Week of April 8, 2010
| Some condo investors who bought at bottom itchy to sell By Yudislaidy Fernandez Some investors who bought up condos in the depths of the recession are analyzing the possibility of reselling, but others plan to hold on to sell when creditworthy buyers return to the market, real estate professionals say. Many have a long-term outlook for their condo investments because they are seeing that the market won't turn around quickly, says Craig Werley, senior principal at Coral Gables-based Focus Real Estate Advisors. The intentions of many investors, especially foreign buyers, are to keep the units they bought in recent years for two to three years at least, he said. Historically, real estate investments for foreign buyers are a long-term commitment because it is a way to invest outside their home countries, where often they feel the money is less secure because of internal political or social conflicts. International buyers investing in South Florida real estate now include Venezuelans, Colombians, Brazilians, Argentines, Italians and the French. Unlike foreign investors, Mr. Werley said, domestic bulk buyers are generally prepared to keep the property about five years, with the mindset of selling and taking their gain as soon as the market rebounds. Domestic investors, he said, continue to dominate the market, representing about 65% and foreign investors the rest. A strong trend visible in the past two years is investors buying condos and then renting them out, he said, as a way to gain some income from their investment while they wait for the housing market to improve to sell. Many buyers who acquired distressed properties from 2007 to 2009 are starting to examine reselling these investments for a profit, says Peter Zalewski, principal at brokerage and consultancy Condo Vultures. "The greatest success in reselling distressed product is coming on the bulk basis," he said. A total of 16 bulk buyers, who bought a combined 1,800 units in South Florida since July 2008, he said, have "gone to the market to re-trade the product." These buyers have successfully resold almost 400 units at an average profit of $83 per square foot, he said. While reselling is still challenging in today's market, Mr. Zalewski says, it can be done at the right price. But 2011 could be the year when more investors start to sell as analysts forecast financing becoming more accessible. Many investors expect financing to start to become available next year, Mr. Zalewski said, which would allow more creditworthy, end-user buyers to re-enter the market. "Watch for some prices in certain submarkets for new product to stabilize and possibly even increase in the next 21 months," he said. "Financing will be the key, which is why all-cash buyers are scrambling to accumulate product that will be able to be resold in the future."
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