Bulk Sale Opportunities Emerge in the Miami Condo Market

February 11, 2009

For the past couple of years, vultures have been circling the skies of Miami waiting for the right moment to swoop in for the kill.  Their day of reckoning seems to have finally arrived.  I am now familiar with over 30 condo developments in Miami and Miami Beach with units available to be purchased in bulk.  The list consists of partial and entire condo developments, including a few with Section 8 potential.  Ballpark prices for these bulk sale opportunities range from $3M-$60M.

Throughout much of 2008, there seemed to be a stalemate between developers and vulture funds about price.  However, market conditions have worsened considerably within the past six months, due in large part to ever-tightening lending practices.  Even for creditworthy individuals, it has become extremely difficult to obtain financing for condominiums in Miami.  As a result of the new Fannie Mae guidelines, financing has become especially restrictive for condos in recently completed buildings.  Lately, it has been individual buyers strapped with cash, for the most part, who have been the ones pecking away at the remaining inventory in these new condo developments.  Facing the realities of the market, developers – and their lenders – have begun to turn to vulture funds as a quick, easy way to part with unclosed condos.

Recently, two major arms-length bulk sales have closed in Miami-Dade County: the 60-unit bulk sale in the Downtown Miami high-rise called Marina Blue and the 101-unit bulk sale at Harbour House, a beachfront condo-conversion located in Bal Harbour.  Both deals closed in December 2008.  The 60 units at Marina Blue sold for $200 per square foot while the 101 condos at Harbour House sold for approximately $277 per square foot.

There are some who negatively portray vulture funds as entities who feast upon the misery of others.  Personally, I feel that vulture funds are a necessity to a real estate market such as Miami and do more good than harm.  Bulks sales provide instantaneous feedback as to where the intermediate level of pricing resides for condos in the given development, as well as those in the surrounding area.  Bulk sales also provide stability to a condo building which would otherwise have many uncertainties concerning its financial condition.  One can assume that the vulture fund will have the capital resources to pay monthly homeowners association fees on time.  It also has a vested interest to ensure that the condo development is well managed.  The greatest benefit, however, is that thousands of unoccupied condos in Miami will be filled with residents much faster.

Most of the vulture funds that I’ve come into contact with over the past year have plans to buy condos in bulk, lease them over a period of 5-10 years and resell them for a profit on the back-end once market conditions have improved.

Please feel free to contact me if you have an interest in the bulk sale opportunities that are now available in Miami and Miami Beach.  Investment packets complete with estimated operating budgets, a rental and sale market analysis, neighborhood demographics and projected cash flow statements are available to serious buyers for most of the bulk sale opportunities.