Terrific Buy Or Risking $27,500?

By
Real Estate Broker/Owner with Daytona Condo Realty, 386-405-4408

Hot market a few years ago marked the era of condo conversions. Apartment complexes were converted to condos at an astounding pace and offers were getting more and more enticing. First discounts, then offers of first year maintenance fee paid by developer, other incentives...

Daytona Beach, overshadowed by Orlando with its billions in conversion sales, had a much slower pace, and the conversion of another riverfront small complex was nothing out of the ordinary. I remember the signs offering the ownership with, I think, $900. Just bring a check and it's yours. Hurry up, grab it. Proud ownership for sale cheap.

Better deal than rent. To rent you need first month plus security, and often last month rent, so you have to bring more cash than to buy. The mortgage plus maintenance fee was higher than they would have to pay in rental places, so when the market started softening, the rents in the area were getting more and more affordable, and there came the moment when they were paying too much for these condos. With falling values, they were not worth the balance of their loans. There is nothing to hold them.

Would you be surprised that many of the owners stopped making payments both to the Lender and to the Association? Soon the management could not pay for utilities, insurance, or anything else needed to keep it operating. Of course, the Association can force a foreclosure, but they are not in the first position. To do so they would have to buy out the Lender. But these units are not worth what's on the books. So management could only put liens on the units.

Out of 80 units only 8 are still paying maintenance fee. 32 units, according to the manager, are in either short sale or foreclosure. It does not sum up. Well, if only 8 are paying their maintenance fee, and 32 are dropping the units one way or the other, this means that there are another 40 owners, who have not yet received the Notice of Default, that's all. The units that the lender gets, can only be sold for cash, as there is not insurance. The association is 6 months behind with payments, so there is no financing. But without insurance, who are you going to sell it? Wonder why there was a direct riverfront unit, 2 bdr/2 bath for $27,500? Do you want to risk even $27,500?

It is difficult to predict how this will end. Nothing encouraging. And it all started with a terrific idea to make home owneship affordable. So easy to get, so easy to lose. logo

   Jon Zolsky, your Daytona Beach connection
   www.BeautifulFlorida.com

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Rainmaker
309,378
Mike Wong
Keller Williams Realty Southwest - Sugar Land, TX
Realtor: Commercial, Residential, Leasing, Invest

Jon, keep us updated on this. Im seeing something similar here and would like to see how this situation turns out.

Oct 05, 2008 11:29 PM #2
Rainmaker
217,571
Richard Shuman
The Only B.S. I Have is from the University of Massachusetts - Lake Mary, FL
Real Estate Broker - Orlando Area - Love Referrals

Some of the lenders are going to stop offering loans on condo's. Maybe they are telling us something?

Oct 06, 2008 12:09 AM #3
Rainmaker
83,324
Winter Baserva
Seasons Realty Group of Solid Source Realty, Inc. - Atlanta, GA
Realtor -Homes For Sale, Atlanta, GA

$27,500?!? WHO WOULDN'T BUY A CONDO FOR THAT?? Buy at the bottom (that's where we are) and waterfront condos will always be in demand. Especially to foreign investors.

Oct 06, 2008 12:16 AM #4
Rainmaker
592,907
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Jon,

Talk about opportunity! Wow!

These could all be brought back into single ownership for next to nothing!

Opportunity, profits and helping the community, all you need is an aggressive investor.

Bill

Oct 06, 2008 03:40 AM #5
Rainmaker
378,355
June Stark
Elite Realty-Luxury Homes & Condos On & Off the Strip - Las Vegas, NV
Las Vegas Condos & Luxury Homes Expert

There is a website Investment Riches....maybe you could post an add & find ONE investor to take the project on as a whole. 

Oct 06, 2008 02:03 PM #6
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Dagmar - You have a good idea with International investors. I am trying to set a website and marketing with people abroad. Not that much hope here, people are not really thrilled with investing in US, at least, this is the impression that I am getting 

Oct 06, 2008 04:55 PM #7
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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Mike -  I will. I am curious myself. There is not precedent here, so it is difficult to predict how it will unfold. One thing for sure: the Lenders will not see a lot of money forecllosing on these properties.

Oct 06, 2008 04:58 PM #8
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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Richard - Lenders have actuaries, who calculate the risk based on previous performance, and forecast of the trends. All it tells us is that there were bad loans for condos. But there were tons of bad loans for homes, and even vacant land.

Oct 06, 2008 05:00 PM #9
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Jon Zolsky, Daytona Beach, FL
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Winter Baserva Realtor Atlanta Homes For Sale - Yes, but if they do not get out of this situation, they will have their electric, and water shut down, they might be forced into bankruptcy, and neglect may result in decalring the condo untenatable (in Florida you do not need much time without AC to get mold, and then yo are doomed).

We witnessed a condo-hotel just immediately south of our office, 87 condos declared untenatable, and leveled. Owners got the insurance money and walked away. It is a vacant land now. But it happened in 2004 after the hurricane, and the value of land was so high, that people still got more, than what they paid (but less then what similar properties were selling for in other condo-hotels).

Here you do not have it. Wrong market, wrong location, NO INSURANCE. Do you still want to buy?

Oct 06, 2008 05:07 PM #10
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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Bill - You are absolutely correct. I am calling people trying to interest an investor with the potentially terrific deal even in this market.

 

 

Oct 06, 2008 05:11 PM #11
Rainmaker
212,529
Terrylynn Fisher
Dudum Real Estate Group - BuyStageSell.com - Walnut Creek, CA
HAFA Certified, EcoBroker, CRS, CSP Realtor, Etc.

Florida has been really hard hit, awful situation with hopefully light at the end of the tunnel.

Oct 06, 2008 05:40 PM #12
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Terrylynn - The interesting part is that we know that in a few years we will be looking at today's prices and regret we could not buy as many property as we wanted. Yes, tis is a terrible market, but there is so much money to be made.

Oct 07, 2008 12:19 AM #13
Rainmaker
246,926
Gena Riede
Riede Real Estate, Lic. 01310792 - Sacramento, CA
Real Estate Broker - Sacramento CA Real Estate (916) 417-2699

Jon, what an opportunity for an investor. If only I had the cash to buy out the whole complex...what a deal this would be!

Oct 07, 2008 03:28 PM #14
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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Gena - you are stealing my thoughts (LOL). The good part is that I am not the only one who thinks so.

Oct 07, 2008 04:30 PM #15
Rainmaker
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Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Hi Jon: I imagine the terms of the deal are cash only buyers because a lender would most likely not make a loan on a complex where 90% of the HOA fees are uncollected. But, still. $27,000? You can hardly buy a car for that! That's a down payment in California! I agree with the assessment that a group of investors or a corporation should pick up the whole project.

So many people don't understand that when prices fall, that's a good time to buy. My husband walked in the door last night and announced we should buy stock. And he's right. :)

elizabeth weintraub sacramento real estate agent in land park

Oct 08, 2008 07:08 AM #16
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Elizabeth - it is getting crazier every day. You are correct, these deals are cash. With no insurance getting money is out of the question.

So, you are buying stock?

Oct 08, 2008 03:24 PM #17
Rainer
70,555
real estate real estate
Providence, RI

Wow, I cannot believe it. The price is very unbelievible. I think I need to move to Florida.

Oct 10, 2008 03:43 AM #18
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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Huiting - Awfully sorry, I missed your comment somehow. Do I need to say, "Welcome to Florida" (LOL)?

Yes, who was doing very well when the market was going up crazy, those are suffering the most. Like flying too high, and then falling hurts more.

But the deals are beyond imagination. Though we still did not get to the point when the Sellers pay the buyers so that they buy.

Oct 13, 2008 02:04 PM #19
Rainmaker
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Barbara S. Duncan
RE/MAX Advantage - Searcy, AR
GRI, e-PRO, Executive Broker, Searcy AR

Jon, I'd never thought of this before.  I've heard of condos made from apartments but didn't realize the complexities about it.  Just another mess in the making!

Oct 15, 2008 05:43 AM #20
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
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Barbara - And nobody else knew. If the values kept marching up, there would be no problem, but they didn't.

I remember people asking me "stupid" questions like "What is gonna happen to the condo-hotel, if there is a hurricane, and it would be gone". I used to smile. They were so naive. Now just next to my office there is an acre of vacant land on the Ocean where there was a 87-unit 5-story condo-hotel. Hurricane did not destroy it, people played dirty tricks, but nonetheless, it's gone.

I am learning to be cautious. Things tend to turn the unexpected way.I read the story of a lost property, and it was written by the attorney, who lost his property like that. Basically, even an experienced attoreny was caught in something like that, and could not do much about it.

Oct 15, 2008 06:27 PM #21
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