[RedScare]

This is amazing. We've all seen slumlords forced to renovate decrepit apartments, but I've never seen a condo complex shut down, especially one where the residents have spent tens of thousands of dollars maintaining it. I know. I used to own one of these units.

http://www.click2hou...067/detail.html

[u080570]

RedScare, on Tuesday, August 19th, 2008 @ 3:24am, said:

This is amazing. We've all seen slumlords forced to renovate decrepit apartments, but I've never seen a condo complex shut down, especially one where the residents have spent tens of thousands of dollars maintaining it. I know. I used to own one of these units.

http://www.click2hou...067/detail.html

What happens to your "investment" in a situation like this - does your insurance cover you? I can't imagine getting kicked out of my home like this....I suppose the alternative of having the parking garage collapse on me would be worse though...

[musicman]

they are screwed. who do they think they are going to sell their units to? land value is looking better no doubt.

[tanith27]

Almost 2 years ago as I was looking for a new place to live I went to these places with my realtor to look at a couple of the units. Given the prices and location it seemed like a good deal. When I got there there were so many red flags suggesting the condos were in bad shape. Crumbling mortar everywhere, rusted steps, and on top of that as I recall the monthly association fees were over $500. That immediately told me that either a) the association didn't use the money to fix the property or if they did, this complex was on the verge of a massive one time levy from each homeowner to fix everything. Had to walk away...no other choice. Its a great location though, but given the difficulty in developers to secure financing now, I can't help but think these may sit around as condemned units for a while...

This post has been edited by tanith27: Tuesday, August 19, 2008 at 8:00 AM

[sheeats]

tanith27, on Tuesday, August 19th, 2008 @ 7:59am, said:

Almost 2 years ago as I was looking for a new place to live I went to these places with my realtor to look at a couple of the units. Given the prices and location it seemed like a good deal. When I got there there were so many red flags suggesting the condos were in bad shape. Crumbling mortar everywhere, rusted steps, and on top of that as I recall the monthly association fees were over $500. That immediately told me that either a) the association didn't use the money to fix the property or if they did, this complex was on the verge of a massive one time levy from each homeowner to fix everything. Had to walk away...no other choice. Its a great location though, but given the difficulty in developers to secure financing now, I can't help but think these may sit around as condemned units for a while...

$500 a month for HOA dues? Damn! And I thought our HOA dues were ridiculous... But at least we can see our dues at work every single day over here. No crumbling mortar or rotting staircases. Those poor people...

[RedScare]

They could see their dues at work over there, too. Numerous staircases were replaced. Bad stucco and rotted wood was removed and repaired. All sorts of projects have been going on for several years. But, an engineer's report that the concrete supports are subject to catastrophic failure is a whole other matter. I was on the board at one time. I can attest to the money being spent on rehabilitation. I can also say that never in our wildest dreams would we have seen this coming. Rust and rot is one thing. But, concrete? In a 28 year old building?

BTW, the condo owners voted to put the entire complex up for sale back in March or April. It was already on the market before the city stepped in.

Oh, and $500 was for a 2100 sq unit.

This post has been edited by RedScare: Tuesday, August 19, 2008 at 8:50 AM

[TheNiche]

u080570, on Tuesday, August 19th, 2008 @ 6:38am, said:

What happens to your "investment" in a situation like this - does your insurance cover you? I can't imagine getting kicked out of my home like this....I suppose the alternative of having the parking garage collapse on me would be worse though...

Property insurance does not apply here in any form. The land value meets or exceeds the market value of the condos, so they are pretty well protected, although some people may have cash flow problems in the interim. It also helps that they have already held meetings months ago and agreed per the bylaws that they were going to sell their property--which is by the way very hard to do in such a large condo complex.

I wouldn't be surprised if either the Association took out a loan or charged a big up-front fee in order to demolish the condos, but since nobody is going to be living there, the fee will likely be significantly reduced.

The wildcard may be that since the property is getting condemned, some of the lenders of mortgages on the property could have a right to foreclose. This would mean that owners here might have to refinance as land. And if the land is sufficiently valuable and the mortgageholder is in default, some banks may not wait around to foreclose, seeing it as an opportunity to make money. ...I'm not sure about any of this, though--I've never had to deal with foreclosures or even come remotely close to triggering one, and I'm not sure what is within the bank's rights in this situation.

[Pumapayam]

So you at least get a chunk of the land sale, right. $/108 units in the Memorial area should not be too shabby. How many acres?

[marmer]

I know someone who lives/lived there. She's found another place but it won't be ready for another month at least so she's going to stay with her mother for a while. Lucky her that she can do that. I don't know that it is a serious financial issue for her but it is certainly an inconvenience.

[Pumapayam]

Looking on HAR.com, someone scammed their way out on 4/08, and sold they condo to some poor schmuck. Sucks that only 5 month later, you get kicked out.

Hopefully this person bought it for investment post demo, and not to live in.

[lwood]

RedScare, on Tuesday, August 19th, 2008 @ 3:24am, said:

This is amazing. We've all seen slumlords forced to renovate decrepit apartments, but I've never seen a condo complex shut down, especially one where the residents have spent tens of thousands of dollars maintaining it. I know. I used to own one of these units.

http://www.click2hou...067/detail.html

There was an article in Houston Business Journal recently stating that a broker was trying to pull together a deal for every owner to sell to a developer. The complex would be completely torn down for the value of the land. Based on the relatively low market value of the units, each owner would probably come out better if everyone sold out.

[RedScare]

Pumapayam, on Tuesday, August 19th, 2008 @ 3:25pm, said:

So you at least get a chunk of the land sale, right. $/108 units in the Memorial area should not be too shabby. How many acres?

108 is the number of units in the complex, not the price per square foot. The land is slightly less than 5 acres.

[TheNiche]

RedScare, on Tuesday, August 19th, 2008 @ 5:17pm, said:

108 is the number of units in the complex, not the price per square foot. The land is slightly less than 5 acres.

I think "$/108 units" meant: Sale Price divided by 108 units.

Incidentally, if they can get the $85 psf that I think they were initially hoping for, then it'd be in the ballpark of $18.1 million, or about $167,000 per average unit.

The buyer of the unit that Puma had referenced a couple of posts ago (with a sale price somewhere between $120k and $150k) would get about $187,500. For that person to possibly lose money, the land price would have to be below about $68 psf.

[RedScare]

TheNiche, on Tuesday, August 19th, 2008 @ 5:33pm, said:

I think "$/108 units" meant: Sale Price divided by 108 units.

Incidentally, if they can get the $85 psf that I think they were initially hoping for, then it'd be in the ballpark of $18.1 million, or about $167,000 per average unit.

The buyer of the unit that Puma had referenced a couple of posts ago (with a sale price somewhere between $120k and $150k) would get about $187,500. For that person to possibly lose money, the land price would have to be below about $68 psf.

You may be right on the $/108. My apologies to puma. As for $85 psf, that seems wildly optimistic, even for great Memorial Drive frontage. I realize that there is not that much land available in the area, but the units in Caseres, just north of Park Memorial, are hardly moving, and land in the area seems to be more in the $40-50 range. I was thinking $60-65 psf might be the high end.

Knowing what many of the units sold for, $85 would be good for virtually everyone in the complex. $65 psf would still be break even or better for most.

[TheNiche]

RedScare, on Tuesday, August 19th, 2008 @ 5:49pm, said:

You may be right on the $/108. My apologies to puma. As for $85 psf, that seems wildly optimistic, even for great Memorial Drive frontage. I realize that there is not that much land available in the area, but the units in Caseres, just north of Park Memorial, are hardly moving, and land in the area seems to be more in the $40-50 range. I was thinking $60-65 psf might be the high end.

Knowing what many of the units sold for, $85 would be good for virtually everyone in the complex. $65 psf would still be break even or better for most.

$85 is very optimistic. But it's good to want things.

[houston-development]

disclaimer:

some people may not like what i'm about to post. if you live there, know someone that lives there, or have very strong sympathetic emotions for the residents, please either don't read futher or lash out at me.

just my $0.02

most of the owners knew the property was seriously in need for major repairs. this isn't something that recently came up, it's been known for years. to their credit, it is VERY difficult and time consuming to get everyone on board to sell. they were able to get majority approval to sell based upon the economics of renovation and bringing the building up to code. again, that was an accomplishment.

on the other hand, knowing how bad things were, they shouldn't have strung this out as long as they did. some/most/all were convinced that they could make some really good money on the transaction and didn't even think twice what could happen if the city came in for an inspection. who's fault is that? well, i have my thoughts and will keep them to myself as to not offend anyone. additionally, the residents knew the city was coming in due to notices placed on their doors last month:

Quote

This building is in worsening condition and may experience catastrophic failure at any time.. The building is not suitable for habitation.

ironically, the brokers requested best and final bids the day afterwards. coincidence??!?

regardless, onus falls with the homeowners. sure, they can complain to the media, try and generate sympathy, but i ain't buying it because i know greed when i see it.

one theory i have (which is purely speculation) is that the owners jaded a prospective buyer and they went to the city inspectors.

personally, i think it makes some-what economic sense around $70 psf but someone will probably come in around $80. hypothetically if i had the deal under contract at $80 and saw this news, bet your bottom dollar i would be retrading the deal in a heartbeat. if they got their act together a year ago, which is what they should have done in hindsight, this deal would have easily traded for $90+ psf.

nothing personal, just business.

[houston-development]

some excerpts from the proposed contract, provided by sellers a month ago:

Quote

BUYER ACKNOWLEDGES THAT IT HAS BEEN FURNISHED A COPY OF THE ENGINEERING REPORTS ATTACHED HERETO AS EXHIBIT D. BUYER SPECIFICALLY ACKNOWLEDGES THAT THE BUILDINGS ON THE PROPERTY ARE OBSOLETE AND UNINHABITABLE AND WILL BE DEMOLISHED OR REMOVED BY BUYER AT ITS SOLE COST AND EXPENSE

Quote

1. Maintenance and Operation. The Improvements are in poor condition and must be removed by Buyer. Seller is under no obligation to maintain the Improvements. Certain of the Improvements are “red-tagged” by the City of Houston, including the parking garage.

Quote

3. Condemnation. Seller will notify Buyer promptly after Seller receives notice that any part of the Property has been or is threatened to be condemned or otherwise taken by a governmental or quasi-governmental authority. Buyer may not terminate this Contract due to any condemnation and Buyer shall receive all condemnation proceeds. In the event condemnation occurs or is threatened, (a) Buyer and Seller will cooperate in the condemnation proceedings, ( any award in condemnation due Seller will be assigned to Buyer, and © if the taking occurs before closing, the description of the Property will be revised to delete the portion taken.

Quote

7. Removal of the Improvements. Buyer acknowledges the Improvements are in poor condition. Buyer will not attempt to repair or restore the Improvements, nor permit occupancy of the Improvements, but shall remove the Improvements as part of its redevelopment of the Property.

and finally, note the dates of the engineering reports:

Quote

6. Engineering Diagnostics Report of Findings dated May 30, 2007
7. Engineering Diagnostics Report of Findings dated July 23, 2007

[RedScare]

Not sure why you feel you have the right to trash the owners without any response. At any rate, I will respond regardless, as I DO know some of the owners, and I DO know some of what they found out, and when.

Yes, they knew major repairs were needed. Further, repairs were ongoing at least as far back as 2002. However, the cost and scope of repairs always exceeded estimates. I don't think anyone knew of structural problems in the garage until the engineers report. I know I didn't

Not sure if you have ever tried to gather the 75% owner approval required to vote on something as major as selling a condo complex en masse, but considering that the structural problems appear to have been confirmed in May and July of 2007, and owners approved selling the property in the spring of 2008, that appears lightning fast to me.

Respectfully, you do not know greed when you see it. The owners have been pouring money down this rathole for years to rectify years of deferred maintanance. I am quite sure that the estimates to shore up the structure were astronomical. Faced with an assessment of thousands of dollars in repairs versus the alternative of selling a well located property in the hopes of recovering your investment, choosing to sell instead of pay does not equate to greed in my book. It is called good business.

The person complaining on the video does not live in the unsound garage units. He lives in a standalone building that has not been declared unsound. That is the basis of his complaint, nothing more. Further, it is not coincidental that final bids were called for after the residents were told to move. Most of these people have mortgages, and now will have rent on top of that. Maybe you rich guys can cover two house payments, but the retirees and working people living in that complex largely cannot. Again, not greed, just playing the hand life just dealt them.

I have no doubt that these owners had hoped to turn their lemons into lemonade by selling at a premium in a desirable market. If attempting to secure top dollar for one's home is greed, well, they'll probably live with that label from someone on the outside guessing.

BTW, I'm glad to hear that they might see as high as $80 psf. That might cover the purchase price of units bought in the last 6 to 8 years.

[pestofan]

houston-development, on Wednesday, August 20th, 2008 @ 10:22am, said:

one theory i have (which is purely speculation) is that the owners jaded a prospective buyer and they went to the city inspectors.

Probably more accurately stated as just: "a prospective buyer went to the city inspectors." De facto membership has its privileges in this town. Perhaps the city can now abscond by ED an adjacent property as a pocket park for this developer, since there is such a dearth of parkland next to the state's largest urban park.

[TheNiche]

pestofan, on Friday, September 19th, 2008 @ 9:29am, said:

Probably more accurately stated as just: "a prospective buyer went to the city inspectors." De facto membership has its privileges in this town. Perhaps the city can now abscond by ED an adjacent property as a pocket park for this developer, since there is such a dearth of parkland next to the state's largest urban park.

It might actually make sense as an extension of park land along the Buffalo Bayou/Memorial Drive corridor, if thought of as part of a regional project rather than as a neighborhood project. The site itself is low-lying and has some flood plain issues that are not inexpensively overcome. But as park land (or possibly flood control), those are aspects that could be viewed as beneficial and that would make it relatively less expensive than other nearby parcels of comparable size.