Luxury condo pre-con deal in Florida - Part One

Early in 2005  I bought a pre-construction luxury condo in “The Beach Club” - a top of the line luxury condominium complex located on the ocean between Ft. Lauderdale and Miami at 1830 S. Ocean Drive in Hallendale Beach, FL.

This is obviously a different play than what this group usually invests in: Cash flow properties in decayed areas of the rust belt, such as Buffalo and Trenton. (I do also own some of those) This is a play in a classic booming Sunbelt bull market which shows no signs of slowing, with substantial upside potential. I used to live several blocks away from this development. The growth there has been and is astounding, and is in a true community, with shopping, jobs, and other attributes that make it less “frothy” than many of the Miami Beach places. Donald Trump is building in the area. It is one of the fastest growing areas of the country, and going higher and higher end each year. There is talk of the market being overheated…as their has been for the last 10 years. In all the years I lived next door, the boom was about to end, yet Europeans, South Americans and New Yorkers continue to pour in …all with money. Miami has been transformed into a glamorous destination for the fashionable crowd. The future is not in Cleveland…it is in places like South Florida.

THE PROPERTY: The property is one bedroom apartment on the 39th floor of tower 2 of The Beach Club. It faces the intercoastal waterway and the city. It is one bedroom one bath, total of 871 square feet. For more info on the building, see: www.beachclubstyle.com It will have such luxury amenities as 50,000 sq. ft. spa, fitness center, pools, restaurants. Floor to ceiling glass windows, granite bathrooms with Jacuzzi and bidet., Kitchen with European styled cabinets, granite countertop and top-off-the-line appliances. Parking space in garage.

THE DEAL I bought the unit with a partner for $365,000. I paid 20% down ($73,000) with the balance of $292,000 due upon close in Summer 2006. This contract is assignable to someone else for a small fee of about $1,500.

WHAT IS THE LATEST? (written late 2005) The entire 3-tower complex sold out within about a week of being on the market. I don’t want to close on the unit, as I don’t have $292,000 to do so. I may hold on till the last minute to gain maximum appreciation, or I may start to market it now. I am seeing listings for 1 bedrooms in the complex for up to $595,000 – which is a $230,000 premium over what I paid. A ridiculous price, I know, but I am hoping for a 50-150,000 profit on this deal. I turned down an offer this morning (July 2005) for a $20,000 profit. I may bring in another partner to take a piece of this deal with me (let me know if interested). Viva Florida!