Incredible Buy on a 1 Bedroom at The Grand – $299K
November 30, 2007 by Lucas Lechuga
I just came across a one bedroom/one bath listing at The Grand that looks to be incredibly well priced. It has 1,180 square feet of interior space. It is listed for $299,000, or $253 per square foot. There are a few other one bedrooms in the building that are listed for slightly less but none of them come even close to having the level of quality that was put into this unit.
This is a perfect condo for somebody in search of a spacious one bedroom that is in impeccable condition for under $300K. You won't find this type of space in a one bedroom in most of the new buildings.
Take a look at the MLS listing for more information and pictures. You can call me for additional details as well or if you'd like me to schedule you a showing.
Ignacio what if you wait 6 months and the prices go up and you lost the opportunity? If you think like that whats to stop you in 6 months from thinking the same thing? Keep thinking like that so you can be negative the whole ride the market takes down and then when its over be negative that you dont own anything. If you are buying a condo for under replacement cost in theory you are getting a good deal, thats just basic economics, and I dont know of anyone that can make solid construction for under $200 a foot on a nice condo.
Why is the maintaince fee is so high in this building?
If I remember correctly the Grand was built by the same developer as Opera and Club at Brickell Bay.
Overall 299k seems really high for a unit that was fetching 160k 3 years ago.
It will be 160k again 3 years from now.
Lucas, what did it rent for? Also, did you get a handle on the carrying charges? Thanks.
$200 a foot times 1180 square feet is $236,000 if you bought it for $160,000 that would be buying at $135 a foot, that wouldbe ridiculous. Make all the fun of me you want Chris because in fact I hope you are right, if apartments like that go to 160K and the Euro which will keep gaining over the dollar goes to 1.60 to 1.70 EUR/USD I will have so much business i wont be able to handle the volume. Lucas if you find out what its rented for let us know so we can do a an NOI, IRR and Capitalize it.
Buying it at 300K would be like 6k a year in property taxes plus another 7k a year for maintenance. The risk Free T Bill rate is about 4.5% so lets say you can get 5% of 300K a year would be $15,ooo a year plus $7,ooo HOA plus $6,000 property taxes would equal 28,000 a year lets say a vacancy and credit loss of about 2 months rent since you have to pay the realtor commision to rent it equal to 10% of 12 months rent so in theory you would have to rent this apartment for about $2650 a month so you are not upside down. I would be very surprised if this rented for over $1800 out of which the owner still has to pay commission to the realtors.
Then, Candela, assuming you are an investor, I have a condo you should buy. It’s for sale at $299k – same price, and priced aggressively low, rents for $1700+, and the maintenance is $258/mo. And it is not moving.
Lucas – I am not using your blog to advertise my condo. I am merely pointing out economics. An investor should prefer a unit that brings in $100-$150/mo more in rent, and costs +/- $340 less in maintenance.
FYI Everyone – This building is classified as a ‘Condo/Hotel’ property. Many of the units are rented out by the DoubleTree Grand Hotel which occupies the first 10 floors of the building. For this reason, all mortgage brokers classify it at a higher risk so you can expect to have to put down at least a 20% down payment AND you will pay a 2-3% higher interest rate over prime; even if you have PERFECT credit. This was before the August credit crunch so terms might even be tighter at this point.
Many deals fall though at this building because of this and I would not advise buying at a ‘Condo/Hotel’ property; especially in this market.
Beautiful unit. Any idea what the condo fees are?
Hi,
Personally I would wait untill the market gets more stable. This condo can look as a good deal today, but what about 6 months from now?
If the prices continue to go down you might be upside-down after maybe only 6 moths.
RayRay,
The listing doesn’t show but I think they’re around 50 cents per square foot at The Grand.
How realistic is the rental price? Do 1BRs in this condo typically rent for $1700?
Also, if I am doing the math right – never guaranteed – you’re saying the CC on this unit would be c.$600/mo. Why so high?
Beautiful unit, by the way. It looks like it is priced to move, unlike 90% of the listings out there. For someone in the 28% tax bracket, this is one of the few rent vs. buy prices I’ve seen that passes the giggle test.
Even more compelling if the super-exemption comes into play, and tax rates go up in the next administration (as they will).
Is there anything preventing someone from building a condo tower on the parcel just north of this building (where that little tiny building is located)?
Is it a historical building or does someone own the air rights above it? If not, it seems like that if someone put a new building there it could potentially destroy the view from that side of The Grand:
The Grand – Bird’s Eye View
Never mind – I just looked it up, and it is on the register of historic places (Miami Woman’s Club). So the view is safe.
is that a Corian countertop?
BB – Yep, it’s a historic building. That view won’t change unless some money is slipped under the table.
Paola – I never knew what a Corian countertop was until I Googled it. It looks like it may be a Corian countertop from the pictures of the unit. I’m showing the condo tomorrow so I’ll be sure to ask.
Ignacio – I think the new construction buildings are the ones that will come down the most in price. The older buildings, such as the one above, will come down a bit but not as you would expect. There’s a lot of speculative money behind the new condominium buildings. The older buildings are pretty safe. Almost all of the contracts that I’ve either written or received within the past 3 weeks have been in older buildings. There may be a few foreclosures in older buildings because people bought at the top and overextended themselves or they refinanced but nobody bought into an older building with the intention to flip.
The reason why I think this is a great buy is because it is a large one bedroom, which you won’t see in the majority of the newer buildings, and it has been completely remodeled. The only new building that will be completed within the next six months that will offer this type of square footage that I can think of for a 1 bedroom is 900 Biscayne Bay. The price, however, will be around $400,000 and up. It’ll come “decorator-ready” so you’ll have to sink at least another $35,000+ to make it rentable. I’m a huge fan of 900 Biscayne but there’s a big chance that a large portion of the development will default.
Ignacio what if you wait 6 months and the prices go up and you lost the opportunity?
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LOL!
Chris, I’m sorry. Your retort to Alejandro made me laugh. It’s not exactly as though potential buyers are sweating it over prices being higher in six months’ time. Al contrario.
On the other hand, I doubt this unit will be $160K again ever. It wasn’t, by the way. The last recorded sale of this unit was for $221k in March 04. Since then, the owner has spent a small fortune on renovation. I would buy this in a NY minute at $160K.
I know how much it costs psf to install premium wood floors and baseboards, and that kitchen did not come cheap, either. The lighting didn’t come cheap. As Lucas pointed out, this apartment appears to be finished beautifully.
This is not a $160k apartment. It’s not a $260k apartment, absent problems in the building I don’t know about.
Yes, that’s a Corian countertop, Paolo, unless Lucas says otherwise.
I’d take drop-dead-beautiful wood floors over a countertop I can replace any day of the week.
However, according to Lucas’s link, the apartment is now withdrawn from the market.
So I guess this is all moot.
JM – I showed the unit yesterday afternoon. The listing has been withdrawn because a lease was just signed on the condo. I wanted to show it anyway because my clients were investors. I asked the listing agent about the countertops. He wasn’t sure what they were. They looked to be Corian, however.
By the way Chris I just contradicted myself and made you look right because I actrually sat down and did the math. I guess financially it would make sense for this apartment to trade for $180,000 to $200,000
The unit rented for $1,595 per month.
Ouch $1595 that doesnt even cover the commision, property taxes and maintenance fees
rent of $1595 a month, this would not make sense as an investment at $300k… In my book that should be a buy at $159k and a pass over 190k
It should also be considered that this isnt a stable market, there is too many rentals right now so rents have gone down about 30% over the last year. I personally would buy anything on the spot that I could rent for monthlu 1% of the sale price meaning that if an apartment is 100K and it rents for 1,000 a month I would buy it without seeing it, unluckily I have never seen that over the past 8 years while ten years ago it was the rule of thumb
I think the older buildings are going to do way better than the newer ones. I own in both an old building and a new one. The old buildings really have their act together, can easily reduce costs (maintenance has gone down almost $150/mo), and don’t have to worry about issues with the developer. Everything is working perfect, and the vast majority of the owners have been there for years. They pay on time, and they take care of the building. All the contracts are up to date, and the board has been in control for years.
On the other hand, the new building still has problems, management doesn’t have control of the place (we have had 3 property managers in 1 year), owners were desperate to rent so they rent it to anyone who will pay (we have kicked out people), we still have open items from the developer for over a year, we are still stuck in developer contracts with vendors, and most people aren’t paying, so we are stuck with a mound of unpaid maintenance fees. In just doing some searches, although we have problems, it seems that other buildings are far worse. Anyone want to create a “dead pool” of doomed buildings? I think it would be an interesting site. It seems the media doesn’t want to talk about what really is going on.
Alejandro:
One question, why you mention the “risk Free T Bill ” into your calculations?
ps:
sorry if it’s a dumb question 🙂
Ignacio – He mentions risk-free T-bills to compare how his returns would be had he placed his money into risk-free T-Bills instead of paying cash for a property. Buying real estate is not a risk-free investment so your return should beat the return of investing in a risk-free T-bill.
Haaa,
I’m such a n00b 🙂
Good comparision and also an eye opener.
Antonio,
I think a blog that tracked the problems at each of the new condos out there would be really informative… only who would report on it? The folks who are living with the problems have a vested interest in keeping that stuff away from the public. They are having a hard enough time trying to sell as it is.
That being said, I’d love to see it.
You will always find somebody who want to rant and vent the problems they find.
The real problem is who will do it, and how the would be poster will find it.
Maybe a good start is that site that somebody created to sell SF of his condo. I do not remember the url right now
$1595/mo changes my view of the economics on this. I can’t see an investor buying. Certainly not this one. I feel sorry for the owner.
Jeez, I would buy it for $260k hands down, even with the tenant in there at $1595 a month.
WOW! What an amazing condo. What might the condo fees be?
I just had a deal fall through for the precise reason stated out by Jean Stewart.