Top 5 Distressed Condo Sales Closed in December 2009

January 5, 2010 by Lucas Lechuga

Below, you will find what I believe to be the five best condo deals of the 59 distressed sales that closed in December 2009 in the MLS located in Brickell, Brickell Key, Downtown Miami and the Arts District.

  1. Uptown Lofts #1005 – 1 bedroom/2 bath (1,280 square feet) – This unit sold for $135,900, or $106 per square foot, on December 4, 2009.  Foreclosure
  2. Cite on the Bay #3304 – 1 bedroom/1 bath (797 square feet) – This unit sold for $107,000, or $134 per square foot, on December 16, 2009.  Short Sale
  3. Solaris at Brickell #1001 – 2 bedroom/2 bath (1,145 square feet) – This unit sold for $182,000, or $159 per square foot, on December 23, 2009.  Short Sale
  4. Latitude on the River #2407 – 1 bedroom/1.5 bath (899 square feet) – This unit sold for $148,000, or $165 per square foot, on December 4, 2009. Short Sale
  5. 2 Midtown #M0707 – 2 bedroom/2 bath (986 square feet) – This unit sold for $165,000 or $167 per square foot, on December 7, 2009.  Foreclosure

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55 Comments on "Top 5 Distressed Condo Sales Closed in December 2009"


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Anonymous
jorge
6 years 8 months ago

Are there any buildings in Miami with reasonable maintenance fees?
even as cash deals, after HOA and taxes you could only clear a couple hundred dollars a month if you were to rent them. Where are the good deals?

Anonymous
DJ
6 years 8 months ago

Jorge, my building (the Lexi) is about 32 cents/sq. foot. I pay $577/month in HOA for 1753 sq. feet (plus an additional 625 in balcony space). It’s one of the most reasonable I’ve found.

Anonymous

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Anonymous
Joe
6 years 8 months ago
jorge — Why would you expect large numbers of people to be willing to rent a unit for hundreds of dollars *more* per month than he or she could buy the unit on the open market? Obviously, some people prefer renting to buying, and others don’t have a choice (short-term work assignment, bad credit, etc.), but otherwise it just doesn’t make sense in a down r.e. market like this one. All these r.e. investors are like heroin addicts who want just one more good hit. It’s like they simply can’t believe the paradigm has shifted and that r.e. isn’t the… Read more »
Anonymous
juan
6 years 8 months ago

Joe,

There’s tons of deals where you have hundreds left over after paying HOA and taxes. Now if you have a mortgage that’s different. You won’t have money left over

Anonymous
Joe
6 years 8 months ago
juan — But as discussed in the last thread, paying cash for a $200,000 condo costs $12,000 per year in lost interest plus another $9,000 in HOA and another $6,000 in taxes. That comes out to over $2,250 per month. With a little profit added in, how many people in Miami can afford to pay $2,500 or more per month for a cookie-cutter condo (which is what most units in the $200k price range basically are)? Unless a person simply needs to launder money and doesn’t care about maximizing returns, the r.e. rental business doesn’t seem like a great business… Read more »
Anonymous
Poorandunemployed
6 years 8 months ago
Joe Here is 1% rule of real estate investing. Do not invest in real estate unless you can get 1% of unit price in rent. Which means that unless you can get $2000 /month rent for that $200k condo – do not buy it. If the going rent is $1000 then the condo is worth $100K. What many have forgotten the real value of money. $250 K condo in Miami used to be a very respectable and upscale place to live. Now people think that is pittance. All because some borrowed millions while earning $30k/year in salary. Remember all the… Read more »
Anonymous
MLS#1
6 years 8 months ago
Joe, your assumptions are rather flaky, most likely because they are designed to confirm your preconceived point of view. Nobody will pay you 6% interest today, unless you accept the risk of losing your principal. 3% max is what you’d get if you look for safety. Taxes on 200k condo would be closer to 4000 than to 6000, and HOA would be closer to 6000 than 9000. Thus the total annual cost of a 200k cookie-cutter box condo would approximate $16000, if you don’t itemize your deductions – and $15000 if you do. That’s around $1350 a month, almost one… Read more »
Anonymous
Samson
6 years 8 months ago

MLS#1 – For the record, you can make more than 6% on your money without really risking your principal. I do. I’ve owned Con Ed, KMP, DO, SO, MO and WIN for years and together they make me more than 6% per annum and don’t, I think, represent a risk of my principal. I never lost a dime. Whatever. The rest of your math makes sense.

Anonymous
Joe
6 years 8 months ago

MLS#1 — Are you seriously projecting a maximum 3% rate of return over the next 5-10 years? Get serious.

Further, Miami Dade is on the verge of bankruptcy, which means taxes will be spiking, and HOA fees only head in one direction, and that’s up.

My numbers might have been slightly pessimistic for 2010, but your budget is just ridiculously optimistic. You truly must be new to Miami if you think current condo prices are great deals and/or that the average carrying costs in the Miami condo market are reasonable (or likely to remain stable).

Anonymous
Wild Bill
6 years 8 months ago

S. Fla. foreclosures up 29% in 2009

Anonymous
Joe
6 years 8 months ago
MLS#1 — Just to be clear, I’m not trying to give you a hard time here. But if you scroll thru the rental listings on this site, you’ll see hundreds and hundreds of rentals in the $2,500 and below price range, and some of them have been listed for hundreds of days. (And a lot of these units would be well over $200,000 if listed for sale, so the above example doesn’t even hold in terms of ROI.) I understand r.e. investing can be profitable. I just don’t understand how it can be profitable in this current market, between the… Read more »
Anonymous
Miami Skeptic
6 years 8 months ago
Take a look at the Solaris deal Lucas listed above – 2/2 $182,000. The most recent 2/2 rental in that building went for $1700/month or $20400 per year Less: HOA and taxes Condo fee is listed at $950/month or $11,400/year Taxes should be around $3640 or $303/month. Anyone with more accurate tax estimate feel free to chime in Based on the above, the net income would be $5360/year. Return on cash of $182,000 would be around 3%. Again this is just ballpark, not bringing in deductions/allowance for vacancies etc but end result would be similar. Taking on a ton of… Read more »
Anonymous
Wild Bill
6 years 8 months ago

The effort involved in renting a unit is not worth the effort. The county is going after people who claim homestead exemptions for properties they rent.

Anonymous
Gixxer 1000
6 years 8 months ago
Samson #9 and Joe #10 Some people need to take some financial classes. The return rate that is being argued over (3% or 6%) is called the risk-free return. The risk-free return is the rate that can be assumed to be obtained by investing with no risk of default. In America we use US Treasury bills because as of yet, Uncle Sam has never defaulted. As of right now a seven year note yields 3.34%. In contrast a 3 year note yields 1.54%. If you have cash and you want to invest it with zero default risk, these are the… Read more »
Anonymous
Renter Tom
6 years 8 months ago
Don’t forget maintenance, repair, replacement and redecorating costs of a rental too. One month vacancy out of a year kills your “profit”. I have said this for years….if you want to get into residential real estate, your best bet is a larger apartment complex with a dedicated staff (if you want to own directly, not through an investment vehicle). The hassles of being a floplord are simply not worth it…..at least not to me. What a hassle. The only thing worse would be owning and running a small restaurant. A change in taxes, HOA fees, or special assessments are out… Read more »
Anonymous
Joe
6 years 8 months ago
Gixxer 1000 — It’s easy to win arguments when you use apples and oranges comparisons. Why are you using the “risk-free return” as your basis for ROI when the other side of the equation here, owning a Miami condo, is anything but risk-free? – If you buy a condo to rent and it sits empty, you lose. – If you buy a condo to rent and it declines in value, you lose. – If you buy a condo to rent and end up with a deadbeat tenant, you lose. – If taxes go up, you lose. – If HOA fees… Read more »
Anonymous
Ozzy
6 years 8 months ago

RenterTom – what do you mean by cost of capital? How does this apply to cash buyers.

Anonymous
Gixxer 1000
6 years 8 months ago
Joe -I think you understanding of finance is silly. If you have $200k to invest the first thing you need to do is to see what are you options with no risk. So if you need your money in 7 years right now no risk would get you 3.34%. Now you project you’re return for the various investments your considering. Lets say your desired investment options are a stock or a condo. You project a 6% return on a stock and a 5% return on a condo. Which one is better? Well that answer will be different for each investor.… Read more »
Anonymous
Gixxer 1000
6 years 8 months ago

Ozzy – “what do you mean by cost of capital? How does this apply to cash buyers.”

Renter Tom here is referring to the “opportunity cost” and risk-free return rate. Ofter times when people calculate their return if using cash they neglect this opportunity cost. For example the figure a $200k investment will yield 5% return and then stop there. But you also have to consider that if you just kept the cash and invested it without risk what would your return have been. So if you get 3% for doing nothing and 5% for investing you’re really on getting 2%.

Anonymous
Renter Tom
6 years 8 months ago
Ozzy – Gixxer 1000 said it right. The analysis comes down to is that 2% marginal additional return worth the risk??? That IS the question when looking at investment alternatives. Similar mistakes are made all the time on “Deal Or No Deal” which is interesting to watch regarding “investor” behavior. They tend to risk large amounts of money when the additional money would not give them as much additional benefit as the certain money they have by pressing the button. Similar analysis on playing the lottery, one dollar gets you in the game but each additional dollar only increases your… Read more »
Anonymous
6 years 8 months ago

When calculating return on real estate dont forget that the tbill is taxable while you can have deductions on real estate investment returns (depreciation etc)

Anonymous
Renter Tom
6 years 8 months ago

computer consultant – The depreciation is really a cash flow and tax timing issue. The depreciation gets recaptured when the asset is sold so that is a bit of a mirage. The real benefit is the like kind exchange (1031 Exchange)…of course I am not in favor of such treatment as it distorts capital allocation in the economy. Revisit the taxability of treasuries please… You also need to look at things all pre-tax or all after-tax (after-tax if some things are taxable on some aren’t).

Anonymous
Gixxer 1000
6 years 8 months ago

computer consultant – Agreed.

This is part of what I’m trying to explain. When performing these returns, the more detail the more accurate the result. Instead many people are here saying mortgage, rent, HOA, taxes and voila! This is the same logic people used to justify flipping these condos in the first place. Rest assured there are some shrewd business people making deals that will benefit them and some other making deals that will ruin them. And then there will also be a few more that profit or lose on sheer dumb luck.

Anonymous
Joe
6 years 8 months ago
Gixxer 1000 — I have no idea what you’re even arguing now. My point from yesterday was that the ROI on buying and renting condos is unlikely to be positive vis-a-vis just about any other option right now. You jumped in and stridently disagreed with me, but now, after a couple thousand words of lecturing, you seem to be saying the same thing I said yesterday. Seriously, what the hell is your point? Saying things like: “Rest assured there are some shrewd business people making deals that will benefit them and some other making deals that will ruin them. And… Read more »
Anonymous
Gixxer 1000
6 years 8 months ago
Joe – You said: “Saying things like: “Rest assured there are some shrewd business people making deals that will benefit them and some other making deals that will ruin them. And then there will also be a few more that profit or lose on sheer dumb luck.” … is basically useless. That’s like saying tomorrow it might be sunny or it might be overcast or it might rain. Gee, no kidding.” Do you not see how illogical you through process is??? You can’t say what I’m saying is obvious if you disagree with me. 2+2=4, Gee, no kidding it equals… Read more »
Anonymous
Joe
6 years 8 months ago
Gixxer 1000 — You seem to be a graduate of the AJ School of Debate, in which you shift the goalposts and claim people said things they didn’t really say. At no time did I say anything remotely close to the following, as you allege: “You’re saying as a business model NO ONE can make money off of condos in the next 10 years in this market.” I did agree with this, but since the statement is so obvious, it didn’t really advance the discussion: “I’m saying that depending of the specifics of the deals some people will profit and… Read more »
Anonymous
Gixxer 1000
6 years 8 months ago
Joe I agree that I over stated your position. But the extreme was to highlight my point. Your comments have been from the perspective that Condos are not profitable. Here are a few of your comments: “Unless a person simply needs to launder money and doesn’t care about maximizing returns, the r.e. rental business doesn’t seem like a great business model right now. Otherwise, I wish someone would explain it to me.” “I understand r.e. investing can be profitable. I just don’t understand how it can be profitable in this current market, between the glut of available units and the… Read more »
Anonymous
reybermudoii
6 years 8 months ago

You cannot paint real estate with a broad brush.

In my opinion, downtown miami is not worth the risk/reward even at $200 sq ft.

Beach is another story. The international interest is not what it is for downtown. There is and will be global demand for prime beachfront real estate.

Anonymous
6 years 8 months ago

Still many foreclousures all over the area, even the first quater of this year things will look kind of hard..

Anonymous
Lara
6 years 8 months ago

If someone knows about good multifamily apartment comlex for sale let me know particularly if it’s a pocket deal.

BTW JCrimes, any news about Nobe condos. You mentioned them several months ago.

Anonymous
gables
6 years 8 months ago
since all the arguing came about from my previous post regarding the $200k condo, i will chime in. The numbers are a very realistic assessment of buying a condo in today’s market. MLS#1 was off base criticizing the tax and HOA fees. You will pay around 2.5% on an assessed value which does not correspond to the actual sale price of a distressed property. property taxes are on your assessed value not sale price. and assessed values will not plummet the way sales did. homestead exemptions not included. $6k a year on HOA works to $500 month (under $0.50 sf… Read more »
Anonymous
Renter Tom
6 years 8 months ago

The simple fact is mortgage rates have only one way to go…UP. If we have some inflation later the rates could go up a lot. Most people use financing to buy a home….plain and simple. When interest rates go up current home prices become unaffordable and the only part of the equation that can change to keep it in balance is to lower the price.

Anonymous
Joe
6 years 8 months ago
Gixxer 1000 — I stand by all of my comments in this thread. I’m sure there are a small number of condo deals that might be revenue-positive for the investor right now in Miami, but those are likely few are far between. And please don’t move the goalposts again and say, “Gotcha!” because I just said this. Remember, your point above, which started this long argument, was that some people are making r.e. investments right now, on a large scale, that will make them fabulously wealthy over the next 10 years, but no one gets fabulously wealthy by renting 3… Read more »
Anonymous
gables
6 years 8 months ago

Joe, you can make money in RE as a landlord in Miami. but you have to be a grinder-somebody willing to work hard every day to make the program work. unfortunately most folks in miami don’t know how to work hard. everybody here wants to get rich quick without ever actually working. the lazy attitude was salvaged in recent decade by home price appreciation. even if you failed miserably as a landlord, if you waited long enough your sale price could bail you out. not anymore!

Anonymous
Gixxer 1000
6 years 8 months ago
Joe – “I can’t see how anyone making bulk purchases in this market could be posting big rental gains right now.” Because not everyone is making these deal for immediate income. Some people actually invest for the future and not to make a quick buck which seems to be your perspective. If you have $20M in capital today why would you really be pressed about rental incomes today if your projections show a 10% gain 10, 15, 20 years (or whatever you investment time line is) in the future. “The fact there are hundreds if not thousands of empty rentals… Read more »
Anonymous
Wild Bill
6 years 8 months ago

Condominiums are the lowest of the low in the real estate world. Every real estate book until the mid 1990s stated this. If you’re struggling to find an condominium investment on a blog you probably should try your luck in a Las Vegas casino. At least then your money will be gone in a week and not slowly drained through special assessments.

Anonymous
juan
6 years 8 months ago

Joe just stop. FYI – the Edgewater deal was pretty solid. The units were bought with a 5 year lease in place from a credit worthy school. They provided a 7% return after expenses

Anonymous
Joe
6 years 8 months ago
Gixxer 1000 — It’s at the point where it’s not even possible to debate with you. First you claim I said things I never said, and now your examples are so outlandish as to have almost no applicability to the people on this site. Seriously, what is the point of a comment like this: “If you have $20M in capital today why would you really be pressed about rental incomes today if your projections show a 10% gain 10, 15, 20 years (or whatever you investment time line is) in the future.” Yeah, we all have $20 MILLION in capital… Read more »
Anonymous
Meakes Me Think
6 years 8 months ago
“Who in their right mind WILLINGLY buys properties so they can rent them at a loss for months, let alone years, at a time? There’s almost never a good reason to buy r.e. in bulk and hold it at a loss for years while waiting for the market to rebound. ” Joe, that statement shows your ignorance. Have you ever heard of a REIT? As a matter of fact that statement above describes just about every investor. You are commenting on things you know very little about. Just admit to yourself that you missed a few important chapters in the… Read more »
Anonymous
Gixxer 1000
6 years 8 months ago
Joe – “now your examples are so outlandish as to have almost no applicability to the people on this site.” “Remember, your point above, which started this long argument, was that some people are making r.e. investments right now, on a large scale, that will make them fabulously wealthy over the next 10 years” I’m sorry but it appears as though you are the one who is moving the goal post. I was under the impression (and you acknowledged) that we’re debating if there were investment opportunities available on a large scale. Now your saying that it doesn’t matter because… Read more »
Anonymous
Joe
6 years 8 months ago

Meakes Me Think — No one here has been talking about REITs. This discussion started with one guy saying he wanted to buy 2-3 condos for investment purposes and asking where the big-money rental deals are right now.

As with “Gixxer 1000”, you seem to have trouble staying on topic.

Anonymous
Joe
6 years 8 months ago
Gixxer 1000 — You’ve taken this discussion in so many different tangents that I have no idea what you’re even debating anymore. For one thing, I highly doubt anyone on this site has “$20 million” to throw around right now, so continuing that debate is senseless. For another, this discussion started off with a debate over the wisdom and cost associated with paying CASH for condos right now for rental purposes, but now, in your last post, you’re going off on yet another tangent about mortgage rates. Despite the fact we weren’t even talking about financing properties, your point actually… Read more »
Anonymous
gables
6 years 8 months ago
Gixxer “Yes, and if they do increase (interest rates) doesn’t that make buying real estate with credit more expensive in the future compared to now, all things equal?” This is the big question. Higher rates will reduce the principal on future home prices. By how much remains to be seen. But if interest rates move from 5% to over 8%, i can buy in cash rather than a mortgage. Since over 90% of the people on this blog are either looking to buy to live in, or dipping their toes in the RE market with one or at most two… Read more »
Anonymous
gables
6 years 8 months ago

Any details on the Solaris unit listed above? I like the building from the outside, but dont know the finances of the building HOA. But that seems to be a pretty good deal all the way around. $182k for a newer 2B in Brickell. Lucas if you can pull another deal like that in Solaris with similar results I am quite interested.

Anonymous
Meakes Me Think
6 years 8 months ago

Investor: “The term implies that a party purchases and holds assets in hopes of achieving capital gain or cash flow, not as a profession or for short-term income”

please note “HOPE” and “not.. for short-term income”

Investors will invest in a negative cash-flow business for years in “hopes of achieving capital gain or cash flow” . If it was as obvious as the nose on your face everyone would be an investor, well almost everyone (no offense Ace). That’s why most people work for investors

Anonymous
Lara
6 years 8 months ago
I personally know several buyers who are looking to make bulk purchases in Maiami now. They do not want to buy a portion of the building but rather buy an unfinished whole building and rent it. Let’s say someone who started doing condo conversion but never finished it due to the obvious financial reasons and went under water. In fact this market is so competitive that $20-40 mil deals are being sold in a matter of 2 weeks. Part of it is because they buy at a relative discount and rents today still make sense for them to buy and… Read more »
Anonymous
gables
6 years 8 months ago
Lara, I can’t dispute the existence of bulk buyers. But they are not on this blog and certainly dont listen to our advice and comments. We live in a completely different world here with Lucas! That being said, even the bulk buyers are making the huge assumption that home values will not fall in the medium term (whenever they plan on selling). Same with rents. Is this a wise assumption? Not really sure. Property prices AND rents have dropped by historic measures. Do they really need to bounce back with some correction? Ask the Japanese about the existence of a… Read more »
Anonymous
gables
6 years 8 months ago

Or ask the dot.commers on the nasdaq!

Anonymous
BillP
6 years 8 months ago

Lara,

There may be some savings in self managing a building, but it costs a lot to run a large building. Elevators, insurance, maintenance, staffing, utilities. Some of the sponsors may get kickbacks from the suppliers, but in general the management companies aren’t getting rich. I believe that it is naive to assume that self management will result in a great savings.

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