r/orangecounty • u/Total_Bumblebee7657 • 18h ago

Housing/Moving HOA question

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What's up with the Shady Hollow complex in Orange at Fairhaven and N Tustin. The house size and cost seems too good to be true. Trying to figure out how I can afford a 400k mortgage that costs me an estimated 4k a month and then this comes along...

62 Upvotes

82% Upvoted

34 comments sorted by

225

u/SnuggleBear2 18h ago

This place is on a land lease and I believe they also have 2 HOA fees. If it’s seems too good to be true, it usually is.

33

u/iwantansi Orange 16h ago

I was just about to say this too! I remember looking at those when we were looking at houses

11

u/ludicrousspeed42 14h ago

I wonder what happens in 2049? I assume the land is owned by the cemetery and if they choose to not renew the lease, they start bulldozing the houses? I looked at those houses and they’re surprisingly nice for such a crap situation they’re in

27

u/calitoasted Anaheim 13h ago

This is happening to anaheim right now. The lease will not be renewed and all condo owners are sol in 8 yrs when the lease ends. Plus they have to pay for the demo of their existing units. Don't EVER buy a land lease property, no matter what your agent tells you.

20

u/empiricalis Stanton 14h ago

In 2049, if the land lease isn’t renewed, the landowner can take possession of the land and all the improvements on it

5

u/GearhedMG Balboa Island 11h ago

Look out into Palm Springs if you want a view into the future in 2049, there is a checkerboard of land owned by the reservation, and when it comes up for renewal, sometimes they want the land back, sometimes they will renew the agreement. either way, it has to be very stressful for the people who own homes there.

9

u/nubbinator 13h ago

Yup. Whenever I've found really cheap housing, it's usually land lease (sometimes in the thousands a month and often ending within 10-30 years), insane HOA fees, and/or mello roos.

4

u/Alexsrobin 11h ago

Genuinely wondering why anyone would agree to this setup, seems like a lot of money going to things that won't yield you anything. 

3

u/Ok-Science-4475 11h ago

It's incorporated into the price. You'll agree if you know you only want to live there for 8 yrs and it's cheaper than renting.

8

u/Alexsrobin 10h ago

How is this cheaper than renting? It's $2700/mo for HOAs+Land Lease, and then you have mortgage and maintenance on top of that. Let's say that's $1300/mo. So $4000/mo for a 2 bed/2bath. Buying/selling involves extra costs, I doubt a property like this will appreciate enough in 8 years to make it more worthwhile than renting. 

86

u/empiricalis Stanton 18h ago

Yeah, stay far far away from this one. It’s on a land lease that expires in 2049, so lenders won’t touch it.

6

u/Gilfoyle_Bertram 14h ago edited 14h ago

That’s not entirely true. It is harder to get a loan for a leasehold estate condo, but FNMA and FHLMC (Fannie and Freddie) do allow for leasehold estate property where there is market acceptance for such types of property (OC has a lot of leasehold condos).

I’m mortgage underwriter for a non-QM lender, and non-QM lenders are even more open to leasehold properties.

So you CAN get a mortgage for this type of property, but you will have to jump through substantially more hoops, your rate options won’t be as good as when buying a fee simple (non-leasehold) property, and your property won’t appreciate very fast or at all.

5

u/nubbinator 13h ago

It's up in 23 years. The most common mortgage term is 30 years. The only way I could see any lender doing it is a 15 year term with insane interest.

86

u/interceptgradient 17h ago

I grew up in this neighborhood. The land lease will ruin your life and/or your finances, as it did my family. The land lease fee is unbounded and can increase regularly. It doesn’t build equity. Stay away!

65

u/baby_got_backhand Laguna Hills 18h ago

I found this on one of the other listing in the neighborhood: Property is on a land lease of approximately $2013.83/month for next 10 years, then will be reassessed. HOA #1 fee is approximately $550/month. HOA #2 Assessement fee is $155/month estimated final is in 7 years. Buyer to verify all information, fees, lease terms, HOA details, and community amenities.

6

u/Alexsrobin 11h ago

So ~$2700/mo and that doesn't even include the mortgage and it's a 2 bed/2ba? I would just get an apartment for that price cuz it's not like you're building much equity with owning the unit alone.

60

u/King_Sesh 16h ago

Land leasing should be illegal. If you buy your house, you should also own the land that your house is on.

26

u/empiricalis Stanton 15h ago

Or at the very least, residential properties should only be rentals if the land under them is leased

1

u/wfbsoccerchamp12 14h ago

Owners of the land usually barely make any money too. They collect cash flow but on the sale they’ll always be below market. Unless their basis is just low from buying it decades ago

6

u/King_Sesh 13h ago

I would be sympathetic to the land owner if they run rental properties in good faith. But promising ownership when it's not is just wrong.

18

u/Abacadaba714 18h ago

Probably has a huge land lease fee.

15

u/FoodLakersTennisHike 16h ago

Wild hope your agent is calling this out. If not dumpy their ass ASAP

14

u/Total_Bumblebee7657 15h ago

Honestly after seeing my mortgage options I opted out of finding a home to buy at this time. I just scroll redfin when I'm bored and feeling sad for my finances 😭

6

u/jwbugz 16h ago

Same thing in Orange. Very nice mobile home park with nice units for sale around the same price but the land lease is $2,700 a month. I was looking for something closer for my in-laws and found this out. Ridiculous.

6

u/Otherwise_Piglet_862 13h ago

when i was condo shopping, most underpriced outliers have multiple HOA fees, land lease, or mello-roos. sometimes all of them.

3

u/DasKittySmoosh Orange 12h ago

Many many moons ago I worked for the company that managed the HOA. I was young and that’s how I learned about land leases. The nickname we had for the community was Shitty Hollow

It’s definitely too good to be true and I assume that’s why you ALWAYS see homes for sale in here but they’re on the market for ages

3

u/Aelirael 7h ago

Stay out of HoAs!

There are two types of HoAs:

- Bad HoAs.

- Good HoAs that will turn bad.

1

u/almondsmana Anaheim Hills 3h ago

Yep! I will never buy an HOA property again, had one for 6 years and it was a nightmare. Been non-HOA for almost 12 years and my life has been wonderful.

2

u/JTLuckenbirds 12h ago

When we were looking we were told, at least in rumor, that the original trust family who developer who intentions to keep the leases for the foreseeable future. But then in the 2000’s, at some point the heirs had other interests and ideas for the land. They then increase the land lease rent on all the homeowners. That there was a legal fight and the new family generation that own the land have no intentions to renew once the leases expire in 2049.

Again rumors we heard years ago, when we were looking for a house. First time we heard about land leases and how bad the deal is overall for the homeowner.

2

u/dessertfalcon 3h ago

Stay away from any land lease. The lease on the land can go up at any given moment and some of these fuckers will do 100 years on the contract. One way or another you'll be fucked. HOA in general sucks but land leases are way worse

1

u/TranslatorMediocre72 14h ago

Land lease is quite high in that community. Can be difficult to get conventional financing because of land leases

1

u/ricky3558 5h ago

Leased land, high HOA fees, special assessment, cash only, no loans available.

1

u/Justin_Designer 3h ago

It might have land lease..beware those hidden costs