Top 5 Miami Distressed Condo Sales in December 2008

HAPPY NEW YEAR Lucas and welcome back.Nice Deal’s there…..any more??

Lucas, How much are the condo conversions going for in the suburbs now like Kendall for example.

Are they crashing back to earth faster than the Brickell Condo’s?

onemortime – It is my understanding that the La Perla was one of the earlier new condos to be completed….sometime in 2006 but was first proposed several years earlier (2001-2002?). It is adjacent to the Newport Beach Hotel & Resort (a fairly dated yet popular hotel) on the north and the major beach access and pier access on the south. It is nothing special regarding finishes (standard was carpet and black appliances) and amenities (what real amenities exist?) but has the advantage of being further along with its HOA than some of the very very recent buildings. The same developer has gone belly up on a large Hollywood project and no longer has any ownership interest in the building leaving numerous items unfinished which were and are being passed along to the owners now (legal actions). It is midgrade level — newer than the Oceania’s to the south and Sands Point to the north. It is one of the least expensive of the newer buildings as Turnberry, Sayan, Trump Towers, Jade Beach and Jade Ocean all were competing for the more ultra lux buyer. It is the only one of the few new buildings that have maybe 1/3 the lights on at night as opposed to 5%! Very very high number of rental units and combined with the units for sale make about 30% of the building currently for rent or sale (obviously a lot are already rented out so perhaps 50% are for rent, for sale, or rented). I know several people in the building …. all renters, supposedly the lower floors on the north side next to the Newport complain about the noise from the Newport.

So if you want to rent, there are some great deals ….but looks like Trump Towers is coming out with some even better rental deals considering they are much much nicer. To buy, I wouldn’t pay more than $300/s.f….for some units $250/s.f. may be on the horizon. I heard the condo HOA delinquency rate may be as high as 10% even though the HOA fees are cheap compared to other buildings. So, no it is NOT a luxury building….and it depends if you are looking to buy or rent. There are around 330 units in the builing so that is a lot of people!

http://www.laperlamiami.com

Hope that helps….

AJ said: “Any one wanting to buy a flat to live in it never had it so good.”

– Ohhhhh, it will get better as 2009 will be terrible. Did you read the Fed minutes from the meeting when the lowered the target rate to nearly zero? They are scared sh*tless about deflation in a debt laden economy. My point exactly per previous posts on asset prices in real dollars purchased with nominal dollar debt in a deflationary environment. We need some inflation……..but the demand curve has shifted permanently downward (not a cycle along the demand curve) as a result of the credit bubble (that can’t be reflated by the fed govt) and with slack in all areas of the economy – housing, condos, cars, TV’s, labor, home furnishings, apparel, etc. — the supply curve needs to shift downward while at the same time the slack needs to be absorbed….. write off 2009. Now with newbie wanting to replace consumer debt with govt debt in a futile attempt to reflate a credit bubble to create demand is misguided as this is NOT a business/economic cycle issue, it is a structural shift of the demand curve issue….big difference between the two. Maybe Euros are such a bad idea….

Maybe Euros AREN’T such a bad idea…. (oppppps).

isabel,
If you do not crawl under a rock and surface once every six months and instead regularly contribute to this blog and steer us in a different direction that you think is worth discussing about, things would not be so stale. But as usual everyone is a talker and a complainer but no one acts. It is like not voting but hoping your guy wins!

So for a change, do not clam up and express your opinion – On anything. Doesn’t even have to be related to Miami RE. Say something and spice up this “stale” blog.

continuing with #11,

Why do we have 10 regular contributors and 10,000 passive readers? This new year all you girls and guys should post at least once a week if not once a day. How about that for a resolution?
That would take a little pressure off of me and RT to “entertain” you all. I know many of you open this blog the first thing (or the second) in the morning even before you open Yahoo News or your e-mail inbox 🙂

$125.00 per square foot in nigh!

The Smart Money just purchased Unit#2o12 at Marinablue for $168,600, or $127.92 per square foot. The condo has 1,318 square feet of air conditioned space. In March, Unit 2112, an identical unit a floor above, sold for $557,740, or $423.17 per square foot.

The Smart Money in action.

AJ is right, more people should contribute their thoughts instead of lurking and then RT vs AJ would only be 15% of the blog instead of 85%…….I do think their “battle” is reflective of what is happening right now. Marina Blue sure seemed to have a lot of advantages (earlier to market, good design, tons of water views, lower price point) than the next crop: 900, Marquis, Icon, Paramount, etc and still needed a bulk sale in order to pay off the loans. It is amazing to see some of the closed prices per square foot above compared to the wishing prices listed for comparable units in those buildings. If you really had to sell a unit at APOGEE quickly due to divorce or BK or Madoff would you get 4 Milly or more like 2? We have our 3 bedroom at Latitude listed at $495K which is means about a one hundred grand loss in a year and a half post buildout and am seriously considering dropping the price another $100K to $395…….

I have to agree with both AJ and RT, ok, they argue but I for one find it interesting, I find other posters like Gables, JCcrimes, Muir, Lala, Ace also worth listening to and reading, I will contribute to the site more, because I do read it.

For me, my plans are still the same find a nice holiday home in Miami for my family. I live in London and as you know the pound is shocking at the moment, so those are all factors I have to take into account. We are going out to take a look at the area in greater detail in Feb/March, so I will report back.

To all amateur economists on this blog,

Don’t think only in unidimensional patterns !

Look back what happened in the recent past.

If you are only a little familiar with the chaos theory, then you should know that the future could bring also some very unorthodox developments (not only bad ones).

Linear reflections don’t help a lot nowadays.

AJ,
The Cite sale would have been of interest to me, except that I am not sure of the Cite building. Need to look up a bit more info. My preference is Brickell south to Coral Gables for personal reasons. But you now see the price point ($165 sf) which will get people like myself off of the sidelines (I recently inquired about a unit at $150 away from downtown, but sellers are dragging feet). Forget the need for direct bayview as you noted, my primary requirement is a safe and clean building which I can own a unit and sell without taking a loss versus rent in the next 5 to 10 years. when the price point allows that, most of the new buildings will finally be filled up with permanent residents.

Swiss,
Glad to hear you are not in a desperate situation and can consider any loss on the unit as just a reduction of profit from your other units. I’d be more than happy to help you write of the loss with an offer of $150 sf to take the property off your hands 🙂

Your logic of upgrades is of interest to me. It seems to me too many people did not properly account for the cost of upgrades and corresponding assessment value. In essence, it seems like many people thought a $30k flooring upgrade would be an instant $75k increase in sales price-pretty nice ROI but not realistic. Did you upgrade for investment purposes (which now does not seem like a good idea) or for personal preference (which i will not argue with-its your living environment)? In today’s market, you are not going to get any benefit from the upgrades-i tend to price a unit as if there are no extras at all, just building and location.

Also, you left One Miami. Any particular reason? I have considered it as one building I would buy in. I like the location and the building is old enough to have a HOA which should be working out the kinks. Does the building hold a dirty secret I should be aware of?

Lucas,
If you can find me a similar priced unit in Carbonell as listed above, let me know. I would consider that the best deal in the list. It certainly got my attention.

Well, with newbie already saying we’ll have Trillion Dollar deficits for YEARS and the 2009 deficit could be $1.2-$2 Trillion (yes, two trillion) we are now entering into insanity land. Who will finance such deficits? Certainly not the American people since their wealth and savings have recently waned. On the one hand the fed govt will complain about credit availability to consumers and businesses but then on the other hand they will absorb all the available credit that is out there….and cause interest rates to rise which is an indirect “tax” on the American people. How are mortgage rates going to remain low with $5 Trillion in NEW deficits needing to be funded??? The fed govt is grabbing all the capital that is out there…

The Four seasons unit sounds good to me. You can’t go wrong buying in the best building. In the future once all this panes out the best buildings will be the ones where units will be able to sell fast in. This will happen because they distinguish themselves from all the other cookie-cutter holes called condos. And you can’t argue that the Four seasons is not the best building.

Ace you made a great buy, I was one of your early doubters that you would be able to find 125 sq/ft in a building such as marina blue. Great buy, how the hell you pulled it off I don’t know.

Carbonell at just over 200 sq/ft is good deal. I really like Brickell Key, safe and upscale. Would love to see more deals like this and of course the Marina Blue deal that Ace scooped up. Great buy Ace!

Raffi – Ace didn’t buy, he was quoting a recent sale to someone that was smart with their money…..at least that is how I read his post.

Hey ace….i am really interested in getting a good deal. For example the marina blue unit that you bought…..please inform us

AZ88,

One has to put multiple offers on different apartments in order to get 1 through. I would estimate about 15-20% success rate. Obviously you have put down an inspection period where you can cancel the deal for whatever reason. It is very competitive out there. A lot of deals go through for about 10-15% above the asking price. Is it realistic? Yes. Dous it require focus and persistence? yes.

Also someone at the beginning asked about La Perla building. I was at the beginning of this project in 2001. Resold some of the apartments and still have 1 left. Though the price that I purchased it for is superb (the first round of pre construction prices in 2001) I still carry a negative cash flow. When apartment was not rented I lived there for a week at a time coming and going between NY and Miami.

My impression of the building: I like it. I chose it at the very beginning because of its location and (frankly to speak because of historical pier. Has it been restored btw?) This building has a very good style. Lobby is done with a very good taste. Nothing flashy or striking but very pleasing to the eyes and cozy. This lobby appeals to cultured, well educated crowd more of an intellectual type. It does not mean that that type of crowd lives in the bulding (it is not located next to Columbia University).
Now about apartments. Some of the floor plans are bad but some are really great. Every apartment has ocean views and some have stunning intracoastal, city and all the the way to Downtown views. HOA seems very stable and well established. Finished are very evarage but modern and nothing wrong with them. Prices are much lower than in other buildings except Oceania. IT is just my personal opinion. I am not selling my apartment because it is the worst time to sell. I’ll go through the storm and sell when the time is right.

An interesting real situation to analyze:

I just heard from a buddy of mine that owns a 2/2 unit in the Brickell Bay Club condo (renting it out), that the association just passed a special assessment of $550/month for 36 months to replace the A/C and some other work.

With this assessment, he says he will pay over $1,200/month in HOA fees!

I believe he bought around 2003. He is renting it out at $2k/month and he says that with this special asessment, it is costing him $2k/month to carry the unit!

Think about what that will do to pricing!

And this is supposed to be a stable building…

what does this do to my investment?

January 5, 2009, 1:56pm EST | Modified: Tuesday, January 6, 2009, 12:00am
Bulk buyer snags 60 units at Marina Blue

A Singer Island-based group has paid nearly $13 million for 60 units at the Marina Blue high-rise across from American Airlines Arena inMiami.
The deal was recorded in separate deed transactions between developer MistTowers – a subsidiary of Miami-based Hyperion Development – and buyer Welcome Bay on Dec. 24.
Joseph Kuharcik, an attorney in Palm Beach County who represented the buyer, declined to comment. Hyperion Development could not be reached immediately for comment.
The developer issued 374 deeds for the 516-unit Marina Blue before making the bulk deal with Welcome Bay, according to court records.
The total price, based on the taxable value paid for each deed, was about $12.9 million. The unit prices ranged from $165,000 to $264,000.
Robert Given, CB Richard Ellis executive VP in the South Florida Multi-Housing Group, estimated that the units sold for about $200 a square foot.
Given, who is not involved in the deal, suggested that senior lenders at projects like Marina Blue would be happy if units sold at $200 a square foot because that price could generate enough cash to pay them off.
“What you are going to find is that premium buildings and premium sites are going to have enough value to satisfy the senior lenders on new construction and additionally pay back some of the mezzanine and investor positions to a degree and those sites in marginal locations are going to be more challenged,” he said.
However, during preconstruction, units at Marina Blue were selling for about $400 a square foot.
The $200-a-square-foot price provides a ceiling for inferior pricing at inferior locations. But equal or better-quality condos may be able to generate a higher per-square-foot price, Given said.
When the 60-unit bulk sale is factored in, the building is about 84 percent sold, which is “very good” in this market, Given said.
Although $200 a square foot is less than what a lot of units in premier buildings sold for, even at preconstruction prices, it gives developers the breathing room to rent units immediately, and sell the units for more down the line, Given added.
“Once they pay off the senior lenders, they can slow down and maximize sales on the remaining units for investors,” he said. “Senior debt creates pressure to liquidate.”
Given also said that it could be an all-cash deal because financing is so hard to come by in the current market.
Many groups are on the prowl for bulk buys in downtown Miami.
The Related Group’s Jorge Perez is responsible for one of the few bulk buys that have been made public. He launched a buying fund that made two deals in the 528-unit 50 Biscayne, which Related Group built in partnership with Atlanta-based Cousins Properties. The bulk deal sold out the project and closed out its loan.
The 50 Biscayne buying fund, Lubert-Adler Partners, paid $6.1 million in May for 26 units –an average of $236,294 a unit – and $30.3 million for 120 units –an average of $252,504 a condo.
Condo Vultures Realty CEO Peter Zalewski, who was featured recently on 60 Minutes and frequently is quoted about his work to facilitate various bulk buys in Miami, was uncharacteristically silent on the Marina Blue deal.
Kevin Tomlinson, an Esslinger Wooten Maxwell broker specializing in condominiums, speculated that Corus Bank, Marina Blue’s lender, might be getting less from the developer. With individual condo buys becoming harder to come by, bulk buys are a lender’s best chance at recovering any of their money.
“The people who own the senior debt – they may be taking a discount,” Tomlinson said, noting that the deal may not be what the banked wanted or what it was owed, but it is better than nothing.

Visionary,

Thanks for the reminder. I’ve been swamped since I got back. I’ll try to get to it within the next couple of days.

Muir – Apartment to condo conversions are the worst performers I have ever seen. A 50% drop is lucky as 80% drops occur. Really really really poor investments. The only thing worse I suppose would be apartment to condo-hotels….if those happened. They make timeshares look like gold!

«Wonder what the condo fees might be on that one»

Never mind it’s on the listing. $480. Seems low for 611 sq. feet.