475 responses so far ↓

• 1 Renter Tom /Oct 8, 2008 at 1:45 pm  Vote:    

  I suppose there is a knife-catcher out there who will buy it at this still inflated price! Just kidding! Not bad price at all, wonder if it will set the market. Still, buying into a condo building with massive HOA problems is like being in a life raft with people what are only concerned for themselves and aren’t hesitant to turn to cannibalism. Desperate people do desperate things…

  Heck, maybe I’d buy one just or a hurricane evacuation pad….

• 2 Raffi /Oct 8, 2008 at 1:59 pm  Vote:    

  Renter Tom,

  prolly wont be much of a hurricane pad since its two blocks from the bay. The Vue has the most problems out of all the buildings, but its in a good location (relatively speaking), one block from brickell ave. and 2 blocks from Mary Brickell Village, with a little paint job on the ugly exterior you got yourself a nice building. under 100k sounds good to me, you would just have to weather the storm of crap in that building for a few years.

• 3 Shelley /Oct 8, 2008 at 2:13 pm  Vote:    

  Wow…this sold for $490,000 in 2006! That is quite a haircut. I just wish their were included pictures to see just how crappy the actual unit it.

• 4 Cristian /Oct 8, 2008 at 2:33 pm  Vote:    

  It doesn’t surprise me at all, 1 br below $100k is the tip of the Iceberg.
  South Beach already has 1 br below $100k hitting the market. The buildings are older and some of them don’t have parking but you can’t beat the south beach location, location, location.

• 5 Richard /Oct 8, 2008 at 2:51 pm  Vote:    

  The realtor could have put $50,000 as list price—its all subject to lenders approval. Very misleading–makes car dealers look almost legit with their small print

• 6 Cristian /Oct 8, 2008 at 3:02 pm  Vote:    

  @Richard

  the 1br below $100k in South Beach I’m talking about is bank owned.

• 7 Renter Tom /Oct 8, 2008 at 3:11 pm  Vote:    

  I did look up other “11″ line units in that building….there are others for sale under $120K if that is helpful.

• 8 Hugo P /Oct 8, 2008 at 3:43 pm  Vote:    

  Get ready folks… my guess is that we will see a lot of these in the near future.

  Can anyone say $200psf average?

• 9 Muir /Oct 8, 2008 at 4:43 pm  Vote:    

  Guess I’m in the minority. I see MUCH steeper drops.
  Can someone here explain to me what significance there is what it previously sold for when money was monopoly money, no doc loans ,104% financing ruled the day, straw buyers everywhere, Just what significance?
  NONE.
  At 100K would this unit cash flow positive at current rentals with 20% down?
  Maintenance at $450 (796sq feet)
  Taxes $7550 year (based on similar) = $630
  Rents are asking, ASKING $1275
  -
  Please explain to me, just how on earth $99K makes sense?
  -
  Let’s assume that the country where these properties are located are NOT in two wars and NOT facing a recession/ depression.
  -
  Now, explain why this 99K is a deal.

• 10 Renter Tom /Oct 8, 2008 at 4:56 pm  Vote:    

  Muir - You must not have been paying attention. Owners are supposed to chip in hundreds if not thousands of dollars to their rental condo each month. It doesn’t need to be cash flow positive! LOL LOL LOL You just need to make friends with your tenants…that’s priceless.

• 11 Muir /Oct 8, 2008 at 5:01 pm  Vote:    

  I’ll answer my own question so you can criticize my analysis and hopefully I’ll learn something.
  Assume a 30% decrease in taxes to $5300.
  Assume renting it for $1050
  Make/break point is 50K for me.
  -
  Now taking into consideration a domestic deep recession, Europe’s Asia’s problems, HOA problems….
  I would CURRENTLY still use the 50K as the make break point only because at some point you have to put it somewhere before the oncoming inflation (after the current deflation cycle) arrives.
  However, as this goes lower, I could revise and go lower.
  -
  But 100K?
  I thought investments were supposed to make money, NOT lose them.

• 12 Renter Tom /Oct 8, 2008 at 5:41 pm  Vote:    

  Muir - I was being sarcastic and kinda rubbing it in on our long lost buddy and former (apparently evicted) real estate investment cheerleading resident, AJ…

• 13 raffi /Oct 8, 2008 at 5:52 pm  Vote:    

  renter tom, you must have a crush on AJ I’ve never heard someone talk so much about another person haha.

• 14 Muir /Oct 8, 2008 at 6:29 pm  Vote:    

  Sorry Tom.
  Actually answered my own post before I read yours. I know your position on this.
  Still, I just want those who answered on the poll to justify their answers.
  I can’t see where my numbers and logic are wrong.
  What is their logic if not speculation?
  Unless they believe that an Argentine type hyper-inflation is just around the corner, in which case i’d like to hear about it.
  But really, other than just pulling a number out of the air, how did they arrive at an answer, did it sound good?
  More importantly, how will they know when it IS a good buy?

• 15 DJ /Oct 8, 2008 at 6:50 pm  Vote:    

  I agree that this is a sign of the times. There is absolutely no way that prices can remain artificially high in any real market, let alone this one. Stock market’s in free-fall, we might be in a recession, and credit’s tighter than my first girlfriend. Just think about how many people are out there now that want to buy, but are no longer qualified. The question now is when will the sellers and developers admit that this is the case and lower their asking prices or begin to accept the low-ball offers.

  I tried to explain to this my realtor the other day but he didn’t seem to want to hear it and tried to convince me of otherwise, which kinda turned me off to him. If you guys remember, I’m planning on buying a condo soon for cash in the $500k range. I want a nice place to live for a while. Does anyone have any recent data that reflects how much sales prices are decreasing on average here in Miami? It seems like most of the steals out there are all REOs on sub-par units, but the average seller doesn’t seem to facing reality.

• 16 Hugo P /Oct 8, 2008 at 7:08 pm  Vote:    

  Muir… I agree with you 100%. Dead on with the $50K number.

  Purchase price: Goes for $100k (forget closing costs for now)
  Rents: Assume you can rent it at $1,200. $1.5/sf, should be OK for that area.
  HOA: The $450 in the HOA fees translates into $0.56/sf. IF the HOA has no problems (not sure), this number should be OK for that building.
  Taxes: Assume they come down and stabilize at 2% of the purchase price ($5k, $420/month).

  Assuming all of this, you net $330/month ($1200-$450-$416) or $4k/year.

  That’s a 4% return on the $100k.

  The question is, who would buy this at a 4% return with the asociated risk that it might depreciate and the income could go down (vacancy, possible lower rents, HOA problems, etc)?

  I would definitely not, but I do think that at these prices, you might get more some smaller foreign ALL CASH buyers who might want a second home and are running from the stock market.

  That being said, I don’t think that there are enough of those to maintain these prices.

  For me, it’s gotta get at least to an 8% return (your $50K ), so we can start clearing some inventory here.

  Back to basics

• 17 Hugo P /Oct 8, 2008 at 7:14 pm  Vote:    

  DJ…. Amen

  I had the same experience with my broker and she started to give me all this historic data from the peak days and convincing me I had a deal. Not biting. Made a decent offer for a new condo and wasn’t accepted. Let’s wait and see. Lots of sellers are still trying to sell at a profit and it just ain’t happening.

  No one wants a loss, but it will start hurting soon and prices will adjust.

• 18 jcrimes /Oct 8, 2008 at 7:53 pm  Vote:    

  the problem(s) with sellers is that they are reacting, rather than anticipating. mainly, if i’m throwing something on the market now and i’m SERIOUS about selling it, i would price it at a level where i anticipate asking prices to be six months from now. instead, everyone follows the leader…however…the leader’s place ain’t selling in the first instance.

• 19 Hugo P /Oct 8, 2008 at 8:13 pm  Vote:    

  Check that…. just noticed I made a mistake in the taxes: If they stabilize at 2%, it’s $2k and not $5k. ($166/month)

  This bumps the return to 7% and the price to $87K (8% return)

• 20 Renter Tom /Oct 8, 2008 at 8:36 pm  Vote:    

  DJ - I’m sorta in the same boat but am perfectly fine with renting what I’ve got now since it is a great place at half the price! My thought is the capitulation will happen in this quarter. You’d have to be pretty thick skulled to not price to market after being hammered with all that is going on. But we have to remember that the denial out there is strong…very strong. People had already “cashed in” there real estate lottery ticket in their minds and are now psychologically anchored to those prices…they simply can’t face the reality of a loss instead since it would dash their mental dreams of retirement, etc. It really is a huge blow for many. But the burden of being bled each month with no end in sight will eventually get people to throw in the towel…you CAN’T beat the market….macro econ will win every time so it is better to go with the tide than try to drain the ocean (yep, that is an original quote…. ) I really ought to be a guest host on Fast Money! LOL

• 21 SB /Oct 8, 2008 at 8:59 pm  Vote:    

  Hugo, I dont understand your math. Where are you getting $87K? Also, dont you think a 2% tax rate is quite a bit of “wishful thinking”?

  Muir, where do you get $7550 in taxes on a $100k condo?

  Trying to learn here so dont flip out please. Thanks in advance.

  SB

• 22 SB /Oct 8, 2008 at 9:00 pm  Vote:    

  oh, and $450/month HOA is a tad absurd for a $100k residence too

• 23 gables /Oct 8, 2008 at 10:19 pm  Vote:    

  the fundamental reason you are not seeing private owners price at a fire sale level is they cannot afford to do so. if you paid $300k recently for a condo now valued at $200k, you would have to write off $100k. most owners have no ability to do so. they have a shot only if the banks will allow them to short sale-but many banks are not pushing the short sales-they seem to prefer to take the property in foreclosure and then fire sale the unit. the only low sale prices i see in the listings seem to be REO. i have not seen many of the short sale listing actually close. thus you cannot blame the owners for not adjusting to the new market reality-its the banks that are in denial. most owners would run from their property if given the opportunity.

• 24 RAM /Oct 8, 2008 at 10:21 pm  Vote:    

  Muir & Hugo P,

  Your calculations are wrong.

  For a cash deal, the numbers for an investor would be:

  Annual Revenue: +$14,400 (Rent @ $1,200/month)
  Real Estate Taxes: -$2,000 ($100,000 @ 2%)
  Tax Credit: +$600 (R.E. Tax Deduction of $2,000 assuming a 30% Tax Bracket)
  HOA: -5,400 ($450/month)
  Depreciation Credit: +$1,463 ($100k for 20.5 years & assuming a 30% Tax Bracket)

  NET on Cash: $9,063 (or 9.1% on your $100k).

  For a financed deal, the numbers for an investor would be:

  Annual Revenue: +$14,400 (Rent @ $1,200/month)
  Real Estate Taxes: -$2,000 ($100,000 @ 2%)
  Tax Credit: +$600 (R.E. Tax Deduction of $2,000 assuming a 30% Tax Bracket)
  HOA: -$5,400 ($450/month)
  Annual Mortgage Payments: -$4,769 (30% down = $70k mortgage @ 5.5% for 30 years).
  Mortgage Interest Deduction: +$1,245 (Annual interest of $4,149 & assuming a 30% Tax Bracket).
  Depreciation Credit: +$1,463 ($100k for 20.5 years & assuming a 30% Tax Bracket)

  NET: $10,308 (or 34.4% on the $30,000 down payment).

  For an investor, the HOA dues may or may not be tax-deductible. The IRS allows certain expenses of the HOA but not all.

  For a home buyer, if you include the tax credits for the mortgage interest and the real estate taxes, the monthly outlay is $860/month.

  I am not suggesting that this condo is a good investment. You need to take into consideration vacancy, possible lower rents, HOA problems, repairs, headaches, etc.

  All I wanted to convey is a complete financial picture of owning/investing in a rental property.

• 25 pissed /Oct 8, 2008 at 10:41 pm  Vote:    

  RAM, You are the smartest guy on this blog. I see and hear so much bullshit here. Mostly self serving personal opinions of people. It is rare to see hard facts presented like yours. Great job.

• 26 Muir /Oct 8, 2008 at 10:47 pm  Vote:    

  Folio No.: 01-4139-088-2420
  Property: 1250 S MIAMI AVE 1111
  Mailing Address: DEUTSCHE BANK NAT’L TRU CO TRS

  4828 LOOP CENTRAL DR HOUSTON TX
  77081-
  Property Information:
  Primary Zone: 6408 RAPID TRANSIT-HIGH DENSITY
  CLUC: 0007 RESIDENTIAL- CONDOMINIUM
  Beds/Baths: 1/1
  Floors: 0
  Living Units: 1
  Adj Sq Footage: 796
  Lot Size: 0 SQ FT
  Year Built: 2004
  Legal Description: VUE AT BRICKELL CONDO UNIT 1111 UNDIV 0.2257100% INT IN COMMON ELEMENTS OFF REC 23102-262 OR 22937-4474 1204 2
  Sale Information:
  Sale O/R: 24696-1536
  Sale Date: 6/2006
  Sale Amount: $490,000
  Assessment Information:*
  Year: 2008 2007
  Land Value: $0 $0
  Building Value: $0 $0
  Market Value: $330,170 $330,170
  Assessed Value: $330,170 $330,170
  Total Exemptions: $0 $0
  Taxable Value: $330,170 $330,170
  *The market and assessed values are accurately reflected.Information related to this property’s exemptions and taxable values are being updated as a result of the recent passage of Amendment One and will be available shortly.

• 27 JL /Oct 8, 2008 at 10:54 pm  Vote:    

  Here’s my question, if this unit sells at 100K tomorrow

  How long is it going to take Miami Dade to take the taxable value from $330,170 to $100,000.

  From what I’m hearing, you can’t make any assumption that the taxable value will correlate to the purchase price and that really makes it hard to make an investment thesis.

  When condos were selling for $0 in the previous bust, what were they getting taxed at…. any ideas?

• 28 Muir /Oct 8, 2008 at 11:07 pm  Vote:    

  Pissed your an amateur.
  Ram, Gables, SB
  Monthly HOAs run around 43-50 cents.
  My exact $450 I got from this site but is quoted elsewhere for units with same square feet (someone could just call and verify. 796sq/ft * 50 cents is $398 and not $450 but I have SEEN worse)
  The taxes see above. (http://www.miamidade.gov/PA/)
  Pissed. What is the mill rate? Common what is it?
  Look at assessed value and multiply. Investment or living there? I calculated investment for my $7500.
  Prove me wrong.
  I PREDICTED a drop to $5300, thoughts?
  Ram, $1200 / month?
  Are rentals going up or down? Thoughts?
  Renting it 365 / year? No leeway for downtime? Reserving anything for minor repairs?
  Ram $2000 for taxes?! Show me the money.
  SB, So what are HOAs running per square foot since you say it is ridiculous.

• 29 Muir /Oct 8, 2008 at 11:08 pm  Vote:    

  JL look above

• 30 Muir /Oct 8, 2008 at 11:19 pm  Vote:    

  OK Ram, Gables, SB
  Show me the money!
  Pissed don’t bother, out of your league son.
  Do NOT get me wrong guys, I’d LOVE to be proven wrong cause am sitting on a shit full cash and if you convince me I would be REAL happy, let’s just use real numbers instead of wishing numbers.
  Millage? Appraised value ?(JL nailed it and I posted on it with a prediction of a 30% reduction in appraised value)
  Are rents going down? (This is easy to check and I do know the answer to this one)
  Your are assuming occupancy of 52 weeks?
  -
  Let’s start with that.
  Then we can get into other numbers. How many times a year can you rent? What are the buildings finances like?
  -
  No need to even mention the economy, let’s make believe that all is well.
  Hugo, I think your original post was right on. Then you assumed a 2% on the sale. See JL my comments above.
  Tom? Your numbers? I know your thoughts and we seem to agree, but how do you see the numbers?

• 31 Muir /Oct 8, 2008 at 11:27 pm  Vote:    

  Finally before lights out here are my original numbers:
  “I’ll answer my own question so you can criticize my analysis and hopefully I’ll learn something.
  Assume a 30% decrease in taxes to $5300.
  Assume renting it for $1050
  Make/break point is 50K for me.”
  My question was:
  “Guess I’m in the minority. I see MUCH steeper drops.
  Can someone here explain to me what significance there is what it previously sold for when money was monopoly money, no doc loans ,104% financing ruled the day, straw buyers everywhere, Just what significance?
  NONE.
  At 100K would this unit cash flow positive at current rentals with 20% down?
  Maintenance at $450 (796sq feet)
  Taxes $7550 year (based on similar) = $630
  Rents are asking, ASKING $1275
  -
  Please explain to me, just how on earth $99K makes sense?”
  -
  My numbers still hold up RAM.
  Your numbers work only if the following assumptions are true:
  “Annual Revenue: +$14,400 (Rent @ $1,200/month)
  Real Estate Taxes: -$2,000 ($100,000 @ 2%)”
  Your wrong on the second and the first I’d like to hear more about in a market with much more supply than demand.
  Again everybody, if I am wrong I will CELEBRATE!
  Just show me where if that is the case.

• 32 RG /Oct 8, 2008 at 11:45 pm  Vote:    

  RAM you forgot to factor in the tax’s you would have to pay on the rental income 1200 x 12=14400 x 30%=4320. Let be realistic and say you deduct a few grand that’s still over 3k in taxes that must be factored in.
  Another thing to point out is yes it would be fair to calculate the property tax’s as mill rate times the price you paid which is about 2% however that’s not how it works nor will it ever be like that because the state couldn’t afford such a hit so the mill rate will be multiplied by the their “market value” which is over 300k.
  A third point due to the over building rents will most definitely over the next couple of years go down due to the inventory.
  I want prices to go up as I am losing and will continue to stand to loose a lot of money but I am calling it as it is really. Nothing is an investment now, you will loose. Will prices go much lower I doubt it, you have to factor in construction cost not only rental cost as must of you do. It just wont be a good investment for a long while until prices stablize and rental prices increase but to think prices of a unit like this will drop below 50k is insane despite the fact the cost/rent ratio doesnt work out.

• 33 RAM /Oct 8, 2008 at 11:54 pm  Vote:    

  Muir,

  O.K. Let’s use your numbers:

  Annual Revenue: +$12,600 ($1,050/month)
  Real Estate Taxes: -$5,300 (using your 30% discount)
  HOA Dues: -$5,400 (again your number -$450/month)
  R.E. Tax Credit: +$1,590 (30% Tax Bracket on $5,300)
  Depreciation Credit: +$1,463 ($100K for 20.5 years @ a 30% Tax Bracket)

  NET: +$4,953 (4.95% return on full asking price of $100K).

  The analysis goes for any rental property. Not just this condo.

  Again, “I am not suggesting that this condo is a good investment. You need to take into consideration vacancy/occupancy, possible lower rents, HOA problems, repairs, headaches, etc.
  All I wanted to convey is a complete financial picture of owning/investing in a rental property.”

• 34 Renter Tom /Oct 8, 2008 at 11:57 pm  Vote:    

  RG - FYI the income taxes are paid not on total rental income but on the net after expenses. Moreover, construction costs will not be a price floor on existing home inventory, it will only prevent new construction from coming online. You are correct that govt will be slow to mark down the assessed values. There is a ton of inventory and it will take years to work through that inventory and so the bottom is a long ways off. I’d buy my rental condo at $200/s.f. this minute, $250/s.f. wouldn’t be bad either, but $300/s.f. would make me think that I could do better….

• 35 Renter Tom /Oct 9, 2008 at 12:05 am  Vote:    

  RAM - You are looking at cash flow. From a wealth accumulation standpoint and assuming you do not hold this asset until you die, you should not include the “Depreciation Credit” as an expense since it will be recaptured when sold so it is just a temporary thing. Moreover, the entire purchase price can not be the basis for this depreciation since the purchase price includes items that can not be depreciated such as land which reasonably would be 15%-25% of the purchase price (all condos have X% undivided interest in the common areas which includes an interest in the land). So, the return on a cash flow basis is an inflated return until the asset is sold. Other than that nuance, good analysis and good job.

• 36 McMichael /Oct 9, 2008 at 12:12 am  Vote:    

  Wow Renter Tom, you are really smart!

• 37 Mark (Not Zilbert) /Oct 9, 2008 at 12:12 am  Vote:    

  RAM you factor in the depreciation credit, but then you keep it as profit? Buddy you’ll be spending 1.5% on maintenance on that unit trust me. You can’t just pocket it or pretty soon you’ll be a slum lord. You will likely spend more than that. Also this unit is likely a TRASH OUT meaning the insides are gutted. Copper pipes and wiring likely stolen. So you’ll be investing quite a bit at the outset. Also, rents are headed down baby. If you think otherwise you’re out of your mind. $1/SF will be the norm in 1 year. How do I know this? They built 66% too many condos (they were all non-owner occupied), purely for SPECULATION. There aren’t enough people in Miami to actually rent all these condos. The city’s population is 409K and there are currently 25 thousand condos for sale. Think about it. There aren’t enough renters plain and simple. Prices WILL fall below construction costs.

• 38 Mark (Not Zilbert) /Oct 9, 2008 at 12:16 am  Vote:    

  Also keep in mind if you look at case shiller the price crash in Miami didn’t start until July/August of 2007 so this is only 1 year in. And housing in Miami is in infinitely better shape than condos and has only fallen 50% of the way. So what do you think will happen to condos?

• 39 SB /Oct 9, 2008 at 12:16 am  Vote:    

  I guess you missed the “dont flip out” part…

  Thanks for providing nothing to help me learn more. If you dont think 5.5% in HOA fees is absurd, Ive got a bridge in Brooklyn to sell you. Hope you enjoy being your own biggest fan. Thank you very little.

  SB

• 40 Shelley /Oct 9, 2008 at 1:01 am  Vote:    

  Can anyone provide a link detailing the past condo bust where condos were going for $0. This sounds quite amazing to me.

• 41 andrey rossin /Oct 9, 2008 at 7:36 am  Vote:    

  If it is a shortsale that is not approved they caould have listed it for $50.ooo for that matter,does not make any difference unless theres a written set price from the lender it is all sheer speculation.

• 42 BFG /Oct 9, 2008 at 8:15 am  Vote:    

  Like many of these posters, I think taking the old school real estate investment approach makes sense.

  However, like many have also pointed out, there are a TON of variables out there that make it hard to really forecast how low prices will go (global recession, tight credit markets, stock market down, rising unemployment, hurricanes, Florida losing its status as retirement capital, etc). Just like we way overshot the fundamental values on the upside, I think we’re likely to overshoot them on the downside, as well.

  And based on RAM’s analysis, I don’t think it makes sense to buy this thing at $99k if you’re only getting a 4.95% return (with some big assumptions: you make enough money to get the tax benefits, there are no maintenance costs, no vacancies at all, you paid cash, taxes will go down, rents will not drop).

  When you can get 5% guaranteed on an insured CD, why would anyone bother with an investment like this?

• 43 Muir /Oct 9, 2008 at 8:16 am  Vote:    

  RAM, TOM thx, that’s what I am talking about with the numbers.
  Guys, it works better if we all try to help each other with info.
  Each of us might have some knowledge the others do not have.
  I’m here because I am interested in buying not talking down Miami condos.
  My uncertainty is when to do so.

  RAM // Oct 8, 2008 at 11:54 pm
  Muir,

  O.K. Let’s use your numbers:

  Annual Revenue: +$12,600 ($1,050/month)
  Real Estate Taxes: -$5,300 (using your 30% discount)
  HOA Dues: -$5,400 (again your number -$450/month)
  R.E. Tax Credit: +$1,590 (30% Tax Bracket on $5,300)
  Depreciation Credit: +$1,463 ($100K for 20.5 years @ a 30% Tax Bracket)

  NET: +$4,953 (4.95% return on full asking price of $100K).

  The analysis goes for any rental property. Not just this condo.

  Again, “I am not suggesting that this condo is a good investment. You need to take into consideration vacancy/occupancy, possible lower rents, HOA problems, repairs, headaches, etc.
  All I wanted to convey is a complete financial picture of owning/investing in a rental property.”
  -
  Renter Tom // Oct 9, 2008 at 12:05 am
  RAM - You are looking at cash flow. From a wealth accumulation standpoint and assuming you do not hold this asset until you die, you should not include the “Depreciation Credit” as an expense since it will be recaptured when sold so it is just a temporary thing. Moreover, the entire purchase price can not be the basis for this depreciation since the purchase price includes items that can not be depreciated such as land which reasonably would be 15%-25% of the purchase price (all condos have X% undivided interest in the common areas which includes an interest in the land). So, the return on a cash flow basis is an inflated return until the asset is sold. Other than that nuance, good analysis and good job.

• 44 Probably too Cynical /Oct 9, 2008 at 8:29 am  Vote:    

  what your analysis is also leaving out is that this building is a toilet. I toured it in 2004 when it was brand new and hated it then. it has only gone downhill since. a friend who recently moved out tells horror stories of squatters occupying vacant units. and it is now surrounded by taller buildings on all sides, so there will be zero view. it is competing with The Club and The Sail for “Crappiest Condo near Brickell.”

• 45 Dave /Oct 9, 2008 at 8:30 am  Vote:    

  On the tax front, I think the County is going to have a tough time with the comps on these properties to come up with the taxable values because they are forbidden by state law from including “distressed property sales” in thier evaluations. How many downtown condo sales are not “distressed” (ie. not short sales, foreclosures…etc)?

• 46 Muir /Oct 9, 2008 at 8:34 am  Vote:    

  RG // Oct 8, 2008 at 11:45 pm

  “I want prices to go up as I am losing and will continue to stand to loose a lot of money but I am calling it as it is really. Nothing is an investment now, you will loose. Will prices go much lower I doubt it, you have to factor in construction cost not only rental cost as must of you do. It just wont be a good investment for a long while until prices stablize and rental prices increase but to think prices of a unit like this will drop below 50k is insane despite the fact the cost/rent ratio doesnt work out.”

  It is unfortunate that you are losing money, I gain nothing from your loss and your integrity is apparent in calling it like it is.
  I was writing something long about construction costs and selling prices when I realized it wasn’t important, if they are in a position where they have to sell, they have to sell.
  Finally thx on these 2 points:
  “Another thing to point out is yes it would be fair to calculate the property tax’s as mill rate times the price you paid which is about 2% however that’s not how it works nor will it ever be like that because the state couldn’t afford such a hit so the mill rate will be multiplied by the their “market value” which is over 300k.
  A third point due to the over building rents will most definitely over the next couple of years go down due to the inventory.”
  In Palm Beach downtown condo rentals have gone down quite a bit. Different market same principle.

• 47 DJ /Oct 9, 2008 at 9:28 am  Vote:    

  Tom (post # 20)

  I hear what you’re saying man. I’m fine renting for the time being as well, but I’m kind of at a point in my life where I feel like I need to own my own home. I’ll be turning 30 in a few months, and I guess I have sort of a psychological desire to own my first place. I’ve been pretty dead set on this for a while now, but the more I think about, the more I realize I cant let my own impulses dictate this decision. I guess now it’s just a matter of waiting things out until the best deal comes along. Hopefully it’ll be sooner than later.

• 48 GT3 /Oct 9, 2008 at 9:59 am  Vote:    

  Shelly stated “Can anyone provide a link detailing the past condo bust where condos were going for $0? This sounds quite amazing to me.” It sounds quite amazing to me, too….. amazing BS. Who is going to back up JL’s statement? Are any of you doom and gloomers (who are likely rolling around in laughter and greenbacks right now) already standing in the free-condo line? I heard that Mercedes Benz is giving away S-Classes to anyone who can pay the gas-guzzler tax and sales tax. They just don’t want to keep holding on to those depreciating vehicles any longer.
  In all seriousness, if condos on Brickell went for $0 in the last bust, and this RE/condo bust is considerably worse, then owners shouldn’t be giving them away for free. The seller should be paying the buyer to take it. So forget free condos, let’s get payed to own one. Okay, I wasn’t serious after all.

• 49 Renter Tom /Oct 9, 2008 at 10:13 am  Vote:    

  DJ - I’m renting at 1/2 price without the asset price decline or HOA worries….. It is a great deal. I’m saving a ton! If you include the asset price declines, I’d save enough for a free condo in 2-3 years.

• 50 Renter Tom /Oct 9, 2008 at 10:20 am  Vote:    

  In fact, I was really looking to buy before deciding to rent but couldn’t put a value on anything to make an offer because of the uncertainty. After getting over the “must own” mindset, I decided to rent and am very very happy! When I decide to move, I won’t have the burden and expense of selling….it is a hassle with showings (if you still live in it at the time) and of course the commission. I’ll just move out, have cleaning lady do the final cleaning, and be done….so simple. Renting is the way to go in this market!

• 51 Mark /Oct 9, 2008 at 11:03 am  Vote:    

  Renters are laughing all the way to the bank.

  Scratch the wall? Not my problem, I rent. Landlord will repaint after I more out. Fridge not working? Call the landlord, have it fixed. Poor quality cabinets? No need to call customer service/carpenter and complain, I’m out of there in 8 months, what do I care if the cabinets look like utter shit. Low water pressure in the shower? Call landlord and fix it. If it isn’t perfect I’ll just deal for 8 more months. CEILING CROOKED (NEW CONSTRUCTION QUALITY SUCKS ASS)? What do I care, it’s not noticible, its not mine, I freaking rent!!!!

  Do you see why renting is fun?

• 52 Muir /Oct 9, 2008 at 11:18 am  Vote:    

  GT3 // Oct 9, 2008 at 9:59 am
  Shelly stated “Can anyone provide a link detailing the past condo bust where condos were going for $0? This sounds quite amazing to me.”
  A little off topic isn’t it?
  So, if in 05 I had told you that in 3 years 400K condos would be asking 100K, I would have been nuts?
  Oh, hindsight is 20/20.
  Well guess what, I sold Dec 04.
  -
  Why not try answering just what would be a good investment price for this condo.
  -
  The numbers point out that 100K is too high.
  Of course, it’s a free market and someone will buy which is fine by me: prices went up a rung at a time and will climb down the same way.
  I mean what are YOUR numbers? At what numbers do you make a return that you can live with?
  -
  Provide details and not what your wishing rents and costs:
  1. appraised value?
  2. millage?
  3. rentals?
  4. rentals going up or down?
  5. HOA monthly assessments? (real numbers, not what makes sense)
  -
  Really I want sales, those are the new comps for me.

• 53 Un-Related /Oct 9, 2008 at 11:33 am  Vote:    

  Renter Tom said: “DJ - I’m renting at 1/2 price without the asset price decline or HOA worries….. It is a great deal. I’m saving a ton! If you include the asset price declines, I’d save enough for a free condo in 2-3 years.”

  The “Rah! Rah! Let’s Go Condos” crew will overlook the truth in your statement because “the truth” hurts (or kills) in this market. You use the words: “I’m renting”, “great deal”, “I’m saving”, and “I’d save” in four short sentences. These are foreign concepts to the “crew” and may be the primary reason for today’s reality. That, and we don’t need a 50-story “memorial” to a “developer-borrower” (wait until this designation becomes a standard description) on every corner.

• 54 Renter Tom /Oct 9, 2008 at 11:33 am  Vote:    

  You know what makes be really upset? There is a person I met who was telling me about their real estate troubles trying to get a short sale through the bank. This foreign couple is getting a divorce and had made a combined income of $300K-$400K. They HELOC’d and credit card debt to the hilt living a lifestyle of world travels and fine wine. This lady just kept rattling on telling me things she just shouldn’t have. Then I find out she has money hidden away (substantial money) which must be in a foreign account that she won’t access until after the short sale goes through so she is anxious (and surprisingly upset) for the bank to approve the short sale. I had to bit my tough listening to all this crap. They are going to stiff the banks for over $500K (I really don’t know the total other than that is the least amount). Meanwhile she drives around in her expensive BMW with prefectly manicured hands, etc. planning her next world trip! Unbelievable. It make me sick. I think this may amount to mortgage fraud or some other financial fraud since they must have had to fill out some forms regarding the short sale…… Hiding assets and then “bragging” about it is very very sickening.

• 55 Mark /Oct 9, 2008 at 11:46 am  Vote:    

  You couldnt pay me to live in the future housing project called “Vue”. I value my life too much. Might as well call it Cabrini-Green.

  Cabrini-Green
  Composed of 10 sections, built over a thirty-year period, the last newly constucted in 1962. The construction reflected the “urban renewal” approach to United States city planning in the mid-twentieth century.

  At first, the housing was integrated and many residents held jobs. This changed in the years after World War II, when the nearby factories that provided the neighborhood’s economic base closed and laid off thousands (sound familiar????) At the same time, the cash-strapped city began withdrawing crucial services like police patrols, transit services, and routine building maintenance (sound familiar???). Lawns were paved over to save on maintenance, failed lights were left for months, and apartments damaged by fire were simply boarded up instead of rehabilitated and reoccupied (already happening at ” Vue”). Later phases of public housing development (such as the Green Homes, the newest of the Cabrini-Green buildings) were built on extremely tight budgets and suffered from maintenance problems due to the low quality of construction (sound familiar?).

  Residents lived with substantially subsidized rents (Vue will eventually become section 8 housing and people will buy the units to rent to people on welfare). However, many neglected their units and vandalized common areas both in and around the buildings. This behavior resulted in most law-abiding residents with any financial resources moving out, leaving behind the extremely poor, petty criminals, gang members, and drug dealers.

  Unlike many of the city’s other public housing projects like Rockwell Gardens or Robert Taylor Homes, Cabrini Green was situated in an extremely affluent part of the city (so this can happen even in NICE AREAS).The poverty-stricken projects were actually constructed at the meeting point of Chicago’s two wealthiest neighborhoods, Lincoln Park and the Gold Coast. Less than a mile to the east sits Michigan Avenue with its high-end shopping and expensive housing (The future of Vue).

  . The buildings’ proximity to these affluent areas made Cabrini-Green a lucrative site for illicit drug sales (this can’t happen in Miami because drugs are not a problem here, right???); in the absence of other employment opportunities, intense competition in this underground economy fostered gang formation and violence. Specific gangs ‘controlled’ individual buildings, and residents felt pressure to ally with these gangs in order to protect themselves from escalating violence.

  During the worst years of Cabrini-Green’s problems, vandalism increased substantially. Gang members and miscreants covered interior walls with graffiti and damaged doors, windows, and elevators. Many residents urinated in the hallways which were rarely cleaned. Rat and cockroach infestations were commonplace, rotting garbage stacked up in clogged trash chutes (it once piled up to the 15th floor), and basic utilities (water, electricity, etc.) often malfunctioned and were left unrepaired. On the exterior, boarded-up windows, burned-out areas of the façade, and pavement instead of green space—all in the name of economizing on maintenance—created an atmosphere of neglect and decay. The high “open galleries” were enclosed with steel fencing the entire height of the building to prevent residents from throwing garbage over the edge, from falling, or from being thrown off (giving the visual appearance of a large prison tier, or animal cages, which further enraged community leaders).[6]

  Mark here - I’ll leave you to do further research, but eventually Cabrini-Green became the murder epicenter of Chicago and the US. There were snipers that would kill police that came to investigate crimes so eventually it became Jungle Rule.

  Have a nice day condo buyers.

• 56 Mark /Oct 9, 2008 at 11:50 am  Vote:    

  Also, the peak of the violence was in the 70s and 80s only ten years after some of the newest construction. So if Vue was built in 2004 it has like 6 more years to go…

• 57 Alejandro Diaz Bazan /Oct 9, 2008 at 11:54 am  Vote:    

  There are 31 Pending Sales right now at the Vue, 27 have closed this year. There are 323 units in the building, theres 122 current Foreclosures in the building. The even numbers face Brickell and have a premium over the odd number units that face the other side. I have had closings with financing in the building so its not only cash buyers like at the Jade. I think the location with Badrutts downstairs, Segafredo and Mary Brickell within walking distance make it great and affordable. Any of these units with 10K in them (renovate kitchen to stainless steel and granite countertops and hard flooring) look really nice. The lobby is actually very nice and if I was a young professional this would be a great building to live in. You willnot pay 5K in taxes for a 100K place, as more and more of thse comps come in at 100K you should pay $1800-2500 and you can contest your assesments with the deeds. My analysis points that the current prices do make sense as I always multiply the rent by 100 and if the asking pice is less than that then I run the numbers. So I take into consideration number of Pending Foreclosures and look at the whole pipeline rather than only take in Comparale Sales and NOI/Cap Rate Once the biulding sells most of the foreclosures the building starts turning over as every time an REO sells that condo association gets back any owed maintenance fees from 6 months Prior to the Sale Date. If you close Foreclosures you see how little the Bank actually nets, its pretty bad.

  If this sells for 85K it probably owes 2007 and 2008 taxes plus it has to pay 5% commision, plus they pay for closing, plus they pay the outstanding maintenance fees due to get the estoppel letter. The Bank probably nets about 60K (not taking into consideration what they are spending in the Loss Mitigation Dept and legal fees for the Foreclosure, eviction costs, rekeying, property trash out) for this Ninja Loan they gave with probably zero down for $490K. Whsat I find the hardest to understand is not why someone would pay $490k for a 1 Bed at teh Vue (Since it is pretty obvious they were juicing it and walking away with cash at closing) but how could the banks be so careless in the lending. Now everyone asks why the economy is so bad and howcome their balance sheets are so toxic? These are prime examples.

• 58 Probably too Cynical /Oct 9, 2008 at 12:46 pm  Vote:    

  so if one rule of thumb I used to hear before everything Brickell Condo went to hell was that a building with 20% of it’s units on the market was in a ‘distressed’ situation.

  so what does this say when 38% of units at Vue are in FORECLOSURE????

  and how many buildings in spitting distance of view are in the early stages of closings? (though not too many lights on at night in these.) not to mention how many sites within a 200 foot radius of view are now just breaking ground?

  Wow. Years from now early 2000’s Miami will be a case study of how to screw up royale.

• 59 Un-Related /Oct 9, 2008 at 12:59 pm