-)
 
irvinehomeowner said:
What akim is saying that MRs in newer (not brand new) are lower percentage wise than when they were first sold (because prices have gone up) and that MRs are actually fixed rather than something that is an actual percentage.

Like when Westpark II was first selling, factoring the MRs was about 1.6-1.8%, now it's more like 1.2-1.3%. So buying in a newer area isn't as bad MR-wise.
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That's exactly what I am saying.  If you look at some SFR's in Northpark Square (conceived as less desireable than NP), the Mellos is very reasonable at $2K per year.  It works out to 1.25% for the specific house in question.  With HOAs at $74, I think it is reasonable in comparison to other areas. 
 
Plus at some point in time the MR is paid off, making your high tax area a low tax one. My humble abode is in RSM, once a very high MR area. Some bonds are beginning to close out which is of great relief to the home owners in that area.

My .02c

SGIP
 
I have to agree with akim that the perception of melloroos and the reality of it are different.  I know some friends who avoid it vehemently while they happily sign up for high HOAs.  Frankly, I dont care what its called, its just another factor to consider and model when comparing properties.  My challenge is the lack of transparency and information.  You have to call the phone number and see how many years are left and even then, each CFD is different.  Some can be extended, some can be paid early, and some go up every year!  VoC INCREASEs yearly by 2% - not pegged with inflation or anything - automatically increase 2% every year.  All this is very confusing when you just want to get a number to plug into your pricing models.

What I would love to see is redfin or similar site break down exactly how much is left and what your options are for paying it.  Any one create their own analysis of all the CFDs in irvine? 
 
rkp said:
My challenge is the lack of transparency and information.  You have to call the phone number and see how many years are left and even then, each CFD is different.  Some can be extended, some can be paid early, and some go up every year!  VoC INCREASEs yearly by 2% - not pegged with inflation or anything - automatically increase 2% every year.
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Wow... this is the first time I heard that.

For some reason this reminds me of the time when I was looking at condos in Tustin Ranch and they showed some chart of some fee that is paid over 15 years (not sure the exact time period) and it looked like a pyramid where it started low, rose and then dropped back down again. Being young and stupid at the time... I didn't think to remember what they were talking about... could this be similar?

Maybe 'test' can tell us more about these rising MR/CFDs and if they really exist (I do know they were quite high in VoC).
 
well, that is a nice argument that older MR fees decrease as a percentage of property value.

but of course the opposite is also true. 

Take Columbus X for example.  if the MR were 0.6% of the $1.2M price, then at the current price of $0.8M, they are 0.9%, so your 'tax rate, has gone from 1.65% to 1.95%
 
freedomcm said:
well, that is a nice argument that older MR fees decrease as a percentage of property value.

but of course the opposite is also true. 

Take Columbus X for example.  if the MR were 0.6% of the $1.2M price, then at the current price of $0.8M, they are 0.9%, so your 'tax rate, has gone from 1.65% to 1.95%
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True... although I have yet to see one of those $1.2ms at $800k.

And the MR rate was more like 0.8%, it hurts when you are paying almost $10k in JUST MRs, add in the property tax and you're paying $22k a year!
 
I have yet to see one of those $1.2ms at $800k.
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We made a $900k offer on a house that was bought for $1.4M in VoC.  Bank came back at $1.1M and agents said that if we countered with $1M, it was ours.  We passed because I never really got comfortable with the idea of a $22K property tax bill that would go UP!  I dont have more documentation on the 2% yearly increase but the agents told us that and when I called the number on the tax bill, they said the same thing.  With HOAs, we were looking at $25K yearly outlay above our mortgage!
 
The 2% increase is tied to the property tax, which is allowed to increase up to 2% each year.  If the value of your property stays the same or goes down the tax does not go up.  Pick any house with mello roos and look at the tax history and you'll see.

 
test said:
The 2% increase is tied to the property tax, which is allowed to increase up to 2% each year.  If the value of your property stays the same or goes down the tax does not go up.  Pick any house with mello roos and look at the tax history and you'll see.
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WRONG.  Well what you said is right regarding property tax in general but you misunderstood what I wrote.  VoC's CFD is unique in that it will go up by 2% every single year PERIOD.  I gaurantee this was the case for the houses on Camilia.  I will try to find documentation but the agents were clear about this.
 
rkp said:
VoC's CFD is unique in that it will go up by 2% every single year PERIOD.
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WRONG.

Like I sad....

test said:
Pick any house with mello roos and look at the tax history and you'll see.
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Taxes are public, just look it up and stop making stuff up or regurgitating to what realtards tell you.
 
freedomcm said:
well, that is a nice argument that older MR fees decrease as a percentage of property value.

but of course the opposite is also true. 

Take Columbus X for example.  if the MR were 0.6% of the $1.2M price, then at the current price of $0.8M, they are 0.9%, so your 'tax rate, has gone from 1.65% to 1.95%
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That's a very good point and absolutely true.  Some woodbury homes sold back in 06-07 would have a 1.8% or higher rate today.  GOOD LUCK WITH THAT SALE!!!  I wouldnt buy a home with $6K in mello for the next 30 yrs.  That PV's to about $100K in today's dollars.  Are these homes in the new areas worth an extra $100K I highly doubt it.  But a couple grand in a moderately newer area PV's to about $30K... that's more tolerable and perhaps worth the cost.  Also, those purchasing new have an option of paying off the obligation up front if you so choose (and you have that kind of money laying around)
 
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