We’ve been following the BR/Model Homes Partners debacle for years now.
In 2005, a group of lawyers from Orange County had purchased 11 model homes in Bressi Ranch and leased them back to the builder Lennar, waiting to make the big kill by selling them once the tract sold out.
But the market didn’t cooperate.
The partnership tried to auction them in 2006, but fell flat on their face. Here’s dny’s remarks from Piggington on the event:
I knew the auction was going to be a bust when he OPENED the first house-the biggest I think at 4600 some sqft at $1.5M. This elecited a small chuckle from me and a few others. He backed all the way down to $1M before getting ending up at $1.05M.
Quick Recap of high Bids:
3700–$1.00M Great BY and View
4091–$1.1M Great BY and View
3384–$900k (1 bid)
3094–$700k-$900k “a little shy”–probably 100k or so off
Again, they did not accept any of the bids, but they did say some were close (maybe $100 or $200k would be my guess as to what close means), and they would negotiate with the high bidder. Some others had nice yards and views too.
Once the auction failed, they leased the houses, content to wait it out.
Flash forward to the end of 2008 – the partnership stops making their mortgage payments, even though they are still collecting rents. Did I mention that this is a group of attorneys?
NODs are issued in February, 2009, adding to the other 20+ foreclosures in the works in BR.
But at the last minute, an investor group bails out the partnership, making a deal with La Jolla Bank to a bulk purchase of the ten homes. It closed on 8/28/09, and the trust deed filed was for $4,600,000, which I’m guessing was the purchase price for the package.
The partnership lost about $2 million in down payments, and La Jolla Bank had $7,500,000+ in mortgages on the properties originally. Just $5 million down the drain.
The guy who called me said he was going to quietly solicit agents around town to bring their buyers, and sell them onesy, twosy.
Two of the houses showed up on the MLS yesterday, and immediately marked pending:
4 br/2.5 ba
SP: $968,500 2/05
LP: $549,000-$599,000 9/09 PEND
4 br/3.5 ba
SP: $1,009,500 2/05
LP: $649,000-$699,000 9/09 PEND
If the new investor can evict the other tenants quick enough, could they make a million?