I must admit that my heart finds for some strange affections. I love dingbats! Now..I better explain myself so that my wife doesn't clobber me. I'm not referring to an "intellectually disinclined" woman. I'm talking about the multi-family building so prevalent to Southern California.
FROM WIKIPEDIA:
A dingbat (also called a stucco box or a shoebox), is a type of architecturally undistinguished apartment building that flourished in the Sun Belt region of the United States in the 1950s and 1960s. Dingbats are boxy, two- or three-story apartment houses with overhangs sheltering street-front parking.
Particularly popular in southern California, but also found in Arizona, Florida, Hawaii and Nevada, they are known for their downmarket status and inexpensive rents. They are currently experiencing a minor sentimental renaissance thanks to the mid-century modern design return to vogue. In spite of their serviceability as functional, affordable housing, and the niche appeal of their trappings and trim, dingbats are widely reviled as socially alienating visual blights; California historian Leonard Pitt said of them, "The dingbat typifies Los Angeles apartment architecture at its worst".
Why do I love dingbats?
These apartment buildings offer one of the greatest challenges to a
real estate financier. They don't qualify for residential financing
because they are usually greater than 4 units. They are "small
commercial" deals that banks pick apart with a fine tooth comb. They
generallly don't cash flow greater than 60% LTV in Southern California
so it is hard for investors to leverage themselves. They do, however,
provide a great opportunity to make money because they have been
generally mismanaged and aren't receiving market rents.
Let me give you an example of a property I just financed. It is less than 500 feet from the sands of the beach in Imperial Beach, CA and was built in 1954. It is mostly studios and one bedrooms with monthly rents of $6600. The investor bought the property for $1.1 million. Banks wanted to finance him at a maximum of $500,000 with no subordinate financing; they were going off of his market rents. Now come on! $660/month for a beach apartment in Southern California..unheard of!
This investor plans to sink $100K-$150K into the building to upgrade the facade and interiors. Updated, an apartment this close to the beach can command upwards of $1,000/month. It is extremely close to Coronado Naval Base, home to over 5000 sailors. These sailors receive over $1,200 allowance for off base housing. He has a natural market less than five miles from his property. Now, what do you think the effect of future rents will have on the ability to service the loan? If you're thinking that it is positive, you are correct. We recognized that and made a hard money loan to purchase this building, allowing for seller-carryback financing of 30%.
One of my favorite things about dingbats is the kitschy names for them. The complex name
is usually emblazoned across the facade in aqua or salmon and has names
like "Palm Gardens" or "Beverly Palms". Dingbats are so retro cool, it
makes you want to don a bowling shirt and fedora and have your picture
taken in front of the property.
Yep...I love dingbats. I love the fact that they offer affordable rents to the masses and a great return for investors. Banks hate them, I love them. If you need financing for a dingbat...call me at 858-699-4590.
