So I went to the Capstone Quarters Condominium Auction Saturday, and it weren't purty...
I had actually gone by earlier in the week to tour the models (you were not allowed in the condos), and the packet they were handing out at that time included a sheet listing the furniture groupings in each unit. There was notation next to 2 units indicating furniture left by owners who did not complete their sales contracts. A sheet they passed out on auction day listed the number of leases per unit and 2008-09 renewals. Each bedroom signs its own lease, and they had 183 leases available. Only 80 were signed (many units had only one or two of their bedrooms leased) for this year, and only 69 are signed for next year. I realize it's early, and they can still pick up lessees over the next few months, but still... :-(
At the auction Saturday, they had 60 units up for sale. 10 were sold at absolute, so they sold 7 2 bedroom, 2 3 bedroom, and 1 4 bedroom unit that way. A total of 25 units sold, out of the 60 offered. (Approximately 40% sold)
The 1st absolute sale was a 2 bedroom unit for $95,000 to an Asian family. I did not get a chance to talk to them, so I don't know if they plan on living in the unit or if they plan on renting it out. The remainder (22 total) of the 2 bedroom units sold for prices ranging from $80,000-$86,000. The original asking price for these units? $130,000-$154,500.
The absolute on the 3 bedroom was $116,000. Bidding on the remaining units got up to $100,000, but they refused to sell at that price. These were originally $160,000-$180,000.
The absolute on the 4 bedroom was $135,000. Bidding on the remaining units got up to $120,000, but sale was also refused on these units. These were originally $180,000-$204,750.
There were several real estate agents in attendance. Some of them own units they bought at the original prices. For people who were seeing equity evaporate at the rate of $50,000-$70,000 a pop, they seemed to be taking it rather well...or maybe they went home and drank themselves blind. Wouldn't blame them if they did...
I tried to buy a 3 bedroom at 116 also, but the unit I chose did not have the number of bedrooms leased as indicated on the sheet provided and therefor backed out of the contract.
Apparently these were pitched to the california investors as student apartments near campus. These are close to campus relative to Danville, I suppose. Abundant rumors are everywhere that they were built cheap and poorly. Keep your money. There are plenty of student apartment investments available where students might actually want to live.
haha my boyfriend is the son of that asian family that bought that 2 bedroom! but something happened with the people who were living there currently so they ended up purchasing the only 4 bedroom. :) small world
From what I could see, B, the construction wasn't too shoddy. As you know, however, students in general have a bad habit of tearing up the properties they rent. One of my concerns is how these units are going to look with 10-15 years of wear and tear on them.
What I'm reading here seems to indicate that at least 2 buyers backed out of sales contracts either Saturday or sometime afterward. If I am correct and this is true, that would mean only 23 units sold--less than 40%. Seems like a really crappy percentage, but this is the first condo auction I've ever gone to (not my first real estate auction; seen plenty of those).
Really curious to see which real estate agent gets the listings for the remaining units, and what kind of pricing they do on them.
These condos are a long term detriment to Bozo Urbana.
If Urbana had a more positive development environment, it never would have felt obligated to accept such a poor quality project which misused land so close to a highway interchange.
At the prices reported, the condos would not make good Section 8 rentals.
A prudent person should not pay more than $15K per bedroom for these.
Urbana could buy the Capstone condos and move the tenants from the crime-infested apartment buildings in SE Urbana to the Capstone condos.
Michael Fuerst
May I ask why not, Mr. Fuerst? The management company is setting the price at $900/2 br. unit to $1,800/4 br. unit, per month. If one were to have purchased one of the units for $80,000, one would have a gross rent of almost $10,800/year (realizing, of course, Homeowner's Assn. fees and taxes and other expenses will have to come out of this gross). In theory, these are renting at significantly more than 100 times their purchase price.
I do agree that there probably are better uses for land next to an interstate than student apartments, but I don't live in Urbana.
From the prevoius posts, management has not (and wil not) be able to fill these at the rents they set. They would have tough time filling them at $300 per bedroom.
Michael Fuerst
I would argue that they would probably have a higher occupancy rate at $300/month per bedroom, but that isn't the type of customer this development hopes to attract, is it? And of course, does the management company feel it can meet its (perceived) necessary profit margin at $300/month?
I'm very curious how much the condo fees amount to and who determines them.
Mr. Fuerst,
I'm a parent who was interested in investing in the Capstone Condos for my son. I even went as far as placing a down payment on a 2 bedroom unit; however, when I attempted to get a Government backed loan (Fannie Mae, Conventional, FHA, Freddie Mac), I was told by the Lending Institution that the condo was "non-warrantable" and could not be financed by a Government backed loan. I was also informed by my Loan Processor that the Lending Institution that Capstone had been using (Nationwide) could no longer provide services because the condos are considered "non-warrantable".
A "non-warrantable" condo means that 70% of the units in the development must have been sold to owner occupants. It also means that Home Owners Association has been turned over by the Developer to the condo owners. Simply put.....Capstone in Urbana failed to notify potential buyers that the condos were 78% owner / investments. This puts the buyer at risk for both financing and insurance.
I am currently in the process of attempting to get my earnest money deposit back because of disceptive business practices on the part of Capstone.
Are you all aware of the fact that the Capstone Condos in Urbana are "non - warrantable". Loans that are backed by the Government such as Fannie Mae, Conventional, FHA and Freddie Mac will not provide financing for the units. "Non - warrantable" condos are very risky because of financing and insurance risk. Approximately 78% of the Capstone Condos are owner / investments, and were not sold as owner occupants. So parents, be aware of this, because if you are looking to sell the unit at a later date, it won't be as easy as you think.
Anon: the whole pitch behind this development was to investers. I'd be really curious to do a survey and see how many owners live within 50 miles of Champaign-Urbana, much less actually live in the unit they bought there. Heck, I'll even take family members, not just the person(s) whose name(s) is/are on the deed.
HOA fees on a 2 br unit are approx. $120/month; almost $170/month on a 4 br. unit. I'm assuming the management company set the initial HOA fees. I looked over the proposed budget for the HOA that was provided to interested bidders, and I questioned the amount they are saying will be spent on the pool (I don't think they are allotting enough money for this item) that is to be used by all residents. (Another issue I had with their pool policy: they say they are only going to open their pool from Memorial Day to Labor Day, but I was down on campus yesterday and saw people using the Roland Realty pool on S. 1st St. If I lived at Capstone, I would be griping about this.)
There actually is government backed financing (fannie ' freddie) available for buyers here who will be occupying the residence... I know this because I've dealt with the problems of non warrantable condo's for another purchaser a few months before. Because of this I went to great lengths to find options for purchasers of non-warrantable condo's. Chances are it won't work if it's an investment property (though we can try) but as long as it will be an owner occupied property, and you meet all other qualifying factors for fannie and freddie loans... It should work, I'm closing one this friday through this lender for capstone... email me with any questions... homeloandoc@gmail.com
These condos are now advertised as needing a $99 security deposit for new lessees. I wonder how many people are going to demand a return of a portion of their security deposit from the lease they signed earlier this spring?
I heard that only 1 person has closed thus far. The purchase contract language states that if the closing doesn't occur by 5/19, Capstone MAY keep the earnest money (10%). Does anyone else think the developer will actually do this to the 20 some odd "auction winners"?!