ALTURAS, Calif. – In the evergreen-cloaked hills and sagebrush flats near this Northern California outpost, dreams are for sale. Visions of a vacation getaway, a nest for retirement or an investment in rural land have lured thousands of buyers to California Pines.
But more than three decades after a now-departed developer filed plans for a subdivision here, the promise appears little more than a mirage in the high desert.
In a development platted for 15,000 lots, fewer than 400 houses dot the hills or surround a lake that is closer to a glorified cattle reservoir that shrivels in the heat.
That hasn’t stopped Jeffrey Frieden and Robert Friedman, two Orange County entrepreneurs who once sold stereos and back rubs, from resurrecting sales in this and other left-for-dead subdivisions across the country.
From Florida to Washington state – and coming soon to developments in other states – their Irvine-based company has sold thousands of lots in subdivisions that mostly predate planning laws requiring sewer, water and power.
“We are riding on the coattails of developers from the ’50s and ’60s,” said Friedman. “We identify these things, we re-expose them to the world, and our clients in the long run get incredible values.”
Inflated sales prices
Through the Internet and television infomercials in English and Spanish featuring faded actor Erik Estrada, their company, National Recreational Properties Inc., is aggressively marketing land that looks cheap to distant buyers.
But prices are often steeply inflated compared with surrounding land.
In 2000, the Rev. Vika Wills led about 10 members of her Bay Area congregation to buy their own lots in what she hoped would be a heaven on Earth.
Wills spent more than $64,000 on four lots that would probably sell on the open market for $3,000 to $6,000 apiece, according to local real estate agents.
“My gosh,” Wills sighed when notified of the going price. She’s now thinking of selling.
It’s an all-too-common reaction. In California and some other parts of the nation, the prospect of spending five figures for land is alluring to those trying to achieve the American dream.
Yet, in Modoc County, where the population shrank in the last census and unemployment is high, real estate is as affordable as it gets. Three-bedroom houses near Alturas can sell for $70,000.
For unfarmable raw land, “$1,000 an acre … would be a fair amount,” said Cheryl Knoch, the county treasurer and tax collector. “I guess people don’t research what property values are in the county.”
Speaking of land sales in general, Stephen Brobeck, executive director of the Consumer Federation of America, said: “If the land is marked up by over 50 percent, that would probably represent a consumer rip-off. And if the price is marked up five to 10 times that then the consumer is simply being fleeced.”
Friedman and Frieden said they run their company according to state and federal regulations and personally resolve buyers’ rare complaints.
Unbuildable land
Five years ago, prosecutors in Santa Cruz County, Calif., targeted a company they operated, Land Disposition Co., for claiming buyers could build estates in the Happyland subdivision where a previous developer platted lots in the early 20th century.
Buyers complained that they couldn’t find the properties because the roads on the maps didn’t exist. Friedman said company brochures warned buyers to inspect the property in advance.
“The people we talked to were mostly immigrants,” said prosecutor Morgan Taylor. “They wanted part of the American dream.”
County prosecutors sued the company for misleading advertising, saying the mountainside land was unbuildable. The company denied the allegations, but quickly settled, offering refunds to buyers who came forward.
After the settlement, a buyer who paid $6,000 for a lot in 1997 got a refund. Three years later, however, Santa Cruz property records show, the company sold the lot to another buyer for $11,500.
County Assessor Gary Hazelton said the company doesn’t do much business in the county anymore. The brochures also provide better warnings, he said.
Another Frieden-Friedman company, Real Estate Disposition Corp., hit similar problems in Santa Monica in 1992, by promising ocean views at 56 condominiums, the city attorney’s office said. Newspaper ads showed the beach and what appeared to be Malibu Pier, which was miles away. The city attorney’s office accused the company of false and deceptive advertising, unfair competition and bait-and-switch to lure consumers, according to court papers.
Admitting no wrongdoing, the company quickly settled, agreeing to a permanent injunction and paying $7,400 in costs and penalties.
“We’re not looking to fight with anybody,” Friedman said. “If we make a mistake – and we do every now and again, we’re not perfect – if we make a mistake, our goal is to make it right.”
Duo’s background
Friedman and Frieden, both 43, took a roundabout path into the real estate business.
They started after high school with a string of stereo businesses. Frieden tried selling cars and phones, and both men even tried to set up a chain of chiropractic massage businesses.
Throughout, they dabbled in real estate, eventually founding an online auction company that sells raw land across that West. That led to National Recreation Properties.
Seeking a high-profile spokesman, the two flipped through a talent agency’s portfolio and picked Estrada.
Estrada, remembered as a likable motorcycle cop on “CHiPs,” was also the star of a popular Mexican soap opera that also airs on U.S. Latin networks. TV ads featuring him appear throughout the country.
“They approached me because they were looking for somebody who dealt with people on the street,” Estrada said.
In addition to getting paid, Estrada is given a lot in each of the subdivisions.
In Cal Pines promotional material, Estrada exclaims: “This place is gorgeous! Take my word for it because I own property there myself.” A sign along California Pines’ main road touts “Erik Estrada’s Home Site.”
But Estrada said he had no plans for building on any of his lots.
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