Sixty Sixty Condo Hotel Sold to Miami-Based Investment Group for $24 Million
In a previous foreclosure fight among owners and developers, the Sixty Sixty condo-hotel in Miami Beach has been sold for $23.5 million to a buyer who intends to repair as well as add to the waterfront development.
The 82-key condo-hotel is located at 6060 Indian Creek Drive along an inlet off of Biscayne Bay but also features views of the ocean. Integra Investments along with Sagar Desai’s Activate Hospitality sold the property to Bloom Hotels, under the umbrella of Bloom Ventures. The founder and CEO of Bloom is David Harari, who is located in Miami.
The CEO of Integra Victor Ballestas stated, “ripe market conditions created an opportunistic circumstance for the sale,” after stating he had no intention of selling the development.
The Schecher Group originally sold a majority of the units in 2020 to Integra and Activate for $15 million, then later bought the rest of the units in 2021. The company was then accused of a takeover although Schecher stated that the unit owners owed $9.4 million in homeowner association fees.
Bloom Hotels utilized Sheridan Capital to finance the property for a loan of $17.3 million. There have been talks of Bloom increasing the room count and bringing Canopy or Tapestry (Hilton brands) to assists with operations. Some plans include modernizing the property as well as adding a marina to the development.
Miami Real Estate Sets Another Record for its Best Sales Month for November in History
Miami-Dade has seen yet another record smashed for real estate sales this year. November is now officially had its best sales month in history following highest total home sales, highest condo sales, and highest single-family home sells.
As of November, Miami has officially hit 35,961 total home sales with the previous record hitting 30,041 transactions for 2013. Although November has the highest home sales for any November in History, June 2021 is still considered the number one sales month in Miami history. November is ranked the 8th best month overall.
Total home sales for Miami-Dade County rose 22.9% for the month of November to 3,021 sales. This is up from 2,459 sales compared to October sales. Single family home sales have increased 1.2% to 1,168, while condo sales have seen a dramatic increase of 42% at 1,853.
For November, Miami home sales showed an increase at 48.6% compared to November 2019. For home sales, transactions saw a 20.2% increase and a 74.6% for condo transactions compared to November 2019.
Luxury single-family home sales saw an increase in 28.2% at 209 sales for November 2021. While luxury condo sales rose 115.6% at 207 transactions.
As for the Miami home sale supply, luxury single-family home sale are 3.6 months and luxury condos remain at 8.4 months with a trend downward month after month.
Single family homes saw an increase of 15.1% between the prices $400,000 to $600,000 with 405 transaction in November. Condo sales that were in the same price range also saw a 132.6% increase at 321 transactions.
The dollar volume totaled $2.2 billion for November with an increase in single family home volume by 14.9% and condo dollar volume at 92.8%.
For the state of Florida, closed single-family home sales totaled 27,541 bringing the total sales up 4.3% compared to last year. Condo sales are down 5.4% at 11,598 total sales.
Median home sales price rose 19.6% with a median sales price $364,900, while the condo sales price is up 19.9% with units median sales price averaging in $273,270.
Cash sales accounted for 60% of all Miami home sales more than the national average for November 2021. For closed sales, cash represented 38.4% of Miami closed sales. For condo sales, cash represented 46.9% while 24.9% represented single-family home transactions.
The demand for Miami real estate continues to increase. The factors that have caused this increase include travel restrictions being lifted to the states, low interest rates, and lack of covid restrictions.
Almost 40% of Downtown Miami Residents Have Pets – Strategies for Investors and Tenants
The Downtown Miami DDA (Downtown Development Authority) released its updated demographics study today, and they found that 39% of Downtown Miami households include a pet. This is interesting because so many of the developments impose strict pet policies upon their residents. Some only allow certain sizes of pets, some only cats, some only allow pets for unit owners and some say no pets at all.
This is always a touchy subject when we are working with a client who has a pet. There is so much misinformation out there regarding which buildings do and do not welcome pets. If a resident gets caught with an unauthorized pet, they are forced with the difficult choice of paying a lease cancellation fee (which is typically the value of 2 months’ rent), or re-homing their beloved pet. Unfortunately, not all agents verify the pet policies before entering into a contract, which wastes time and gets the client all excited about an apartment that they cannot have. No bueno.
I even once had a client who cheated on me with another agent that had told them they could have a large pet in a pet-restricted building. That is completely irresponsible and self-serving of that agent. Thank goodness, the clients realized what would happen if they went forward with that deal. The agent would have been paid and then they would have either had to break their lease or part with their dog. That is a horrible choice to have to make when most people consider their pets as members of the family.
In order to have an authorized pet in the building, many associations require an additional registration and application. The pet’s weight is verified (many times with a report from the veterinarian), their vaccinations are verified and some buildings even take it a step further. Infinity at Brickell requires a DNA sample to be placed on file and in the event that messes are found in the lobby, the mess is sent in for a DNA match. The resident that pops up after the DNA test is issued a fine. I call it Maury Povich enforcement… but it works. If people know they’re going to get busted breaking the rules, they’ll be less likely to do so. This way, the building can continue to allow large pets for everyone.
Over recent years, a popular workaround to the ‘No Pets’ buildings has become all the rage. There are websites where you can claim that you need a therapy dog. They’ll issue you a certificate for a fee and, viola! Your dog can go with you everywhere and nobody can say anything… except the condo associations have started to get wise of this ruse. The Jade at Brickell verifies these Therapy Dog certificates through an attorney. It takes an extra few days during the application process and you don’t get your application fees back if you get caught with a phony form. I don’t recommend the fake therapy dog stunt.
If you are curious of whether a particular building accepts pets, just have a look at the building page on our website. We have verified all of the buildings’ policies and list them in the FAQ section of the website. Every now and again, a building will change their policy in between when we last called to verify, but we update it frequently. Our agents also keep themselves updated of the pet policies and fees for the buildings in the area. We’re all about efficiency and not wasting your time or energy…
So what about investors?
With the rental market changing, it is important to have apartments that appeal to as many people as possible. Purchasing an investment condo for sale in a pet-restricted building automatically crosses out almost 40% of the prospective tenants that could be interested in moving in. Some of my favorite pet-friendly buildings are MarinaBlue and 900 Biscayne Bay in Park West, Infinity at Brickell in Brickell, the Midtown developments in Midtown and One Miami in Downtown.
For investors who are concerned with having animals in your property without knowing the behavior or cleanliness of the pets, it is completely customary to charge a pet deposit for the unit. In many cases, the building has a separate pet deposit or fee, but I suggest a refundable deposit for the unit itself. The amount can vary depending upon the pet. Puppies would require a bit of a larger deposit since they tend to chew and have accidents. You could also lower the deposits in the event that a tenant was able to submit a diploma from obedience school or behavior training.
Whether you are an investor, or if you are buying/renting a home for yourself, if there is a specific building that you are curious about, don’t hesitate to drop us a line and inquire. We’re happy to help.
DEAL ALERT: Developers Offering Attractive Close-Out Pricing on Existing Condos
While the market is buzzing with attractive pre-construction investment deals, not many people think to inquire about the buildings that are existing and still have a bit of inventory. For some investors, these existing buildings can bring a better investment than the speculative development deals that others are flocking to. The close-out phase of an existing building is actually one of my favorite times to sell in a project for a few reasons:
Mitigated Risk
The investor can see the actual building and apartment they are buying, so much of the risk of the design and construction phase has gone by. Since the apartment exists already, the buyer knows exactly what they will receive, not a photo of a building that they hope comes to fruition the way it is shown in the rendering.
Faster Return
If you buy existing inventory for purposes of a rental investment, you can lease the property immediately. You will be able to see your money work for you straight away while other investors wait to see how their investments will perform after the building is completed.
Financing
Mortgages become far easier after half of the apartments in a development have closed. Since the lender can also see the building, they know what their risk is and are more willing to lend money with lower down payments. This is true for both local and international investors.
Flexibility
Developers are investors too, and when they are in the close-out phase they are almost finished with their project. I don’t care how many people say that there is no emotion in business, that is wrong. There is something emotional about being close to the finish line and that makes developers more eager to sell those last apartments to get to their goal. Many times we see developers offering HOA credits, discounted prices and special leaseback programs to entice buyers into helping them reach their goal. If buyers can reach their goals by helping developer reach their goals, isn’t that a perfect scenario? I think so…
With these points in mind, I have a prime example of a building that is currently in this situation.
City24 is a boutique luxury building in Edgewater with 119 apartments. It was originally built in 2008 and has all of the amenities and finishes that residents of the neighborhood have come to expect. There is a 24 hour doorman, gym, pool & jacuzzi, secured garage parking, the apartments have stainless appliances and quartz countertops with tile or wood floors, washer/dryers in the apartment, pretty views, easy accessibility to restaurants and fun events… the things we look for in the Downtown Miami area.
Out of the 119 original apartments, the developer needs to sell only 6 more in order to be finished. We have toured the remaining 6 and have not seen a reason that these specific apartments remain unsold. The developer is offering the full inventory for $2.5M, which works out to roughly $385/square foot. Naturally, if one investor were to purchase all 6 apartments, a lower price or additional perks would be considered.
At the offered price, the remaining apartments would equate to a pre-tax return of 5% when rented for full market value. The typical investment apartment in the area today brings a 3% return, so the buying investor would start off with an advantage on this package. Additional parking spaces, HOA credits or price negotiations would help the both the buyer and the seller while making good use of the property.
If you would like more information on specific apartment numbers, sizes, prices or packages, don’t hesitate to reach out. We can work together to present a package that meets your investment goals on this or similar projects.
Bulk Sale Opportunities Emerge in the Miami Condo Market
For the past couple of years, vultures have been circling the skies of Miami waiting for the right moment to swoop in for the kill. Their day of reckoning seems to have finally arrived. I am now familiar with over 30 condo developments in Miami and Miami Beach with units available to be purchased in bulk. The list consists of partial and entire condo developments, including a few with Section 8 potential. Ballpark prices for these bulk sale opportunities range from $3M-$60M.
Throughout much of 2008, there seemed to be a stalemate between developers and vulture funds about price. However, market conditions have worsened considerably within the past six months, due in large part to ever-tightening lending practices. Even for creditworthy individuals, it has become extremely difficult to obtain financing for condominiums in Miami. As a result of the new Fannie Mae guidelines, financing has become especially restrictive for condos in recently completed buildings. Lately, it has been individual buyers strapped with cash, for the most part, who have been the ones pecking away at the remaining inventory in these new condo developments. Facing the realities of the market, developers – and their lenders – have begun to turn to vulture funds as a quick, easy way to part with unclosed condos.
Recently, two major arms-length bulk sales have closed in Miami-Dade County: the 60-unit bulk sale in the Downtown Miami high-rise called Marina Blue and the 101-unit bulk sale at Harbour House, a beachfront condo-conversion located in Bal Harbour. Both deals closed in December 2008. The 60 units at Marina Blue sold for $200 per square foot while the 101 condos at Harbour House sold for approximately $277 per square foot.
There are some who negatively portray vulture funds as entities who feast upon the misery of others. Personally, I feel that vulture funds are a necessity to a real estate market such as Miami and do more good than harm. Bulks sales provide instantaneous feedback as to where the intermediate level of pricing resides for condos in the given development, as well as those in the surrounding area. Bulk sales also provide stability to a condo building which would otherwise have many uncertainties concerning its financial condition. One can assume that the vulture fund will have the capital resources to pay monthly homeowners association fees on time. It also has a vested interest to ensure that the condo development is well managed. The greatest benefit, however, is that thousands of unoccupied condos in Miami will be filled with residents much faster.
Most of the vulture funds that I’ve come into contact with over the past year have plans to buy condos in bulk, lease them over a period of 5-10 years and resell them for a profit on the back-end once market conditions have improved.
Please feel free to contact me if you have an interest in the bulk sale opportunities that are now available in Miami and Miami Beach. Investment packets complete with estimated operating budgets, a rental and sale market analysis, neighborhood demographics and projected cash flow statements are available to serious buyers for most of the bulk sale opportunities.
100 Condos Under Contract at Quantum on the Bay to Israeli Investment Group
Yesterday, a rumor was circulating that 100 condos recently went under contract at Quantum on the Bay to an investment group from Israel in a bulk sale transaction. I was able to confirm today, from multiple sources, that the rumor is true. However, everyone is keeping quiet in regards to the details involved in the bulk sale transaction. It will be interesting to learn the price per square foot that the 100 condos sell for at Quantum on the Bay once the details are revealed.
(hat tip to Kevin at South Beach Real Estate Blog for the lead on the story)
New Fannie Mae Guidelines Turn Off the Lights on the Florida Condo Market
Some of the updated lending requirements are as follows:
Up from 51 percent, FNMA will now require that at least 70 percent of the total units in a condominium project must be conveyed or be under a bona fide contract for purchase to principal residence or second home purchasers.
New and established condominium projects may have no more than 15 percent of the total units in a project be 30 days or more past due on the payment of their condominium/association fees.
New and established condominium projects with more than 20 units will be required to have fidelity bond/fidelity insurance. It was formerly only required of new condominium projects.
Borrowers must obtain a “walls-in” insurance policy unless the condo development’s master policy provides the same interior unit coverage.
No more than 20 percent of the project’s total square footage can be used for non-residential use.
No more than 10 percent of the total units in a condominium project may be owned by a single entity (the same individual, investment group, partnership or corporation).
The new guidelines are a train wreck to an already crippled Miami condo market but a godsend to vulture funds. Step aside and let the bulk buyers clean up the mess. They will effectively push the reset button and create a floor to a condo market that would otherwise take much longer to reach. The guidelines set by FNMA will have a negative impact on established condos as well. Prices there will take longer to fall into place relative to the pricing established by future bulk sales. Foreclosures will climb in established condo developments until an equilibrium of supply and demand is reached. However, as one person commented in a discussion about this topic, the market will likely first overshoot to the bottom. With very restrictive financing policies, true demand will not be represented as those with cash will comprise the large majority of the buyers. Keep in mind that bulk buyers will either need to hold over the long run or resell the condos to cash buyers themselves due to the rule that no more than 10 percent of the condos can be owned by a single entity.
