Whether the deadline has legs or not, tomorrow is February 29, 2008, and all the efforts and hopes involved in putting together the assemblage may come down to a few owners who don’t care to be a part of the whole.
A review of the resale activity in Sobu Flats during the past several years leads on to conclude that the best hope for any owner at Sobu Flats to sell their unit is through an assemblage. There are reports of units being on the market as long as three years, with others being withdrawn altogether, reduced to ridiculously low prices, allowed to go into foreclosure, or, in desperation, rented without permission. Everyone’s situation or interests change at some point. If the past is any indication, the owner’s desire to sell individually and at any profit whatsoever will be nearly impossible.
Moreover, there are serious financial issues facing the owners at Sobu Flats. Issues that may have taken a back seat during the euphoria many of else experienced when contemplating our options if the assemblage was accomplished. I would not be surprised to see our HOA dues double in the next few years, coupled with considerable assessments.
Repair Assessments. When I moved to Atlanta in the early 80’s, I remember our building as a retirement facility of sorts run by a church group. The first floor housed a Mary Mac’s style cafeteria/ restaurant that served lunches at great prices, and as a kid starting out, was a welcome option to fast food eateries and brown bag lunches. By appearance, the building was old then, and the renovations we all purchased seem to have focused on style more than substance. It is probable that the association will have to deal with repair or replacement issues relating to; the flat roof, the common plumbing system, the elevators, the windows, and the parking lot.
Taxes Individually, the owners will all have to stay vigilant to minimize property tax increases. Last year’s tax increases were difficult to fight and seemed to be based on perceived value rather than the facts exhibited by recent sales. The development in the village will most certainly put added pressure on the property appraisals and result in increased taxes. At the same time, foreclosures, percentage of rentals, increasing homeowners dues, and no resale comps- are affecting owner’s abilities to refinance their mortgages.
Homeowner Dues (Reserves). A recent post on this blog let us know that we currently have much less in reserves than buildings of our size normally would. This reserve is in this situation in great part due to the overwhelming number of delinquent homeowners dues. At some point, the amount of reserves will most surely reach a level where emergency funding is necessary.
Homeowner Dues (Utilities). It appears the recent water crisis and shortfall in the City of Atlanta’s budget has triggered a review of the water meters and fees collection system. A new water meter installed last year coupled with two years of water rate increases have caused our utility costs to skyrocket. A recently announced 15% City of Atlanta water rate increase for next year will further affect our budget.
Rental Activity. When the building was originally sold as condominiums, the governing documents, per guidelines required by the secondary mortgage marketplace, limited the right to lease units in the building to a maximum of 25% of the building. Twenty five percent of the owners possess the leasing permits that allow them to lease their units. Those owners needing to rent their units are either on the waiting list for a leasing permit or are leasing their units in default of these governing documents. As the market for reselling units on an individual basis stays so soft, more and more owners will be faced with this decision.
Board Members. The owners at Sobu Flats have been very fortunate to have dedicated neighbors serve on the board, in some cases for several years. As the profile of owners continues to change and the building has more and more non-resident owners, our reliance on those who will serve on the board and continue to look after our interest with such admirable tenacity may dwindle, especially in face of the increasing burden of delinquent dues, increasing utility costs, repairs, and special assessments.
Will there be another opportunity for assemblage at some date in the future? Possibly. Will it come in time for those whose situation may change in the future and their desire to sell is easier? Who knows. What is certain is that there are several forces out of our control that can influence the possibility. Politics, the economy, the tax code, employment growth, city demographics- all can affect future options. This may be the closest we will have ever gotten to realizing a reward for our investment in Sobu Flats.
http://www.time.com/time/politics/article/0,8599,1717554,00.html?xid=rss-topstories
Subscribe to:
Post Comments (Atom)
6 comments:
All true but falling on deaf ears. There has never been a posting or comment from any of the "holdouts", nor have I heard any explanation or rationale for the refusal to join the assemblage. I can only assume that these individuals are not reading this blog. Therefore, trying to explain the situation to those that read or participate in this blog appears to wasted effort. Unless someone has a way to reach these individuals (and this blog does not appear to be doing so) there is little chance that they will change their mind or understand the opportunity that is passing them (and us) by.
Ideas?
good post Ken, There are just a couple of people that have not signed their contracts and they will. They are not evil and have very good reasons for not signing yet. We will get it done.
Have Faith!!
there not evil?
Chris,
I appreciate your positive outlook on this situation; however, there is a letter posted in one of the main elevators FROM a holdout addressing the assemblage/homeowners and it is not too positive in regards to obtaining 100%. Either there is some investor/builder who will make us an offer based on the contracts we have or we will all be directly affected by the building issues Ken has addressed in this blog. I am not sure I have faith in the 100% assemblage at this point. If there is some news that will change my perception, please let us all know. Thank you for all of the pro bono work you do for SOBU....
KM
If the holdouts think they can get a lot more money in the future, they need only look across the street at 325 paces. Those units are all brand new and haven't sold. I'd be getting more for my unit in a 60 year old building than they would for something the same size. Until 2 years worth of buckhead condo inventory clears out (and there are PLENTY of other old inexpensive condos in the area), we won't see much appreciation.
People always get more in an assemblage. When Microsoft offered to buy Yahoo, they offered 50% more than the stock price. It's the same affect. Selling stocks bit by bit yilds a certain amount, but selling in huge chunks yields much much more.
Come one holdouts! Help us all make some $$$. You can't rent your place for two more years (not legally anyway) and you're stuck paying a monthly mortgage on a place you can't sell. The agents won't cut you a deal, and developers won't touch you with a ten foot pole, unless they only want to use the place as an apartmnet building for 5-10 years.
If you are concerned that not everyone is looking at the blog, it would be great if someone would copy this excellent analysis and put it under everyone's door. I would do it, but I'm traveling at the moment.
And please tell the holdouts this; if this deal doesn't go thru and the HOA runs out of money, I hope they will enjoy sitting in the dark and having to bring in water bec it has been cut off. Things could get very bad if people lose hope and just turn over their the mortgage company.
Post a Comment