Malibu investment deal goes south

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Can you lose money by investing in Malibu real estate?

Yes, you can, and lots of it, according to Michael Hiltzik’s worthwhile yarn this morning detailing a real estate investment idea gone very bad in the hills above the Malibu coast:

‘State law enforcement officials are investigating whether 70 retirees and other investors in Northern California were bilked when they put up $6.4 million for construction loans on Malibu land that may be impossible to develop. The investors have foreclosed on the land, which is worth just a fraction of its appraised value as prime home building property. But they’re still trying to figure out where their money went.’

The investors figured the Malibu land -- four parcels totaling 174 acres -- could be subdivided into 13 parcels, and that 10,000-square-foot mansions could be built on each parcel. The land was appraised based on that assumption. The investors figured wrong: The four parcels cannot be subdivided without state Coastal Commission permission, which has not been granted. And the money they lent is gone.

They do have the land, though, valued by one Malibu real estate agent at about $3.4 million.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.