Terrazas Miami condo at 1861 NW South River Dr. (J. Albert Diaz)
For properties like Terrazas Miami built during the economic downturn, timing is everything.
When it first came to market, perks like door attendants, a sauna, fitness center and water views made 1861 NW South River Drive a hot address on Miami’s emerging riverfront.
But that was 2009. Fast forward five years, a change of ownership and conversion to apartments during the recession, and Terrazas is shifting gears to stand out among the six new condominium projects built since its launch.
In a market known for luxury real estate and record-breaking prices, marketers are positioning the 5-year-old property as a boon for middle-income buyers priced out of the sparkling new towers rising as the housing sector rebounds.
“We’re one of a few buildings offering financing,” said Michael Sadov, Terrazas’ sales director. “It’s about the price point. When you look at lower price-point buyers, they’re more likely to want financing. In the luxury market, there’s no financing available. If you’re not buying cash, then you’re not buying.”
To get prospects for units priced from $224,000 to $500,000, Terrazas is among a growing list of developments working with preferred lenders to offer onsite financing to would-be homeowners hindered by tight lending conditions.
“Properties that stalled during the downturn are now competing with shiny new product,” said Deniece Williams, president of marketing company DW Connect Inc. “They’ve faced an uphill battle because there’s so much happening, but these are unsung opportunities for domestic homeowners. They are real values that have been under the radar.”
Up to 97 percent financing
News of in-house financing is bolstering sales to local buyers at Midtown Miami, where the Bush group led by Miami investor Ronald Krongold paid $110 million in 2012 for 538 condos in three towers as part of a foreclosure transaction with HSBC.
In the first quarter, about 75 percent of the property’s sales were financed compared with 60 percent in the same period last year, thanks to successful relationships with financial firms and mortgage brokers.
“We have banks that are putting people onsite so it’s easier to obtain financing,” developer Ronald Krongold said. “Generally the banks love our projects. Hard money lenders love our projects.”
Today Midtown works with 10 preferred lenders, including BBVA Compass Bancshares Inc. and First Bank of Florida, which offer clients a slew of financing options.
“Lenders are trying to diversify their risks,” said Lorenzo Jose “LJ” Rodriguez, Midtown’s sales director. “They commit to a building at a certain level, forcing the developer to go and find other lenders. That way, they mitigate their losses if the project nosedives.”
For buyers, the partnerships have meant increased access to funding. At Midtown Four, lenders offered up to 97 percent financing. And they’re gearing to do it again at the Midblock tower, pending approval from the area’s community redevelopment agency.
“People will probably say, ‘Here they go again with the lax lending.’ But this is different,” Rodriguez said. “The mechanics are completely different this time around. It’s a project targeted at primary homeowners, not investors. The CRA is encouraging homeownership.”
And that’s what marketers across South Florida say real estate built during the recession offers.
At One Fifty One at Biscayne, where New York-based condo investor iStar Residential is pumping in $5 million to revive condos built in 2007, the marketing tag line is “the right time, the right place, the right price.”
At Peninsula on the Intracoastal in Boynton Beach, executives say lending conditions have improved enough to revert to the original plans for the property, in part due to relationships with preferred lenders. Peninsula was converted to apartments during the downturn, but one renovation and new sales campaign later, the units hit the market in January priced at $390,000 to about $700,000.
“We understand what the consumer wants,” Peninsula’s sales director Adam Kaufman said. “Prices have gone crazy. Everything from downtown Miami to Broward is very expensive now, and that’s why we’re getting such a good niche. We bring tremendous value.”
At Terrazas, value is part of the pitch with special offers waiving two years’ worth of maintenance and homeowner association fees to sweeten the deal.
“This isn’t glitz. These developers know they can’t compete on glitz. But this is an alternative that people should know about,” Williams said. “While some foreign investors may be looking for the razzle-dazzle of brand new construction, that’s not always the best bet in today’s market. Buyers looking to stretch their dollar are taking a second look at condos built in the previous cycle.”