Tuesday, August 02, 2005

Living in Paradise

In the Tampa Tribune comes this story.

The Sarasota skyline is dotted with construction cranes, with at least 25 condo projects in the works.

Kevin Brown couldn't believe how easy it was to make so much money so fast. The 28-year-old St. Petersburg yacht broker heard his clients' tales about clinching lucrative deals in real estate and decided to give it a try.

He pocketed $50,000 on a three-bedroom, 1,664-square- foot condominium on Harbour Island in 10 months' time. He has since bought 10 more condo units in Tampa, St. Petersburg and Orlando, selling most before the closing date, or ``flipping'' the units.
If he couldn't find buyers and had to go to settlement on every contract, it could spell disaster. The potential gains thrill him, but he can't ignore the nagging fear that one failed deal could send his plans tumbling like dominoes.

Condo flippers such as Brown are snatching up high- rise units throughout the state, fueling price increases that could deflate if interest rates rise or too many condos flood the market. In some projects, investors have purchased as much as 70 percent of the units, hoping to flip.

Such speculation has set off a race. Investors scramble to close deals in case the situation sours. Developers hustle to build complexes before banks halt financing. On the sidelines are venture capitalists with big pockets ready to pounce on the worst-case scenario: The bubble bursts, leaving empty high rises dotting the state and investors wanting to bail out and sell cheap.

The price appreciation in the condo market is forcing real estate brokers to change the way they do business. Many are seizing the opportunity to double-dip on commissions by selling and then helping buyers flip the same units.

Their competition increases daily.

Matt Orr, a Sarasota real estate agent with Michael Saunders & Company, says his buyers are a mixture of investors, baby boomers wanting a second home and locals who want to move from the beaches.

Ah, the good life. Life in the frothy real estate market. Aren't we lucky to live in paradise?

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