Oldest Standing Home in Laguna Beach Ca.

[Jon Andersen]

Investment Info:

Single-family residence buy & hold investment in Laguna Beach.

Purchase price: $2,750,000
Cash invested: $3,800,000

Oldest Home in Laguna, built in part from flotsam (wrecked bootlegger ships that hit the cliffs below, even had a ships windless in the yard ) A orange farmer had brought supplies to the coast in a horse drawn wagon so his wife and kids could enjoy the view and cool coastal summer breezes. This glorified shack even had an adobe wall with early western graffiti and straw as part of the old footing below the kitchen . local old timers remember Fleetwood Mac jamming in the garage in the 60's

What made you interested in investing in this type of deal?

I loved the beach and the chance to work on this historic property was enticing. I even saw whales and dolphin playing below the home when working on the project.

How did you find this deal and how did you negotiate it?

My wife was always on the hunt for a project. She saw it the day the listing came out. I use to surf in front of this home when in college, so when I got the call that it was available we made an offer.

How did you finance this deal?

Another Laguna Beach home that I owned for two years was ready to sell. Using the 1031 exchanged tool and a bank loan got the deal done. Holding costs: Positive cash flow vacation rents able to pay for the $30,000 property taxes.

How did you add value to the deal?

This R2 lot had two units on it. It was so old there were no records or plans. The 2nd unit was incorporated into the main home allowing a new structure to be built on the large lot. I was the GC on the project and made it into a kitschy beach rental,

What was the outcome?

$1MM in two years, some great times at the beach when it wasn't rented.. I owned this for 2 years and sold it carrying back 75% of the $1MM gain that is still paying me interest today 10 years later.

Lessons learned? Challenges?

Coastal commission, historic committees and small town building departments are miserable to deal with.