Comments on: Terrazzo Re-Prices 30 Condos at Auction Rates

By: The West End Condos Auction Results | Nashville Condos

The West End Condos Auction Results | Nashville Condos — Thu, 14 Jan 2010 05:58:27 +0000

[...] Terrazzo Re-Prices 30 Condos at Auction Rates [...]

By: Falcon2

Falcon2 — Thu, 03 Dec 2009 03:35:14 +0000

I think your insight is probably correct about this auction. And if it
goes badly I think it's likely that there will be a foreclosure which
probably leads to another better organized auction or good buying
opportunity anyway. Dry powder rules in 2010.

By: Will

Will — Thu, 03 Dec 2009 03:29:49 +0000

I assume that most investors (who know what they are doing) will read them. I do think that a lot of first time purchasers (like myself) will not.

All in all, given the fairly creative/strange/restrictive/open to abuse by-laws, the strange financing arrangements (Compass won't do loan commitments, only pre-qualifications - which means bidders are risking 5% of the purchase price with no way to assure financing), and the strange lack of information flow on reserves and which units are absolute, I am getting pretty nervous about bidding at this auction.

Any potential buyer is basically agreeing to risk 5% of the purchase price and to agree to a HOA agreement that seems fairly limitless in potential liability/assessments, all for the chance to get a good price on a condo project that appears to have failed as a revenue model. The more I think about it, the more I seem to be talking myself out of it.

But, I do like the units and the location is convenient. This may be a day of the auction call for me on whether it is a worthwhile venture, even at a discounted price.

Will

By: Falcon2

Falcon2 — Thu, 03 Dec 2009 02:38:46 +0000

Good point. Yes, there can be no leasing for some time at the West End and there are also onerous right of first refusal conditions in that same section of the bylaws. Absent a release from these conditions this could make it very difficult for owners to sell their units and, oddly, owners are also agreeing to be assessed for their share of any unit purchase that the HOA decides it may want to make. I wonder how many prospective bidders will even read these provisions.

By: Will

Will — Thu, 03 Dec 2009 01:29:02 +0000

For the sake of clarity about the West End, I do think that there is a lease restriction in the by-laws. I didn't read them closely, but it appears that you cannot lease until the building is 100% sold (Section 12.1).

By: Falcon2

Falcon2 — Wed, 02 Dec 2009 21:35:14 +0000

By: Will

Will — Wed, 02 Dec 2009 21:29:49 +0000

By: Falcon2

Falcon2 — Wed, 02 Dec 2009 20:38:46 +0000

By: Will

Will — Wed, 02 Dec 2009 19:29:02 +0000

By: Grant Hammond

Grant Hammond — Thu, 26 Nov 2009 14:46:46 +0000

Thank you Falcon2, you are absolutely right on the money. There is a point at which risk and price intersect to create the “best deal”. In my opinion, that opportunity is currently available in the Encore and the Terrazzo. Now that we have narrowed the safe deal choices down to those two buildings, you just need to decide whether you prefer to be in the Gulch or closer to traditional downtown and what that has to offer.