Miami Condo Fiasco

My story began in June of 2004. My wife and I moved to south Florida and purchased a house. We then sold our old apartment in Rockville, MD and came into some good money. We decided to buy a car and invest the rest…back into real estate. Some good friends of ours had just purchased a pre-construction condo in Miami with some friends of theirs and there were a few units left. We figured that was a perfect opportunity. So I called my brother and told him we should go in 50/50 on it. So my sister-in-law was in town and we went to the sales office and signed the papers. $35k each.

Remember, this was the height of the real estate boom and we were very confident that getting in at phase I was a great deal. The property in question is The Plaza on Brickell. All the credentials were there. This was a development by a very reputable builder with a long portfolio of real estate success (Jorge Perez and The Related Group). Everyone kept telling me that everything he touched turned to gold. Sounded great, and actually I have to say, I they still maintain their reputation for within budget and on-time delivery. Anyway, $35k was the first half, my brother would put the second half when the time came. I was so eager to get in on this that my enthusiasm was unstoppable. So we did it. The unit we bought was on the 45th floor, the first floor accessible by the express super high speed elevator. By the way, the mock ups and the sale of the building were really impressive. There was all this talk of investment in the downtown Miami area, some Japanese group was investing $1 billion dollars renovating the area etc. The local Publix (grocery store) was going to be demolished and re-opened as a gourmet store.

You can imagine the atmosphere, everyone smiling laughing, talking loudly about the new life that was being injected into the Miami area and we, the financial elite of Miami, were financing it and profiting from this glamorous investment. We sipped champagne and signed papers. We could do it, after all, we had money to invest. The rest were homeless, the poor scum of the world, that paid rent, that lived pay check to pay check, well they chose their own poor destiny. Meanwhile the flat screens looped through a computer rendered fly-by of the two towers. Two imposing beacons of promise and financial success, and we were part of it. I felt like I was a close partner, an esteemed associate of Jorge Perez. Yes, he needed my money to get this building off the ground.

Well you know where this is going. Now I’m not trying to make this project sound like some kind of scheme. It’s a legitimate business, in fact the building is almost complete. I’m just trying to illustrate the pathetic enthusiasm I was feeling at the time. I bought a 847 square feet 1 bedroom apartment for $355,000. At the time, similar units in Ft. Lauderdale were going for $600k. What a deal right?

So what if the apartment is super deluxe. The building will be ‘incredible’, with a whole super sophisticated ground floor, with expensive restaurants, valet parking, shops, etc… It’s still a one bedroom! A very expensive one. Anyway, my brother never came through with his $35 so I ended up putting a total of $70k into this thing. The plan was never to go to closing. We were gonna sell it way before the building was completed. Of course we were going to make a killing. We were going to sell this thing for $450k or even $500k. So over time, I kept in touch with the builder to see how much it was worth.

Well, to make a long story short, the building is almost complete, the real estate market collapsed and I will soon be facing a $285k mortgage.