Last week, we had the first official installment of the Market Stat Monday series. We checked in on Quantum on the Bay, which is in the process of overcoming some legal battles. One of our readers suggested that we skip next door this week and look into the less dramatic yet equally beautiful 1800 Club, so here we are.
For those who are new to 1800 Club, it was built in 2007 and has 469 apartments within 42 stories. It is a full-service building, pretty much standard to the area. The amenities include pools, gym, 24 hour doorman, valet, and a party room. The building is quite lovely and is also well-kept. It was actually one of the few buildings in the market to earn FHA approval, so FHA buyers could purchase there with low down payment loans. That approval is notoriously difficult for condo buildings, and sadly it expired for 1800 Club in 2014, but the fact that it was achieved speaks volumes of how the building is run. Today, the FHA certification has not been renewed, but there are conventional mortgage programs that allow up to 95% financing on purchases in the building.
There are currently 32 active listings for sale, so 7% of the total units are available for purchase. The average price per foot ranges more drastically than most buildings. The lowest-priced unit is listed for $295/square foot and the highest price per foot is $511/square foot. If you’re curious why the gap in pricing is so large, it is because the units in this building have a very different mix of layouts and views. Apartments on the east side of the building have direct bay views, apartments on the west side have sunset views and those located on the south side of the building have partial bay views but also look into the nearly-completed Aria on the Bay. Also, all of the one bedroom plans have either the west view or south view. There is one line that has two bedrooms and a west view, but most of the two bedrooms have south or east views. Because the layouts and views are so starkly different, I’ve decided to pull the statistics for each segment of the building.
WEST FACING UNITS
There are currently 7 units on the market that face west. These have beautiful sunset views and the asking price averages $380/square foot. The least expensive is apartment 2902, an 841 square foot 1 bedroom that is offered for $278,900 and includes a $2,000 credit toward new floors (the wood laminate that is now in the apartment is pretty damaged). The least expensive two bedroom is on the 31st floor and is offered for $429,900 with marble floors. The most expensive two bedroom is the same floor plan on the 36th floor for $525,000 that has been completely remodeled.
On the west side, we have seen 3 closed sales since the beginning of the year. These have closed at an average of $323/square foot and the sellers have received an average of 96% of their asking price. The least expensive was unit 1602, which is a 1 bedroom that sold for $260,000. I found the listing photos of this unit to be very misleading. The agent took photos of the bay view from the pool deck but did not specify that they were not taken from the unit itself. An uneducated or underrepresented buyer could easily be led astray with photos like this. Tsk tsk.
There are not any sales listings that currently have pending contracts. I have a feeling we will see some price reductions from those who need to sell.
SOUTH FACING UNITS
The south side of the building is interesting because Aria on the Bay is being constructed next door, so many of the sellers purchased their units when the view was very much different. The view is still pretty, just the water view is not as expansive as it once was. There are currently 8 available sales at an average price per foot of $343. The only closed sale this year in this section of the building was unit 2212, which is a 1,374 square foot 2 bedroom layout that sold for $435,000 ($316/square foot).
Just a few floors up, unit 2712 is currently awaiting closing and was listed for $324/square foot. Since buyers are settling for 96% of the asking price, it looks like we’re due for some price reductions before things start to move.
EAST FACING UNITS
The east view at 1800 Club is really a money-maker. All of the plans on the east side are 2 bedroom layouts and 11 are currently available at an average price of $488/square foot. The actual listing prices are $489,000 up to $620,000.
Something interesting that I found is that the only closed sale on this side of the building was unit 1807, which closed for $545,000 ($445/square foot). The lowest price of the available units is unit 1403, a 2 bedroom with 1,142 square feet for $489,000 ($428/square foot). DEAL ALERT!!!
There are two 3 bedroom units available, but I really don’t have anything to compare them to. One is a furnished 01 line that is on the 8th floor (below the pool deck). The other is a 3,082 square foot duplex loft on the pool level. They are listed for $975,000 and $1.29 million, respectively.
Overall, the building is looking at 27 months of inventory based upon closed sales rates. While that’s not a great number, it is far healthier than some of the other buildings we’ve dug into over recent weeks. There have been a total of 6 closed sales in the overall building with an average price of $328/square foot. With 3 closings on the west side, one on the east side, one on the north side and one that was an outlier (it was on level 3 with a very different floor plan), the less expensive west side is the busier side currently. Since there is nothing pending over there at this point, it will be interesting to see what the summer brings us.
WHAT ABOUT RENTALS?
Just like the buildings we’ve seen over recent weeks, the rental market is still healthy at 1800 Club. There is just under 4 months of inventory on the market (20 active listings and 24 have rented since the beginning of the year). The listings are fetching 99% of their asking price and the listings are staying active for just under 60 days on average.
Now as an investor, you’re probably thinking that 60 days is a long marketing period but also consider that many of the listings are activated 30 days before the previous tenant vacates. The paperwork process of moving a new tenant into the building typically takes 3 weeks, so the 60 days on the market statistic isn’t really so bad.
One bedrooms are fetching $1,750/month and up right now, two bedrooms with west views are bringing $2,450/month. The only north facing unit that is available is an enormous 1,810 square foot 2 bedroom that is available for $3,500/month. East views are available for $2,800/month.
From an investment standpoint, I’m giving 1800 Club a gold star. Mortgages are available in the building, layouts are attractive to tenants (and owner/occupants), the building is well-run, the finishes are nice, the location is top notch and the views are beautiful. Pretending that we purchased that $260,000 one bedroom (the least expensive recent sale) and leased it for $1,750/month (the least expensive 1 bedroom recent rental), it would work out to a 4-5% return rate after expenses. Those are really great numbers for the area!
Which building should we look into next week???
The Biscayne Beach Club Could Offer Memberships To The Public
In anticipation of their opening day, I took the liberty of reading Biscayne Beach‘s 674 page prospectus that will be given to each of the 391 owners at closing. Nerdy? Probably, but I’m also a girl in the know. I learned some interesting tidbits including the cable service will be through Hotwire, valet parking will be through Park One, the building will be managed by First Service Residential, and the developer is retaining the rights to offer beach club memberships to the public.
According to the prospectus, the “Outside Members” will be capped at 250 at any given time and these members have to pay into the condominium association. It reads:
The Developer, during the period in which it is entitled to elect a majority of the Board, and thereafter the Condominium Association, each reserve the right, in their sole and absolute discretion, to sell memberships in the Beach Club to members of the general public who are not Unit Owners (“Outside Members”), upon such terms and conditions as the Developer or the Condominium Association, as applicable, may determine in their sole discretion, provided that the number of such memberships outstanding at any one time shall not exceed 250. All fees and other revenue by the Developer from the sale of such memberships shall be the sole property ofthe Developer, and shall not be considered revenue or income of the Condominium Association.
Notwithstanding the foregoing, each of the Outside Members shall also pay to the Condominium Association, periodic dues based on a proportionate share of the estimated operating costs of the Beach Club, as described in Section 20. The Common Elements of the Condominium, and any other portions of the Common Elements as the Condominium Association may, from time to time, elect to make available to Outside Members, shall be subject to various easements relating to the Beach Club, as described in Section 17.
The prospectus also went on to explain that the developer reserves the right to assign up to four of the 13 cabanas for exclusive use of the owner of that apartment. If the cabanas are not assigned, they are to be used by the Beach Club.
What we don’t know is whether the developer chose to exercise these rights, or what the cost of the Beach Club membership would be if they do decide to offer it. Personally, I love the idea. It would be like having The Standard on the mainland! What do you think?
VIDEO: Paraiso Bayviews Construction Tour
Today we were treated to a preview of the Paraiso district including a hard-hat tour of Paraiso Bayviews. I have to admit, while I’m excited to see the Paraiso district come to life, I’ve always been a bit skeptical about Bayviews because of its location to the west of the other towers. Would it actually have bay views? It does!
Inside the building, it is still too much of a construction site to be able to visualize the units and how the layouts will be. Hopefully we will be able to preview some finished options when the building is a little closer to being finished. It is scheduled to open later this year, so there’s time.
The views that we saw were from the 38th floor out of 43 total floors. There are still a few options for purchase, including a 40th floor 2/2 with 1,068 square feet and a west view, overlooking the tennis courts and sunset for just under $650,000. There are also six penthouses left, priced between $641,000 up to $1.6 milion.
After the residential tower, we also had a look at the Paraiso Beach Club, which is reserved for the residents only. The public will be welcomed in Michael Schwartz’s bayfront restaurant, but the upstairs club is residents only.
What do you think of the views?
Biscayne Beach Receives TCO But Pushes Back Closings
Image by Jennifer Behar Cervera
It has arrived! Biscayne Beach received its TCO (temporary certificate of occupancy) today, one day after it was expected, according to representatives of the developer. They were expecting the TCO to arrive yesterday, but hey… it arrived on “Miami time” and we are very happy to see this step in the right direction.
Due to disclosure guidelines, the closings are able to begin 10 days after completion. Instead of beginning today, they will now begin May 1. Since the initial TCO is for floors 7-35.
Ladies and gentlemen, it’s time! The first bulk sale is officially in contract at the newly constructed Crimson in Edgewater. Despite the building’s opening last year, the developer was still holding onto 20 units that were listed at an average of just over $600/square foot.
The package had been marketed with a 10% discount to an average of $558/square foot. That would make the value of the deal just over $13.5 million rather than the original $15 million. Once the deal closes, we will learn the final contract price and the amount of discount that the developer ultimately accepted. I expect it to be lower than $13.5 million since the Downtown Miami DDA’s report listed the average price per square foot in the building to be $545/square foot in their yearly report, but we shall see.
Crimson was developed by Aventura-based McKafka Development Group and has a total of 90 units. One of the biggest selling features (aside from the waterfront location) is the fact that the building is LEED Silver certified. There are currently 5 resales listed in the building, with an average price per square foot of $677.
I am very interested to see this one close and set the precedent for future deals. I’m sure that we will see additional bulk deals as more buildings open with remaining inventory. Which other buildings do you think we’ll see bulk sales in?
Biscayne Beach Opens This Week
We knew this day was coming soon, and the developers are right on schedule. They had anticipated a late April opening for Biscayne Beach, and here we are. The first closing statements have been sent out for review and closings begin Friday, April 21. The TCO is expected on Thursday, so the developer is really not wasting any time beginning the closings. If the TCO does not arrive on time, the closings will be delayed but we do not anticipate any problems.
Because the TCO has not yet been delivered, we have been unable to preview the finishes and views, but are very excited to do so on Friday when we walk through a unit that we are closing on. This apartment is going to come back to market as a resale and I expect that it will not last long. It is a lovely 2,103 square foot corner apartment on a high floor. There are 3 bedrooms, a den, 4 full baths and is a corner unit. The southeast corner offers south views of the skyline as well as east views of the bay and Miami Beach (the best view offered). You can see the floor plan and more information about the apartment here.
Biscayne Beach was an enormous success for the developers and sold very quickly. I am sure that the buyers will be impressed with how it turns out. We have started a list of buyers and tenants who are interested in the units as they come to the resale and rental market. If you would like to be notified of a particular plan listed for sale or for rent, just reach out.
What Happens If A Buyer Cannot Close On Their Preconstruction Condo?
The spring and summer of 2017 are going to be an interesting time for Miami in a real estate sense. We are going to see a flurry of new condo developments opening, bringing thousands of new closings (and probably hundreds of new resale and rental listings).
Brickell Heights 01 and Brickell Heights 02 are set to open within the next month, 1010 Brickell will follow shortly thereafter (or maybe they will open before… the two projects are neck and neck). Up in Edgewater, Biscayne Beach is slated to open its doors any day now, followed by the first tower of the Paraiso District, Paraiso Bay. The four projects together total over 1,800 new condos that are set for completion this summer. The fall and winter will bring another flurry, but for now let’s concentrate on the openings that are closer. These projects are all effectively sold-out. They are a wild success for the developers! But, what happens if one of the buyers is unable to come up with the remaining funds to close?
During the sales cycle of these four towers, the developers were requiring staggered deposit schedules that totaled a 50% down payment prior to closing and the remaining 50% due at closing. Remember that the majority of these condo sold in 2014-2015. A lot of things can happen in 3 years that can change the financial situation of the buyers. There could be an argument between partners in a condo, divorce, death, health issues. There could be political problems, currency exchange rate troubles, economic hardship. A dictator could be elected. We all know that these things are going on around the globe and they are all very sad. But what happens if one of these factors affects a buyer’s ability to close? It isn’t as dire as some may fear. The buyers do have choices.
They can walk from their deposit
Everyone knows this one. If you put a deposit down on a contract and don’t complete the contract, you will lose your deposit. It is very straightforward, and it stings. These condos sold around $500-$600/square foot. If you figure Related Group’s signature 2 bedroom layout that is almost always 1,200 square feet, give or take, the sale amount would be around $700,000. That’s a $350,000 loss, and that is not ideal for anyone… but it’s an option.
They can close with a mortgage
Although condo financing isn’t easy in brand-new developments, there are banks that will finance preconstruction purchases at the time of closing. The challenge is that many of the buyers in these developments are foreign nationals, and those mortgages are more difficult. Some banks refuse to lend to buyers from countries that have political turmoil (looking at you, Venezuela). It’s not a racist thing, the banks are worried about the political climate and their ability to recoup the mortgage. If you have questions about which banks can finance buyers from different countries, let us know. We have a resource that can help.
They can close with a private mortgage
If traditional financing just isn’t a possibility, buyers could visit a private lender. These mortgages typically require very little documentation and are able to close very quickly because the lender is familiar with the local market, the project, and bases the approval on that. The downside of these mortgages is that they are extremely expensive. Expect to pay 3-4 points to the lender at closing as a fee plus astronomical interest rates. I’ve seen interest rates as high as 13-14%. If a buyer was attempting to close the signature 2 bedroom unit that we discussed previously, that would amount to $10,500 – $14,000 just as a closing fee. Then you could expect around $4,000 per month to go just toward interest. Again, not ideal but also better than losing $350,000 right out of the gate.
They could find someone to step in and close on their behalf
This is probably the most ideal situation for someone in a preconstruction condo bind. Developers typically frown upon contract flipping and there’s no guarantee they would approve it, but developers in today’s market are also not eager to hold inventory on a previously sold-out project. They want to take their money and go do something else until another build cycle opportunity presents itself.
We have already had several investors request opportunities to buy in the event that a preconstruction buyer cannot or will not close. If anyone is in a preconstruction condo bind, please contact us and hopefully we can work it out in a mutually beneficial way.
Missoni Baia Releases Floor Plans And Prices Starting At $500k
Miami’s latest luxury branded condominium development, Missoni Baia, has released their preliminary floor plans and introductory prices. The project will bring 229 ultra-luxury residences to East Edgewater on a waterfront lot with 200 feet of bayfront in a 57 story tower. The sales brochures and renderings are still being finalized, but we were able to get a peek of the preliminary floor plans and first tier pricing.
As I have reported before, the best time to buy a new condo is either when the tower is first announced, or when the tower is completed and preparing to open. Of course, the first buyers have the best choice of floor plans and views. Without further adieu, the first tier prices and floor plans:
FLOOR 8-36 LINE 02
2 Bed / 3.5 Bath + Study
2,335 square feet interior
478 square feet terrace
Direct east center
Private elevators
Starting Price $1,690,000
The sales of the growing tower have remained strong as well, despite the market slowdown. In October the project was reported to be 70% sold, and the developer lowered the minimum deposit requirements from 50% to 35% on select units. When the project reached 74% in January of this year, they expanded the incentive, lowering the deposit requirements for all units. This is a pretty common strategy for developers who are at advanced stages of construction and have sold nearly all of their inventory. At 78% sold today, that leaves 142 purchase opportunities as of now. Since it appears that the project is selling 4% of their units every 3 months, it looks like they are selling just under 10 units per month. While that is not an amazing figure by Miami standards, it is certainly a nice figure considering that so many buildings have inventory today. At this rate, we should expect to hear a “sold out” announcement before the building opens later this year. Very nice, Aria!
Prices of the remaining inventory range from $400,000 to $1.8 million.
Elysee Reveals “Les Grandes Maisons” Collection & New Renderings
Builders typically wait until further into the sales cycle to release the larger, higher and more expensive apartments, but the time is now for Elysee. They have unveiled a collection of the larger, limited edition, full-floor residences on floors 46-56 of the 57 story tower. With the telescoping design, the building is able to offer deeper balconies and 3,891 square foot 5 bedroom plans with a sky-high vantage point. Les Grandes Maisons will bring together the atmosphere and proportions of an estate-like home, penthouse level upgrades and a suite of integrated health and wellness enhancements. The health and wellness enhancements include an aromatherapy infuser integrated into the HVAC system of each residence that continually cleanses the air and dispenses high-quality customizable fragrances; LEED-Certified Wellness Habitat interior paint with antibacterial, anti-mold and odor-eliminating properties; and a pre-installed water filtration system that effectively eliminates impurities.
Owners of Les Grandes Maisons also have the option to have their residences designed by Parisian designer Jean-Louis Deniot,one of the world’s preeminent talents in interior design. Prices for Elysee’s Les Grandes Maisons start at $2.8 million. Tres chic!
All residences will include floor-to-ceiling glass windows and sliding doors, private elevators and foyers, 10- to 12-foot ceiling heights, designer finishes and fixtures, premium appliances, top-of-the-line Italian cabinetry, as well as two expansive east/west-facing terraces with wide open sunrise and sunset views.
Building amenities will include two resort style pools, a health club featuring a fitness center, yoga studio and spa with sauna, steam and shower facilities and private massage rooms, a children’s playroom and a blow-dry bar. Residents will also have access to an exclusive Owners Sky Lounge which will encompass the tower’s entire 30th floor and feature a Great Room, Grand Salon entertainment area with a full bar and piano lounge, Grand Dining Room with seating for up to 30 guests, wine room, chef’s kitchen, library, private theater and gaming room. Elysee owners will also have the enviable advantage of Elysee Attaché – a premium concierge service that will be available to residents 24/7 for travel arrangements, dinner reservations, concert and event tickets, gift deliveries, and more. The project is currently 44% sold and expects to break ground shortly.
