The End of the Saga for Marina Grande

Level of activity in Marina Grande on the Halifax is seemingly higher lately as the inventory of never sold before units is dwindling.

The bulk purchaser, who acquired 150 unsold unit together with the commercial space, has sold 100 units since their purchase in November 2018. They have 8 units under contract right now, and leaves them with 42 units to sell. The end of the saga for Marina Grande will come with the bulk selling disposing of the inventory and leaving the condominium project in the hands of the Association (owners).

Very soon the last condo project in Florida with the inventory left by the real estate crisis would become just a regular condominium with resales, and the real market prices, not the artificial selling prices set by a Bulk purchaser.

Actually, even now the prices are higher than where they were a year ago. No more prices in low $200s. Of course, the changes in condo market affect this, there is no question about it.

I get calls about the condos from people, who would like to buy something, fix it up and then sell. What to buy?

Actually, today I do not see much value in fixing anything. I have a feeling that no matter which condo you buy, if you wait, the values would be higher, and you will sell for a nice profit without doing anything. Meaning that the changes in the market itself are a bigger factor, than any remodeling.

And in this regard, Marina Grande is of interest, because the prices are still less than they were at initial sales. In 2007 a 2 bedroom on the low floor started from $450K. Today you can buy a 2-bedroom on the resale for less than $250K (1 unit only on the market) and there are 8 units for less than $300K.

Assuming that when the Bulk Purchaser sells all their units, which may happen in the next 3-5 months, the values should start catching up with the rest of the condo market, so if in the next year the values in condo market go up by 25%, Marina Grande may yield 40% as there is equity right now. $350K condos are sold for $270K-$280K, so there is about $70K-$80K equity already. Plus another 25% due to value increases in condo market in a year and you get another $50K or more.

What is the future?

So, what the end of the saga for Marina Grande? Skeptics are concerned that the Bulk Purchaser will not be able to sell the remaining units in 3-5 months. I do not know the reason for the concern. Right now, they have 8 units under contract, which means that their pace of selling is pretty good. OK, worst case scenario would be not 5 months, but 7-9 months. So what? Simply a few more months to see their values up. Nothing is really wrong with it.

Think about this. There are 68 condominium buildings in Daytona Beach Shores. 5,205 condos total. Out of this number only 38 are currently available for sale. It is 0.73%, ten times less than what is considered “healthy” market. 50 units in Marina Grande are between the resales and 42 units in the hands of the Bulk Purchaser.

So, in several months they are gone, only resale is there, and it is at the same level as in Daytona Beach Shores. Now imagine that all you have there is o.73% or less than 4 units for sale. How this would affect the prices?  Will they shoot through the roof? Even if my numbers are wrong, and they will have double the percentage, it still will only give you 7 units. And 7 units for a complex like this is close to nothing in terms of inventory. We all know that when the inventory is close to nothing, the prices are crazy high.

This existing equity is what makes investing in Marina Grande potentially quite lucrative. With higher returns than in any other condo in Daytona area.