Top 5 Distressed Condo Sales Closed in April 2009

Below, you will find what I believe to be the five best condo deals of the 42 distressed sales that closed in the month of April in the MLS located in Brickell, Brickell Key, Downtown Miami and the Arts District.

1. Emerald at Brickell – unit 2201 – 2 bedroom/2.5 bath (1,594 square feet) – This unit sold for $306,000, or $192 per square foot, on April 30, 2009.  Foreclosure (#1 despite the high HOA fees)
2. The Club at Brickell Bay – unit 2604 – 1 bedroom/1 bath (825 square feet) – This unit sold for $110,000, or $133 per square foot, on April 9, 2009.  Short Sale
3. One Miami – unit 3215 – 2 bedroom/2 bath (1,145 square feet) – This unit sold for $255,000, or $223 per square foot, on April 13, 2009.  Short Sale
4. Skyline on Brickell – unit 1912 – 2 bedroom/2 bath (1,367 square feet) – This unit sold for $325,000, or $238 per square foot, on April 17, 2009. Foreclosure
5. Brickell on the River North – unit 1007 – 1 bedroom/1 bath (757 square feet) – This unit sold for $145,000 or $193 per square foot, on April 17, 2009.  Foreclosure

Runner-up: Vue at Brickell – unit 2108 – 1 bedroom/1 bath (838 square feet) – This unit sold for $94,000, or $112 per square foot, on April 29, 2009. Foreclosure

Unit 1508 at Brickell on the River North Revisited

Towards the end of February, I wrote about a 2 bedroom/2 bath condo foreclosure at Brickell on the River North that had recently been listed at the time.  The condo was listed for $159,000, or $151 per square foot.  The 2 bedroom was priced below recently closed 1 bedroom condos at Brickell on the River North and, as a result, attracted the interest of many buyers.  From speaking with the listing agent in February, I learned that he had received over 30 offers for the condo.  The unit closed on April 3, 2009 for $236,000, well above asking price.

Top 5 Miami Distressed Condo Sales Closed in March 2009

Below, you will find what I believe to be the five best condo deals of the 47 distressed sales that closed in the month of March in the MLS located in Brickell, Brickell Key, Downtown Miami, and the Arts District.

1. The Mark on Brickell – unit 2702 – 3 bedroom/2 bath (1,470 square feet) – This unit sold for $251,000, or $171 per square foot, on March 20, 2009. Short Sale
2. Brickell on the River – unit 3305 – 1 bedroom/1 bath (757 square feet) – This unit sold for $125,000, or $165 per square foot, on March 17, 2009.  Foreclosure
3. Vue at Brickell – unit 812 – 1 bedroom/1.5 bath (860 square feet) – This unit sold for $90,000, or $105 per square foot, on March 9, 2009. Foreclosure
4. Neo Vertika – unit 1525 – 0 bedroom/1 bath (638 square feet) – This unit sold for $98,500 or $154 per square foot, on March 19, 2009.  Foreclosure
5. Uptown Lofts – unit 1003 – 1 bedroom/2 bath (1,065 square feet) – This unit sold for $100,000, or $94 per square foot, on March 19, 2009. Foreclosure

Runner-up – 1800 Biscayne Plaza – unit 1107 – 3 bedroom/2 bath (1,318 square feet) – This unit sold for $200,000, or $152 per square foot, on March 11, 2009. Short Sale

Top 5 Miami Distressed Condo Sales Closed in February 2009

Below, you will find what I believe to be the five best condo deals of the 26 distressed sales that closed in the month of February in the MLS located in Brickell, Brickell Key, Downtown Miami and the Arts District.

1. The Club at Brickell Bay – unit 2214 – 1 bedroom/1 bath (818 square feet) – This unit sold for $100,000, or $122 per square foot, on February 20, 2009. Short Sale
2. Skyline on Brickell – unit 1911 – 1 bedroom/1 bath (791 square feet) – This unit sold for $155,000, or $196 per square foot, on February 20, 2009. Foreclosure
3. Emerald at Brickell – unit 1205 – 2 bedroom/2.5 bath (1,264 square feet) – This unit sold for $267,000, or $211 per square foot, on February 5, 2009.  Foreclosure
4. Jade at Brickell Bay – unit 4507 – 3 bedroom/3 bath (2,130 square feet) – This unit sold for $869,900, or $408 per square foot, on February 6, 2009.  Foreclosure
5. Parc Lofts – unit 207 – 1 bedroom/1 bath (1,267 square feet) – This unit sold for $210,000, or $166 per square foot, on February 24, 2009. Short Sale

Unit 2214 at The Club at Brickell Bay sold for $100,000.  It’s worth mentioning that this is the lowest that a 1 bedroom (and even studio) has ever sold for in the building through the MLS.  It also works out to be the lowest price per square foot.  At the time of contract, the condo was listed for $149,222.

South Beach Vacation + Bargain Condos = Miami Condo Investments Tour

I’ve been kicking around this idea in the back of my mind for quite some time.  I guess the timing just never felt right.  Prices have now fallen to a more realistic level, however, and it may be time to at least discuss the idea to see if there would be any interest.

I’m proposing to hold a two-day tour of Miami and South Beach condos in June of this year.  The tour would focus on the best condo deals in Brickell, Brickell Key, Downtown Miami, the Arts District of Miami and South Beach.  The objective would be to educate nonlocal buyers, who may not be familiar with the various neighborhoods and condo developments, but may have an interest in buying here at some point in the future.  It’s also an opportunity for local buyers to take a first-hand glimpse into the best condo investment deals in Miami.  Weather-wise, June may not be the best time of the year to visit South Florida, but I expect the deals at that time to be even better than they are now.

The condo tour would be held on a Friday and Saturday, in which time we would visit 10 buildings and about 30 condo units.  The tour package would include a 3-night stay at the Loews Hotel, a 4-star/4-diamond oceanfront hotel in South Beach; 3 breakfasts; 2 lunches; and the 2-day chartered bus tour.  The cost would be $900 for one person or $1,500 for 2 people staying in one room.  The 2-day chartered bus tour would also be open to local buyers who do not require hotel accommodations at a rate of $300 per person.  To those who close on a condo that was placed under contract within 3 months of the tour, I would credit half the cost of the condo tour package at closing for those requiring hotel accommodations and the full cost to those paying the $300 rate.

I’d love to get your feedback about this idea, and I’m open to suggestions regarding the buildings that will be included in the tour.  Please add your thoughts in the comments section and use the second poll below to vote on the buildings that you’d like to see on the tour (you may select multiple buildings when voting).  I’m hoping to get around 20-25 interested parties in order to set this plan into motion.

[poll id=”7″] [poll id=”5″]

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.

Top 5 Miami Distressed Condo Sales in January 2009

Overall, the distressed condos that closed last month weren’t as interesting as the ones I’ve seen in previous months but there were still a few good ones. Below, you will find what I believe to be the five best condo deals of the 24 distressed sales that closed in the month of January in the MLS located in Brickell, Brickell Key, Downtown Miami and the Arts District.

1. Uptown Lofts – unit 502 – 1 bedroom/1 bath (775 square feet) – This unit sold for $84,000, or $108 per square foot, on January 15, 2009.  Foreclosure
2. Vue at Brickell – unit 1214 – 2 bedroom/2 bath (1,149 square feet) – This unit sold for $157,000, or $137 per square foot, on January 9, 2009. Foreclosure
3. Isola – unit 2104 – 2 bedroom/2 bath (968 square feet) – This unit sold for $225,000, or $232 per square foot, on January 28, 2009.  Foreclosure
4. Skyline on Brickell – unit 2508 – 1 bedroom/1 bath (791 square feet) – This unit sold for $190,000, or $240 per square foot, on January 9, 2009.  Foreclosure
5. The Club at Brickell Bay – unit 3903 – 1 bedroom/1 bath (825 square feet) – This unit sold for $124,000, or $151 per square foot, on January 28, 2009. Foreclosure

Can the Current Financial Crisis Be a Blessing in Disguise for Condo Contract Holders Scheduled to Close?

Last Friday, I had the pleasure of having lunch with Jared Beck and Elizabeth Lee Beck of the business litigation law firm, Beck & Lee.  Jared Beck, who pens The Magic City Harvard Lawyer blog, raised an interesting question: Can contract holders of condos in Miami scheduled to close in the coming months use the current financial crisis and inability to acquire financing as a valid argument for nonperformance of their contractual obligation?

I know, I know…preconstruction condo contracts clearly state that performance is not contingent upon financing.  However, a recent federal ruling in Hoosier Energy Rural Electric Cooperative, Inc. v. John Hancock Life Insurance Co., contains language that may assist condo contract holders who are scheduled to close in the near future.

Here’s some background on the federal case, as provided by Jared Beck’s recent blog post entitled, “Federal Court Endorses Financial Crisis As Basis For Relief From Pre-Existing Contractual Duties; Could Real Estate Contracts Be Affected?”:

The background is somewhat complex but essentially involves the owner of an electrical generating plant in Indiana, Hoosier Energy, which in 2002 entered into a complex lease-back arrangement over some of its assets with an insurance company, John Hancock, aimed at creating a tax shelter for John Hancock.  As part of the deal, Hoosier Energy was required to obtain what amounted to a line of credit from Ambac,  a financial institution called a “swap provider.”

Until 2008, Hoosier Energy made all of its scheduled payments under the agreement.  Then, global financial crisis ensued, and the credit rating of Hoosier Energy’s swap provider sunk like a stone.  Hoosier Energy was unable to find another swap provider with a suitable credit rating who could be substituted in a timely manner.  John Hancock declared Hoosier Energy to be in default and demanded a large termination payment, shortly after which Hoosier Energy filed suit, requesting a protective injunction.

Mr. Beck went on to say in his blog post that “Hoosier Energy argued that the extraordinary freeze in the global credit markets at least partially excused it from performing under the contract as an instance of ‘commercial impracticability,’ mitigating the default declared by John Hancock”.  The court agreed with Hoosier Energy’s argument.

Mr. Beck concluded his post with the following:

How could this newly articulated doctrine be more broadly applied? One possibility rests with the large number of individuals who signed preconstruction real estate contracts several years ago, with the intention of obtaining mortgage financing once the project was finished. Now that many of those projects have been or will soon be competed, those buyers are unable to close because, owing to the global credit crunch, banks will no longer extend mortgage financing for certain new real estate construction at 2004 or 2005 prices.

While many of these purchase contracts were drafted with clauses stating that they were not contingent upon the buyer qualifying for a mortgage, it could be argued, on the basis of the reasoning set forth in Hoosier Energy, that the deals were signed under both parties’ reasonable assumption that financing would actually be available from somewhere once construction was completed.  To quote the Southern District of Indiana in Hoosier Energy, “The crisis was not anticipated by the most senior economists in the country.”  If that is true, why should the defense of commercial impracticability, based on the lack of accessible credit, be any less available to the individual real estate buyer seeking to mitigate the effect of a pre-existing contract then it would be to an electrical generating plant operator dealing at arms length with a multibillion dollar insurer?  (To some degree, the question overlaps the analysis of whether “bailout” principles should apply equally to financial institutions and individual homeowners, both of whom are victims of their own inability to foresee the mortgage crisis).

The newly revised Fannie Mae guidelines, which went into effect on January 15, state that the government-controlled entity will no longer fund loans for new Florida condos if at least 70 percent of the total units in the development have not be conveyed or under a bona fide contract for purchase to either principal residence or second home purchasers.  Contract holders who require financing and are scheduled to close in coming months are basically out of luck.  It’ll be interesting to see how the courts handle this argument in 2009.

Distressed Condos Report – New Condo Developments

The spreadsheet below reveals 13 distressed condos currently listed in the MLS which reside in developments in Miami completed within the past two years. I expect this list to grow in coming months. I plan to provide future updates with new listings as well as track the outcome of condos previously listed. 12 of the 13 condos listed below are short-sales. The foreclosure process can be quite lengthy so I don’t expect to see many distressed condos in new developments become bank owned until at least the second half of the year.

View Full Spreadsheet

2 Bedroom Foreclosure at Latitude on the River – $266,000

Within the past three months, I’ve seen a handful of short-sale condos at Latitude on the River become available on the MLS.  Earlier today, however, I came across the first bank-owned foreclosure condo in the building to appear.

The foreclosure condo is a 2 bedroom/2.5 bath with 1,212 square feet of interior and a 196 square foot balcony.  The condo comes “decorator-ready” with concrete floors, as delivered by the developer, and is located on the southwest corner of the 20th floor.  The list price is $266,000, or $219 per square foot.  The most recent Brickell Condo Index published in November 2008 revealed that the average list price of condos available at Latitude on the River was $366 per square foot.  There had not been any closed sales in the building at the time within the prior six months and there haven’t been any since.  Lack of closed sales clearly means that prices of available condos at Latitude on the River haven’t yet fallen to a level that will attract buyers.  It’ll be interesting to see if the 2 bedroom foreclosure condo at Latitude on the River will spark the interest of buyers.

View the pictures and listing information for the 2 bedroom condo foreclosure at Latitude on the River.