Brickell on the River South Closeout Sale
January 9, 2009 by Lucas Lechuga
I received an email earlier this week about a developer closeout sale at Brickell on the River South. Prices of units include flooring and paint. The sale will open to the public January 14, 2009.
The ad states that they have "a limited amount of one bedrooms from $180,000 and two bedrooms from $213,000".
Still cashflow negative. Two bedroom for 150k is a decent deal.
I wonder how many other new developments will suffer Tao’s fate as Sun-Sentinel reported today.
For most any building, once you get to around $200k for a 2B unit, you are now getting my attention. As Cash Flow stated, the flow may be negative, but for a longer term resident you should begin to see positive return compared to rent in the near future as taxes drop (they will as assessed values return to earth) and HOA gets under control (insurance costs will have to drop as values of buildings decrease). we are beginning to see cracks from the developers who realize what price point will attract buyers. but individual sellers will probably never reach this level unless banks improve the short sale process.
Price alone is not an indicator of a good deal. Delinquent maintenance fees, foreclosures and liens should be looked at before even considering a unit in Miami. Anybody care to ask the developer what the financial status of the building is? Then we can compare it to the public records in a few months.
downown 2 bedroom rent perhaps would stabilise near $1000/mo range w/ sofla unemployment zooming to 10%+ by the end of this year. At 100 times rent this amounts to 100k property. Anything above you are going through slow bleeding. This is based on a optimistic scenario that US avoids japan like dacade plus long deflation.
People like AJ who rather obtusely hang on dreams of asset appreciation will unfortunately have to wait for a better part of next decade.Obama stimulus appears to be 1 trillion short in scale. The global excesses were so huge in the past 20 odd yrs that many have no idea where the equilibrium lies.
W/ sofla unemployment going parabolic in this yr, the inventory overhang will remain like a sword of damocles on realestate specufestors. In few yrs these folks will beg to rid themselves of their misery.
1920s epic florida bubble took Fisher (of fisher island fame) as a casualty. This bubble may claim Joe Perez as a victim.
guess their sales blitz of plastering Brickell with “$199K Condos!” billboards a few months back didn’t work too well…..
Just you wait this is no where near the bottom…
Renter Tom..I have been reading this blog for a while and find your posts highly informative. Thanks !
Question…do you have any knowledge/opinion about the Vilazul at 7728 Collins ? I have been looking at the Vilazul, Vilasol and Vilamur for a while now…and like a couple of units I have seen at the Vilazul. I live in Toronto, so purchasing a Miami Beach unit for me would be for vacations etc and eventually to spend more time there in about 5 years. I like this spot because of the proximity to the beach (across the road) and the style (lofts), plus the fact that there are improvements planned across the road to the park and some other nice houses etc. This sort of investment for me is more a “lifestyle” purchase, but would also want to see appreciation over 10-15 years.
Any info you (or others) can share about this small 20 unit complex would be highly appreciated.
Phil
Gables: Why will insurance costs drop? When I look at all the new buildings with their so-called “impact-resistant” glass, I suspect that rates will increase.
I can’t be the only person who drove Brickell Ave the day after Frances (2004) and virtually all the impact-resistant windows had blown in. (And those windows were on the BA side, not the east side, which would have taken the brunt.) Wilma, in 2005, was almost a non-event for Miami, coming at us as it did from the west. Most of the impact-resistant windows on the west wall of my then-condo shattered.
Just because we overbuilt and property values have fallen does not mean the cost of replacement has gone south too.
Phil (#8): Having owned a condo in a ten-unit complex, I will never buy in a small building again. I got assessed every single year. The smallest damage is a pain in the neck. A roof is a roof is a roof, and you are almost certain to have to repair a Florida roof every few years, if not outright replace it. That’s expensive, and way more so when divided by ten or twenty rather than, say, 150. Lord forbid your 20-unit building has an elevator.
Also, in a small building, you have quite a few absentee owners with fewer remaining to handle the administrative legwork – being on the BoD, getting quotes from insurers, contractors, or waste management – etc. It sounds as though you plan to be a largely absentee owner.
It leaves you open to fraud. You may be quite satisfied with the current condo president, but what happens if he moves?
In my case, I used to get an annual telephone call from the president. Maria* would say, we need to re-pave the parking lot. It will cost $10k. Please send a check for $1k. We need to repair the roof; the deductible is $20k; please send $2k.
Get the idea? I finally told Maria* that my CPA required a signed letter from the BoD announcing the assessment, and all the prior assessments too. She was insulted. That’s another thing about small condos: you can’t avoid dealing with neighbors you don’t like. I sold the condo.
I drove around the parking lot two years later. Still unimproved. I know people who live in the condo across from it who say they have never seen anyone work on the roof.
Jess,
Insurance will drop if deflation continues its assault on condos. Construction and replacement costs will also be driven down if deflation continues.The insurance industry reaped record profits over the past decade because most people had cheap easy money and did not question insurance. That will change and very much lower profit margins for the industry-just ask Mr. Buffet.
Gables- Think you’re being optimistic about insurance costs having to go down. At the most optimistic you should count on them being flat.
Jess,
You pressed the wrong buttons and now Renter Tom will go Ballistic. Never ever diss the insurance companies. RT is in their pockets.
Jess (#10):
Thank you for writing back with your small building experience. Wow, those are some issues to think about for sure. I have owned condos but always in large buildings…and your experience with the small complex raise some issues I will really need to think about. Thanks so much for sharing that with me.
Phil
Hi – I live in Liberty City. I heard that these big new buildings are taking Section 8 voutures.
Can someone help me get in touch with owners?
thanks
Phil – Sorry, never heard of those two condo buildings…. Good luck.
Jess – I think deflation will keep insurance rates stable. Of course, insurance rates are highly dependent on claims experience….so one or two big hurricanes and all bets are off. Also, repairs always cost more than that item’s cost during construction of the entire building. With lower material costs, that is a big help. Insurance rates never got a chance to fully bump up in response to oil and metal price increase….now that they have decreased hopefully the new rates weren’t calculated at or near the peak!
Renter Tom (#16) As an owner, I hope you are right. As a person who buys insurance, I wouldn’t hold my breath. Yes, commodity prices are down sharply, but the aftermath of a strong hurricane – we are due for one in SoFL – creates shortages, even if localized. I’ve yet to see an insurance company give me a break when things slowed down; the rates have always gone up for me.
My property taxes are lower than my insurance. If we had ten glorious years in FL w/o a hurricane, I’m willing to bet the insurance lobbyists would still win an increase each year.
I want to post something about rentals. Lucas’s listings are off the mark and off the charts. Lucas is using the MLS; I am using Craigslist.
Lucas has the Cosmopolitan on South Beach on his site, listing rentals for the <700SF smallest 1BRS starting at $1,775. That is nonsense. I rent there (I’m leaving) but I pay $1700. Most of the ads on the MLS for these totally fungible units are for $1900+. Good luck.
If you go to Craigslist Miami, enter Cosmopolitan, and search,
take a look here: http://miami.craigslist.org/mdc/apa/989610917.html
In case the ad is taken down, the owner of one of those units has been advertising this apartment for $1600, act now! And he has been doing it since he first posted it as available 11/1/08.
Landlords have to get real. There simply are not enough tenants for your crappy apartments with their non-functional kitchens. You read the granite-steel-marble manifesto, and believed that prices will alway go up. Wrong.
I’m a landlord too. I hope my tenant will stay for another year. Yes, I will reduce her rent. The last thing I want is an empty condo here.
Mr. $1,600 would already have done better by quietly signing for $1,400.
Jess (#11) is not me.
Phil
i’m familiar with all three buildings. have come close to purchasing there several times but the major drawback for me is the commute to work (i hate driving). all three are nice. only major drawback is the construction is not entirely remarkable. you’ll notice the drywall was done somewhat poorly, fixtures are falling out and the buildings already look a little worn. that said, put some cash in your own place and the former problem is taken care of. as for the latter, well, that’s s.fla for you.
Thanks jcrimes. I had the same impression when I looked at two units in the Vilazul last October. I had put in an offer on one unit at $50K below asking price…but could not get it. Just decided to wait and see if prices come down in this building sometime in 2009. Thanks again for your comments.
Phil
“Prices include flooring and paint”
I guess you no longer get granite counters tops and stainless steel appliances for $125.00 per square foot, or do you!
The Smart Money
$1600 rentals in South of Fifth buildings like the Cosmopolitan! HOA & taxes are about $1200 a month alone there in one of MB’s best locations. Why buy? This market is losing the cash buyers as well as the buyers who can’t get a loan because earning even 2% on $300-400k a year combined with paying rent makes owning, even without a mortgage, much more expensive….A cash buyer who rents instead of owns in say the Cosmopolitan at these rates is effectively renting for $1200 or less (factoring in low money market interest rates) or at the same cost as HOA & taxes except you can leave when you want without potentially getting creamed on your investment or worse be unable to sell if you rent. Why would you buy?
With prices going up 20/30% a year for the first 5 years of this decade many buyers ignored the additional high costs (HOA & taxes) in Miami. That game is clearly over & even if we see a bottoming out in the market many potential second home buyers will never take on ~$20k a year in extra non mortgage costs to own a second crib in Mia.