I recently had someone ask me a very intelligent question. His comment and question is below:
Lucas - I don’t know if I should continue to be concerned or excited with this news. In the end, it is what it is, and it would be great if it just happened as fast as possible. How are you defining a good deal for someone who is ready to buy something today, but may be hesitating because they are reading too much doom and gloom news in the press?
My response is found below:
The good news is that much of the “doom and gloom” will occur behind closed doors. It will happen fast. There are vulture capital funds in place who have been waiting for this very opportunity for years. Once the first one takes a bite then all of the others will swoop in.
These fund managers should wait until the very last moment. 50 cents on the dollar might seem fabulous but 20 cents on the dollar is not out of the question. Hold your ground and the others will follow. The banks are at your mercy; not the other way around. The credit crisis enfolding on Wall Street will create opportunities for these vulture capital funds that are unimaginable.
To answer your question, the deals lie within the older buildings. There is just too much uncertainty with the newer buildings. A developer mentioned the other day at our open house that it is impossible to build something now at $350 per square foot due to the high construction costs. Anything at $350 per square foot or less in Brickell is a bargain. Only the older buildings offer these types of deals. You just need to make sure that you buy into a building that is well maintained and has had a recent special assessment that has already been paid.
4 responses so far ↓
1
equitas
/Jul 22, 2007 at 12:21 pm
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Although well thought out and reasoned, I find your analysis lacking.
The City of Miami has yet to understand, let alone confront, the “doom and gloom.” The “doom and gloom” will not occur behind closed doors because “vulture capital funds,” whom ever they may be, cannot correct the problems by the incompetence of the City of Miami.
Let’s review what their recklessness negligence has given the “Magic City:”
1. Millions of dollars invested in “affordable housing” condo projects that were effectively “day-traded”/flipped by city council members.
2. Unprecedented, unplanned, unregulated residential growth in a city with a 3rd World infrastructure.
“Vulture capital funds,” won’t be able to save a tourism-focused Florida economy from crashing. Strap your-self in, this is going to be a rough ride. The first 12 to 24 months will be a vertical drop: straight down.
2
Lucas Lechuga
/Jul 22, 2007 at 7:25 pm
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The credit crisis that is enfolding on Wall Street will also determine the magnitude of the problems that the Miami housing market will have. It’s important to keep a close eye on what’s happening there. Take a look at the following link to see a video that discusses the credit crisis enfolding on Wall Street:
http://www.youtube.com/watch?v=PIDEi7q6JrQ
3
alec
/Jul 23, 2007 at 8:01 am
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No way that 350psf is the norm
4
Lucas Lechuga
/Jul 23, 2007 at 10:18 am
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You’re right, $350 psf is not the norm. According to my latest condo index for Brickell, released late last week, the average price per square foot of the 18 major buildings that it tracks was $528.84. The weighted-average price per square foot was $540.17. I was saying that anything under $350 psf is a great deal because you can’t build it for that price any longer due to the high construction costs nowadays.
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