Quick Update about remaining unsigned Units
Thank you for your help in contacting the remaining unsigned owners. Josh and I can confirm that every remaining owner of an unsigned unit has been contacted multiple times. We would like to request that you tap the brakes on calling them and please give them time to think about the opportunity and allow them make their decision. The deadline is Friday, so please sit tight until then. Stay positive!
Thank you for that much needed feedback. I believe that the reactions we are getting may in part be due to the frustration SOME of the unsigned are feeling to being contacted so much in the past 24 hours. Granted, there is a lot of frustration on our end also that we cannot seem to find good reason on why we still have holdouts. I will stop reaching out for now to give everyone some breathing room, since you are assuring us that you are continuing to work behind the scenes to get their consensus on the building sale. I request that you please keep us updated as much as possible, there is no such thing as too much information at this point, even if it means several a day from now until Friday. When and if you need us to start reaching out again let us know.
ReplyDeleteI'm going to post this each time we have a blog post update, as we are fast approaching the deadline to sign, which is THIS Friday at 5 p.m. 90% of your neighbors have agreed to sell. That alone should let you know how generous this deal is.
ReplyDeleteTo the hold outs:
A little background on me. I am a Mensa member, have an Ivy League (Wharton classes competed) degree in economics and am a cash based real estate investor. I have purchased around $600,000 in ITP condos in the last 3.5 years that I have sold for around $1,000,000. Compare this ROI to what any other investment is paying, and hopefully you will agree that I know what I am doing in this regard.
1. $287.65/ft is a GIFT for this building. You can buy in the Eclipse, 325 Paces, 2828 Peachtree, Buckhead Village Lofts, The Concorde, Park Lane on Peachtree, Mathieson Exchange Lofts, Ovation, Phoenix on Peachtree, etc at that price per square foot. That is just in our zip code. Those building are light years nicer than ours. All those buildings have had sales in the last 6 months at that $/sq. ft or less!
2. I had my unit on the market for almost 11 months - a loft (only 6 exist in here) - the nicest one bedroom in the building on the market in Sobu (pix here: https://www.realtor.com/realestateandhomes-detail/374-E-Paces-Ferry-Rd-NE-Apt-110_Atlanta_GA_30305_M56289-69935). It was appraised 6/27/17 at $135k for 910 square feet. That is $148.35/ft. I had to show my unit about 50 times, which means I had to waste an hour cleaning it and an hour giving building/home tours to each lookie loo. You don't have to do that in this deal - they are buying your place sight unseen! This deal would appraise my old place at $261,762, which is almost DOUBLE what it appraised for less than 6 months ago! The only reason my unit sold was because the person was hoping to be a part of the assemblage. If my 910 square foot loft with 10 foot ceilings, real HVAC, huge windows, quartz countertops, larger tub/sink, stainless professional level appliances, a back door next to your parking spot and no neighbors above you on the first floor was appraised at $135k, what is your unit worth? Not NEARLY as much as you think it is! My loft unit also appraises for $10,000 more than the standard units (8 foot ceilings) due to a $5,000 upgrade for ceiling height and $5,000 upgrade for having a real HVAC system (not a wall unit). One of the major complaints from the holdouts is their unit is upgraded and worth more. My unit was a LOFT - the appraiser completely ignored my upgrades. He gets paid the same whether he does a thorough job or not. He basically takes the last 3 sales in the building similar to your unit size, divides by 3, and applies that price per square foot to your size to come up with a price. If my LOFT was appraised at under $150/ft, your STANDARD unit (126 of 132) is worth that MINUS the $10,000 bonus I get for 10 foot ceilings/real HVAC, which you CANNOT achieve in your unit.
3. We are now flagged as a non warrantable condo that banks won't loan on unless you have at least 10% down due to low reserves. I lost a deal due to this fact.
4. Our HOA fees are already 56 cents a foot and they are going up 10% in the new year to 61 cents a foot. Newer, nicer buildings have much lower HOA fees/ft - around 33 cents a foot (HALF). You not only will have a much nicer place compared to what you had before (using the proceeds from the sale and spending a similar amount), you will pay a few hundred less per month in HOA fees. The main reason our building is not appreciating is due to the fact that most of our condo fees are over $400/month. That is the invisible barrier that pushes people to look elsewhere. Ask any realtor.
5. Your leaseback includes no HOA's/property tax and you can sublease to whomever or enjoy your unit with no costs for 1 year since you already paid for it out of your sales proceeds. The new owners will also be on the hook to fix anything wrong in your unit and will probably include a concierge service for us.
6. More than 25% of the people here are renters. The board is starting to enforce that rent cap with $750/month fines for illegal renters. Only 5 people left who haven't signed are approved to rent. If we DO assemble, you can sublease to anyone you want for a year. The reason many people bought in here was due to the condo board looking the other way and allowing illegal renters - that gravy train is now over! This is a double whammy as it makes it impossible for people to rent illegally AND drains our reserves by not having the money coming from those illegal renters.
Delete7. Normal commercial sales agents charge 10%. When you sell yourself, you usually have to budget 6% to a realtor and 3.5% for closing costs. So 6% is a great commission rate and we should be happy to pay that amount.
8. I have owned 3 units in here since 2012. I love this place. But real estate is cyclical. If we don't take this deal, we will have wait about 10 years (5 years down, 5 years up) to see a similar one. We are at the all time high in prices in the Atlanta market. One hiccup (North Korea, etc) and we could see another recession. No unit ever in the history of Sobu has ever sold for the almost $300/ft they are generously offering us. Don't forget, units in here were selling in the $20,000 range just 5 years ago, and yes, you read that number correctly! (I bought one of them).
9. This building only zoned for certain height, etc. The fact that they want to use it for what it used to be and can close quickly, for a million more than last time is a GIFT! I was expecting $259/ft which was the last offer around 10 years ago. This is almost $30/ft higher! This added about $25k to my expected return.
10. They put up a building blocking ALL of the southern facing units and destroying our skyline view from the rooftop deck. They are going to do the same to the west. If we don't take advantage of this current deal, our property values are just going to continue to plummet. Our pool may be rendered useless for getting sun depending on what they build to the west.
11. If they have to fix the plumbing, it will cost over $1,000,000. Please reread that number as many times as you need to. The roof is caving in. The building is closing in on 75 years old. The writing is on the wall here.
12: No one has lived here more than about 15 years. This is not a childhood home, or some such with memories attached. This is a lifeboat pulling up to the Titanic - get IN and paddle AWAY fast!
13: You have a YEAR to figure out where to move after the last signed contract. We live in the exact center on Atlanta, many of the buildings I mentioned you could walk to!
14. Moving isn't fun, but neither is dying in a sinking ship. There are many reputable bonded/insured companies you can use, and I'm sure many would be happy to give you discount if you referred your neighbors to them.
15. I know about 5 friends/contact/neighbors here at Sobu. I have emailed/called/texted/Facebooked each one asking them to sign. I encourage you to do the same. This is a group effort!
16. For example, just between myself and three friends who live in the building, our total gross profits between the 4 of us on our 5 units would be $677,381 if the assemblage goes through. If the holdouts are costing just 4 people a chance to make an average of over $135,000 a piece, what are they doing to the other 115 people who have already signed? At this point 10% of the people are holding up the financial futures of the other 90%. This is life changing money for most people.
16.5 We are now at over $16,000,000 (SIXTEEN MILLION, said in my best Dr. Evil voice) in profits that the 119 who have signed can realize based on my extrapolating out the amount of money the 5 units can make times the number of total units signed. So the 10% that are unsigned are holding back $16,000,000 million in potential profit to all of your neighbors. We all live here, we all have the same access to the building. Don't spoil the chance to spread $16,000,000 in joy to your neighbors this holiday season by signing - you also get to partake in the festivities!
Delete17. The other point the holdouts have made is they want to retire here. You want to retire in a non warrantable building that has 61 cents a foot fees, over 25% illegal renters, no reserves, no view on two sides, no skyline view from the roof, an impending $1 million dollar charge to fix the plumbing, and who knows how much to fix the roof? The OLDER the building, the more problems it has. You can take the DOUBLE the amount your unit is worth the developer is offering and move into a MUCH newer, nicer building with higher prices (which means better neighbors and amenities AND lower fees). I'm sure the 90% who want to move don't mind pitching in by carrying/packing a box or two to help the 10% who haven't signed yet. You have a YEAR of free rent, with no HOA/fees, taxes or maintenance costs, to figure out your next move, after the last contract is singed. We are all moving out of tiny condos - not McMansions.
I am sorry, but this is beyond any reasonable explanation as to why so few are controlling so many. And why so few can't see the advantage of accepting this deal. Not one of the unsigned have offered any explanation or any reason why they or anyone else should not accept this deal. AND ALL OF THE UNSIGNED LIVE ELSEWHERE! It makes absolutely no sense what so ever! Hopefully, the real estate team can make this happen for us. I am remaining hopeful til the last hour!
DeleteI had a respectful text conversation with one of the owners. Their concern is that they thinks the cost of future repairs, like plumbing, is not being accurately estimated.
ReplyDeleteDo we have any hard data on the condition of the plumbing and any real estimates on that?
There's a definite lack of trust in the board and some real data might make a difference.
I know we have caps on assessments and fee increases. Do we have any real numbers that we can use?
You've done plenty. Please stop before you make more "nos".
DeleteYou're right, some more solid numbers would be beneficial, and it is good to finally get some feedback from the holdouts, so appreciate you posting that. But at end of the day is that the only thing that is weighing on this individual is the cost of future repairs? It is undisputable that we have plenty of upkeep and upgrades to make on the property. Not sure at this point if it is feasible or realistic to get an estimate, unless this is something the board already has.
DeleteWell, I want to sell my unit at a profit. Will that party, who believes things to be exaggerated, be willing to purchase my unit at the comparable price of a unit in Ovation, Eclipse or 325 Paces. Can't even get the damn unit refinanced because banks say that they have to do more checking into our buildings value.
DeleteI have tried on several occasions with Wells Fargo, Bank of America Mr. Cooper ( formerly Nationstar), etc. The f' ing building is not worth it to them!!! I challenge all the unsign to call the banks.
Also let the unsigned pay for the repairs, however much the repairs cost, if they would like to stay! I am done!
Also, 120 people can't all have the wool pulled over their eyes- can they? Come now. A little objective critical thinking is in order!
Delete#trusttheprocess
DeleteAll solved by signing!!! No more HOA fees, no worries about who repairs what and how much it will cost!!! , no worry about the taxes next year....Gate breaks down? Its the developer's responsibility to fix. Problems with the elevators? The new owner has to fix.
DeletePay your mortgage off with your proceeds and no living expenses for a year! Rent your property for a year with no hassles of being fined for renting illegally! What exactly is the negative to this picture???
For various reasons, it's just not a good deal for this person. They aren't interested in selling. Not everyone is. They also don't live there full time.
DeleteLet's understand that we all have different situations. Not everyone thinks they can get a better unit that what they already have.
That said, they didn't say no. They wanted something that I think isn't likely on this timetable. And, as individual owners, we can't just request estimates.
I, too, am trying to wrap my head around total cost of ownership of we don't fully assemble. It wouldn't hurt for us to have that as part of the picture.
If the question is sell vs keep, what's the cost to keep? That is a reasonable question and one that I'm trying to estimate for myself, too.
Condemning the building doesn't hemp any of us, I don't think.
No, that is way too easy and sensible. There must be a catch.
DeleteFor me, not paying exorbitant HOA for nothing is a huge advantage! And if this sale doesn't go through, I will not pay. I promise you!
DeleteBut condemning may lead to a forced sale for those of us who want out.
DeleteBetween my mortgage, HOA fees and property taxes, I pay approximately $1250 a month that stops when we sell. Surely I am not the only one in that case? That translates to $15,000 in the 12 months I continue to live here if I choose. For those "investors" it is even better if you already have someone renting OR want to for a year. How about those figures? If you don't take into account the roof or plumbing, etc.;. the return is IMMEDIATE. That figure doesn't even take into account the special assessments or HOA increase for next year. $15,000!
DeleteIf I was renting out my unit, let's say at say at the low end of $700 a month, that is an additional $8400, or more than $23,000 extra in my pocket in 12 months!! Seriously.
Do your own math, you might be surprised.
I am seeing postings on the blog about exploring the possibilities of "condemning" the building. Don't hold your breath on that, and don't waste your time on that possibility.
DeleteIn general, a property that meets the criteria for being condemned has to be either an eyesore, unsafe or a threat to the community. A building can be condemned if it is to a point of such disrepair that they are deemed unsafe living spaces brought on by infrastructure failure for example.
The process of condemnation has to be done by a building inspector or government official. They are the ones that will eventually deem a building unsafe or unfit for habitation and make the order for eviction.
Additionally, having the building condemned does not relieve the obligation of having to pay the mortgage lender, which has been upheld in various courts.
Overall a bad idea that would not apply to SOBU at any rate because we do not fit the criteria. This would be an ultimate lose - lose for us all.
What happens if we don’t pay our water bill for 2 months and they shut it off? The building will not be livable.
DeleteWhat possible benefit can anyone see in condemning the building, please let me know because I can't see it. The building is condemned by a building inspector and depending on the reasons it is deemed uninhabitable gives the occupants up to 30 days to vacate. Some may fight it in court and delay proceedings. This procedure forever labels the property as a condemned one which makes the building worth NOTHING until whatever repairs are made and building re inspected, so until then it's only worth the land it sits on. AND the individual owners are still liable for the mortgage, unless you decide to foreclose on your property. No place to live but still paying on it. Makes perfect sense to me.
DeleteHere's an idea - why don't we continue to concentrate our energy on real solutions whether we are able to sell or not instead of these unrealistic ideas that are not good for anyone concerned.
DeleteWe all have financial obligations. Let's remember that, we all signed our purchase papers in good faith that as a community we would remain solvent.
ReplyDeleteThat doesn't change until we are no longer owners.
Let's try to remain positive and hopeful, and have a positive backup plan.
Can SOBU go bankrupt or be foreclosed? The answer is yes - but probably not in our best interest to do so, apologies for being the bearer of perhaps unwelcome news.
DeleteAll the units at SOBU have individual title and financing by each individual owner in addition to the common areas which are owned by the condo association. All unit owners are members of the condo association and have a right to use common areas.
Condo associations generally run into problems in one of two ways: First, owners do not pay their monthly HOA fees. Without money obviously the association cannot pay its debts and obligations. Second, a major repair is required, a repair so large that the association does not have sufficient reserves to pay and so it bills owners for a special assessment and/or goes up on the monthly HOA fees.
If bills cannot be paid by the association, then a creditor could force the condominium into foreclosure and bankruptcy. The common areas of the condo could be lost to a creditor. However, because the individual units are separately titled and financed the condo creditor could not seize those units to pay off the debt.
However, a condo unit can be foreclosed if there’s a condo fee or special assessment which is not paid. In that case, the fee becomes a lien against the unit and if unpaid can lead to the condo foreclosing the unit owner. (The same, of course, is true if a condo owner does not pay the mortgage.)
SOBU is my home, for better or worse. I pray to every deity under the sun that this sale goes through so we can all be rid of the immense burdens facing us as a community and as owners of our condos and part owners of the building. We need to continue to work together to help everyone see the light.
In the scary scenario that it doesn't, we need to do everything we can to find viable solutions for the future. We all lose if we don't
Please let Josh do his job, listen to his wishes of pumping the brakes regarding communication with the unsigned. Stop with the condemning the building and I am not paying my HOA talk, it is not productive for this blog. We are close so lets be patient (regardless of how unbelievably difficult is). Hoping for the best!
ReplyDeleteThese hold out units are currently being rented illegally, get ready for a $750 monthly fine come Feb 1.
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The Giving Tuesday drawing has officially expired. I hope you all were able to give to someone or something in a positive way today.
ReplyDeleteI think most know the reality of the situation. The building will not be condemn or foreclosed upon. It is just attempted scare talk for the unsigned. It is only natural to reach for the furthest star when there is seemingly no hope. However, there is lots of hope (wink, wink)!
ReplyDeleteWe have 2 days before the deadline when all contracts must be submitted. We are 90% assembled. The percentage assembled will likely go up since the unsigned have still not said no to the deal and to signing. When it is all said and done at 5 pm on Friday, many of the unsign will sign. Some of the unsign are just waiting for some miraculous last minute deal. If they find that there really will be no deal, then they will sign for fear of losing an unbeatable deal.
Almost all of the holdouts are investors. They have been in the business long enough to know a good deal when they see it. These investors are just playing hard to get. It is a power play to see if they can squeeze out a couple more dollars. The hold out investors are holding and looking for one of two possible scenarios: 1. The developer to ante up additional funds to acquire the building. 2. The residents to band together and offer additional funds ( or beg developers to do so) to the hold outs if the hold outs sign. If neither scenario occurs, the hold outs will fall over each other to submit their signed contracts.
As for the couple of non investors still holding, they are simply riding the coat tails of the investors.
Also, don't be fooled, all of the hold outs are reading the blog and possibly colluding with each other to see if they can cause money to be brought to the table. By Friday at 5 p, the hold outs will see no money on the table and they will flood the real estate team with their contracts for fear of losing a good thing.
For now, the best thing for the rest of us to do is just relax and let this drama play out. Too bad we could not be the subject of a reality show. You know how much money we would have generated as a result? A lot!
Keep hope alive and I hope to see everyone at the closing table!
Amen!
ReplyDeleteAbsolutely! We need to remove ourselves from all the drama and let the next few days play out. Hopefully in that time the holdouts will see the light and sign.
DeleteHowever, the cards are dealt and for a very small minority to assume they can prevent the will of a majority of owners is foolish notion. One way or another, the majority will prevail. I hope that it is done via a method of least resistance.
For sure, the majority WILL prevail. And the investor-owners, if they are truly savvy investor, know this to be the case. Just sit back and watch the drama unfold. I assure you it will be an Academy award winning performance.
DeleteFor all you holdouts that either live here or not, there is dog pee in the freight elevator since yesterday afternoon. Also some lazy person decided to leave 3 trash bags outside the side entrance.
ReplyDeleteMore plumbing issues? The water is off right now and Hill Mech is outside. Damn, I can take a shower!:-(
ReplyDeleteI applaud the team for NOT giving them another penny. They all want more money to make it a good deal for themselves, no matter what excuse they give. No better deal will come along, and nobody has that much attachment to the place. There are all kinds of other options in the area.
ReplyDeleteThere is no more money to give out - the sooner the ones that are holding out for that possibility realize that, the sooner they will be able to come to terms with the fact that the offer is an incredible one as is. It is no a bluff on anyone's part. It's the reality. The offer is what it is and indisputably a lucrative one for all of us.
DeleteIn any case, it would seem that the majority will eventually prevail in this situation. The residents of SOBU have spoken by any overwhelming majority. They want to sell the building and move on. Join us.