MIAMI, FL--Nearly half of the 70-plus condo bulk transactions for distressed units in South Florida are actively being resold to individual buyers at an average premium of $51 per square foot, according to a new report from CondoVultures.com.Bulk buyers have resold 25 percent of the nearly 7,900 newly constructed or completely renovated units acquired in distressed transactions in the tricounty South Florida region since July 2008, according to the report based on the Condo Vultures® Bulk Deals Database™.
Private equity groups and institutional investors that have purchased distressed condos in packages of at least 10 units for an average price of $215 per square foot during the last 30 months are now reselling on a retail basis at an average price of $266 per square foot in Miami-Dade, Broward, and Palm Beach counties, according to the report based on recorded deeds.
"Bulk condo buyers are reselling units at an average premium of 24 percent, which at first glance seems to fall in the range of every investment group's expected return," said Peter Zalewski (top right photo), a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures® LLC.
"The issue is, the $51 per square foot average premium is a gross amount that does not factor in carrying costs, real estate commissions, marketing fees, and any sales incentives. Once these additional costs are factored in, the net profits are likely to erode for inferior properties."
The future of bulk condo deals in South Florida is the focus of the upcoming Condo Vultures® panel discussion entitled "Condo Conversions - The Next Wave For Bulk Buyers" at 5.30 pm Tuesday, Dec. 14, at the Miami Marriott Biscayne Bay Hotel in Greater Downtown Miami.
Peter Zalewski of Condo Vultures® can be reached at 800-750-0517 or by email at peter@condovultures.com
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