Viewpoint condo jitters (Atlanta: mortgage, highrise, real estate)

[svt97]

This site has been great in providing information on purchasing condos in the midtown area. Last year, I put a down payment on a 1bed 1bath condo at Viewpoint. I'm closing in a few weeks and have gotten a few jitters about the whole process. I'm contemplating on defaulting out of the agreement and taking my losses as they are.

However, my intentions are to live there for 2-3 years then rent it out for a few years. In the midtown condo market, it seems the number of available leases outweigh the number available for sale. I guess it’s much easier to charge someone $1600 a month then it is to straight out buy the place for around $200k.

I bought one of the smaller models (around 650 sq ft) and paid under $200k for it. It seems paying an additional $30k for another 150 sq ft is not optimal, since the resale mainly attributes the fact whether it’s a 1 or 2 bedroom. So with my goals in mind:

· Occupy the residence for 2 -3 years
· Rent it out for another few years
· Then sell it

At this point, if I can break even when I sell it I will be happy. I’ve read numerous articles where the builders (such as Novare who is responsible for Viewpoint) have put a halt on their current plans for additional phases of their implemented projects. The reasoning for this is to let the demand catch up to the supply. Currently for the Midtown condo market, there is heavy saturation swaying toward the realm of supply. When it’s all said and done, too much supply and not enough demand.

Hopefully by letting the demand catch up, in a few years the properties will sell for what their worth or even more. Plus, with the future additions of the Trump towers, things do look up. So what am I to do?

· Default out of my current contract
· Find another condo, such as 1010 Midtown
· Tough it out and hope the future of the Midtown Mile will be all it’s made up to be

Any suggestions would be great! Thanks

[SIZE=3] [/SIZE]

[IntownHomes247]

What's the policy on rentals at Viewpoint? Most of the big Midtown condos have a cap on percentage of rentals so if Viewpoint is the same, there's a good possibility that you would not be allowed to rent the unit in 2-3 years when you decide to move out. You need to be absolutely sure about the HOA regulations on that point before you make long term goals based on the assumption that you could rent it out.

[atlantagreg30127]

Originally Posted by IntownHomes247

What's the policy on rentals at Viewpoint? Most of the big Midtown condos have a cap on percentage of rentals so if Viewpoint is the same, there's a good possibility that you would not be allowed to rent the unit in 2-3 years when you decide to move out. You need to be absolutely sure about the HOA regulations on that point before you make long term goals based on the assumption that you could rent it out.

Beat me to it! I can't count how many threads I've read in the larger city forums where people get stuck with condos they're not allowed to rent out later due to HOA regulations (which are STRICT in highrises).

Buy the unit if YOU want to live in it in that neighborhood. Don't buy it as a future investment. Atlanta was already being oversaturated with condo construction BEFORE the housing market went blooey. It's going to take quite a while for demand to catch up again, that is, if some of the builders who are still planning more new units would stop for a while to allow it all to catch up. A 650 square foot condo isn't the easiest sell. Even singles want more room, and a realtor told me that 850-900 square foot 1BR units sell much quicker, especially those rare ones that have a "den" or computer nook area separate from the bedroom. Your most interested buyers would be people who are migrating here from New York City, or certain areas in Europe, where flats and condos are typically smaller than here (but how many of those are moving to Atlanta, who would find your listing, specifically?).

[svt97]

Great info, I will definately contact Novare and see what their policy is on renting the condos. All the other condos around my price range did not include a real bedroom, rather a low ceiling. At this point however I know it's gamble. Is there another condo that would be a better investment like 1080 Peachtree St or is every condo about the same and has an uncertain future?

[spacelord75]

Do a simple P-E ratio on the unit and if it comes out unfavorable, then it's a bad investment. If you really like the property/area after that, then why not rent one of the units instead, since it would make more economical sense? The price to earnings ratio is pretty easy to figure on real estate - simply compare the monthly cost to own the unit (ie, mortgage, taxes, insurance, HOA) to what the same unit is getting in terms of rent. If you are way over, then it's over priced.

[CityFan]

If you are talking about investment on condos, it's not a good time to buy in Atlanta since there is a huge inventory in the market and builders will throw in more when time comes. If you want to live a city life in Atlanta, it's not a bad idea to hold a condo, at least you feel it's your property and you do what you like. Properties in Atlanta don't appreciate until land becomes scarce which is not likely to happen anytime soon. Viewpoint has a good location. A price at $300/sqft is not really bad. I paid $350/sqft for my condo built by Novare at another location.

[svt97]

Condos with around 100 more sq ft then mine are being posted about $200 over my monthly payment. I did call a few and they are still for rent, however they just became available. If I did rent and pay that amount, I would pay around $19k a year. I was hoping to sell the condo 3-5 years down the road and atleast get what I paid for to try and break even.

One thing I did notice was that Spire and other nice condos for sale have a high value, where at Metropolis you can get a bargain. I saw a 900sq ft condo there for around $200k. So my next two following questions are: >:-)

- 3 to 5 years down the road would you imagine I could sell it for what I paid for it?
- Does metropolis carry the plague?

[CityFan]

I don't think you will sell less than you paid now down the road in 3 - 5 years, but no one knows how fast you can sell it since there are so many condos available for sale. When builders rush into next wave of condo booming, the prices will be much higher, but I don't know how fast the young professionals can grow their income to afford higher prices. The other factor can affect your price is the growing pace of City of Atlanta with its infrustructure and amenities. If Midtown Mile turns out to be very successful, your property will go up in a much faster pace. It's a gambling, is it? We are all in it.

[svt97]

Yes it is, a big gamble but I really do want to live there. However, I get queezy when I think I'm signing a contract that could bomb. The guy I talked to at Metropolis said the bank appraised his unit at $250,000, but I could easily talk him down to $200k. He did say he already purchased a home so maybe he's willing to take a huge loss to get rid of it.

I agree that I should be able to sell it at the asking price. Even if I have to lose $10-$15k after three years, it still beats paying rent for $20k a year right? Since Viewpoint has two more phases for two more towers, that could really hurt the value of existing condos. I did speak with them and they did say it was on hold, as well as Twelve's next phase.

My condo is 620 sq ft with an additional 80 sq ft porch. I have some upgrades like hardwood in the living, custom closet cabinets, and upgraded wall colors. Being one of the young professionals you spoke of earlier, I look at a one bed room as a one bedroom. Regardless if it has 600 sq ft or 900 sq ft, it still won't hold a family. Do I take the gamble or default? >:-(

[IntownHomes247]

Originally Posted by svt97

- Does metropolis carry the plague?

I've known of sellers who have had to bring $40k to the closing table in order to get out of their condo (this was at Metropolis). But no, Metropolis doesn't have the plague. It's simply suffering from being the first of the glass tower condos. Since it's the oldest of the "newer" condo developments it has had more people over the last year or so who have been ready to sell and move up, which, in addition to the inevitable foreclosures, etc., has led to a larger amount of inventory (it's also a particularly large complex so it has more total units).

In Midtown condos, everyone tends to want the "next big thing." New buildings continue to sell better than existing units. You're a case in point. You've bought into Viewpoint rather than buying into Spire, Metropolis, Plaza Midtown, etc. In 3-5 years, you'll probably be in exactly the same position that the owners of Metropolis, Spire and Plaza Midtown are -- trying to sell an existing unit when there are new units available down the street.

As long as supply continues to exceed demand, high quality new units will probably continue to out-perform high quality existing units. And if prices continue to deteriorate, it's entirely possible that you will not be able to get out of the condo for what you paid for it. If you stay 5 years, you'll probably be less likely to take a loss than if you only stay 2-3, but my crystal ball is in the shop and it's entirely possible that we could experience an even greater surge of people wanting to move to Midtown (particularly if the price of gas continues to rise), so who knows. Real estate is an investment and carries risk just like every other investment. Over recent years, people have been fooled into thinking that significant annual increases in value is normal and should be expected. That was not normal. You need to decide what the lifestyle is worth to you and whether you are willing to take the risk that you might not recoup your entire investment. But bear in mind, if you rent, you will not recoup any of your expenses.