News About Properties

Proposal: Pay fee, skip condo-conversion line

Waiting to go condo is San Francisco’s version of waiting for Godot.

Building owners can spend years vying for one of 200 condo-conversion slots awarded annually via a lottery. But this year San Francisco is considering letting people skip the line, offering a one-time chance to the hundreds of folks on the lottery list to go condo now - for an extra fee. The goal is to generate more revenue for the cash-strapped city and to create building-industry jobs, because condo conversions generally require some construction work to bring buildings up to code.

“We’re investigating many revenue options to help solve the city’s budget deficit; condo conversion is one of them,” e-mailed Joe Arellano, a spokesman for Mayor Gavin Newsom.

A proposal to expedite condo conversion would require approval by either the supervisors or the voters - no easy task in a city where housing issues are famously contentious. Tenant advocates say the practice hurts renters who get evicted when buildings convert to tenancies in common, the step before going condo. Previous proposals for increased condo conversions have failed miserably.

Finding Funding for a Real Estate Venture

Q: I recently started a small business of buying and rehabbing homes for rental to the incoming military in the area. The banking crunch has halted our purchases as of now. I am looking for funding to complete the homes already purchased. Is there help out there for this type of venture? —S.P., Fayetteville, N.C.

A: As you’ve probably already realized, this is a tough time to get funding for a new business venture. And with home prices dropping in many parts of the country, speculative real estate development is considered particularly risky these days.

While community banks are increasingly stepping in to lend to small businesses in their communities, they typically want to see a successful revenue history and plenty of collateral from entrepreneurial borrowers. Often they are looking for accounts receivables or inventory to persuade them that you will be able to pay back the money you’ve borrowed. And while in the past they might have extended you credit based on the property you already own, if you’ve taken on substantial debt in making these purchases or if the houses you’ve bought are declining in value, you’ll have a tricky time getting a traditional loan today.

Want a green card? Pay $1M for stake in Orlando-area condo hotel [Central Florida]

Condominium hotels were among the first real-estate investments to go sour as the housing market slumped and, later, the credit markets seized up. But Lake Buena Vista Resort Village & Spa is hoping the lure of permanent U.S. residency will eventually persuade well-heeled foreign investors to help it expand near Walt Disney World.

The condo-hotel resort received government approval several months ago to serve as a “regional center” for foreign investment. Under federal immigration policy, an approved foreigner whose investment is supposed to create 10 full-time jobs in the U.S. can get a conditional visa to live here — and can ultimately secure a regular “green card” good for permanent residency.

The Lake Buena Vista resort is one of only about 35 such centers for EB-5 visas in the country — and the first one not in a rural or high-unemployment setting.

La Via Units Sell for $55,000 Each [South Florida]

A foreign investor has purchased 26 units at the La Via Condominium complex in Pembroke Pines for just over $1.4 million, or $55,000 per unit, in an all-cash transaction. Atlanta-based Apartment Realty Advisors Inc., which arranged the sale, expects to see more such fractured condo purchases throughout Florida in the coming year.

“We will see more all-cash deals from both local and foreign investors,” Avery Klann, senior vice president of ARA’s Florida division office in Boca Raton, tells GlobeSt.com. He says offshore investors are seeking opportunities within the US multifamily sector while domestic buyers are having difficulty arranging financing during the ongoing credit freeze.

Shaoul Mishal, president of Israel-based Gamla-Cedron Group, bought the remaining units at La Via, which amount to roughly 10% of the 250 total units on site. The former Green Key apartment complex was converted to condos in 2005 and all other units were sold over the past three years, at $230,000 each, to owner-occupants, buyers renting out their units and absentee investors.

Con artists take advantage of homeowners in trouble

As tens of thousands of Los Angeles County residents lost their homes to foreclosures in recent years, a Van Nuys businessman and his associate knocked on doors and mailed out fliers offering “Foreclosure Relief Services” to desperate homeowners.

The two men, ages 59 and 71, allegedly told homeowners they could stop foreclosure proceedings if they paid them a $500 monthly fee.

But prosecutors say instead they swindled victims out of the equity in their homes in North Hollywood, Glendale and other communities around Los Angeles.

Accused of 71 felony counts of foreclosure-consulting fraud and other charges, they are now awaiting trial for what prosecutors describe as a “foreclosure rescue scheme.”

Joe Adams: Pooled reserves ensure there’s cash when needed

Q: Our board of directors has been talking about switching over to “pooled” reserves. Can you explain what this means? L.A. (via e-mail)
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A: The concept of funding condominium reserves through the “pooling” method, sometimes also known as the “cash flow” method, came into vogue about seven years ago.

The Florida Condominium Act requires an association to include as part of the annual budget, a reserve schedule. Reserves must be set aside for roof replacement, pavement resurfacing, building painting, and any other item of association responsibility with a replacement cost or deferred maintenance expense of $10,000 or more.

Traditionally, the reserve schedule accompanying the proposed budget has used the “straight line” method of calculating required reserves. For example, assume that the roof on a condominium building has a 20-year useful life, it is 10 years old, and will cost $100,000 to replace. Further assume that the current amount of money in the roof reserve is $50,000. The association will need to collect $5,000 per year, over the next 10 years, to accumulate another $50,000 so as to “fully fund” the roof reserve. This is traditional, “straight line” funding of reserves.