Dearth Of 'End Users' Spells Trouble For Flippers

The Tampa Tribune has this report on condo flipping. "Real estate investors are finding that the days of selling units, or 'flipping' contracts on pre-construction condos within hours or days, are over, especially downtown. It's taking months, or longer, to find buyers, and some sellers are having to lower their asking prices." "That could spell trouble not only for condo owners hoping to turn over their units quickly, but also for developers. More than 30 condo projects are in development in and around the city. Many condo developers have relied heavily on investors to raise enough start-up money to persuade lenders to finance their projects. With short-term investors shifting from urban condos, developers now must market more to people who want to live in their buildings or hold units as long-term investments. Compounding the problem are completed condo towers that sit half-empty." "In September 2004, Lance Ponton Jr. put down 10 percent deposits on five Harbour Island condominiums before they were even built. Ponton, 27, hoped to sell them for a big profit as soon as the building was finished and his deals closed. 'But when it was done, we found that everyone else in the building was doing the same thing,' Ponton said." "He ended up having to make thousands of dollars in mortgage payments for 10 months on all five condos in the ParkCrest Harbour Island. Eventually, he sold four units, pocketing $50,000 to $100,000 on each. With one more unit left to sell, Ponton hopes he can slip out of condo investing before he loses money. 'The market was really good, but it has changed, and it's time to move on to the next hot thing,' Ponton said." "The dearth of full-time residents has made it difficult to attract shops and other tenants in the buildings. Some potential buyers are turned off by buildings that aren't lively, said Jason O'Neil in Tampa. 'It's more difficult to attract end users right now,' O'Neil said, referring to buyers who plan to live in the units full time. The lack of primary residents appears to be affecting marketing retail space in the Parskide building. None of the 11,500 square feet of retail space has been leased." Byron Moger, of (a) commercial real estate firm, is confident that retail space in the condo high-rises will be leased. 'It's just a matter of getting enough people downtown to support it.' Still, the lack of retail is an annoyance to high-rise residents such as Maryanne Piplica, who came downtown for an urban lifestyle. Piplica, who grew up in New York, said she and her husband traded in suburban life in Palm Harbor hoping to find a lively lifestyle. With her children grown, she looks forward to walking to everything she needs." "'I was hoping for a Starbucks, a bistro-type restaurant, a small gourmet shop,' she said of the empty retail space in her building. 'I want to see museums and galleries and shops downtown..things to be open after 5 p.m.'" "Some investors are worried. Jason Barrett, a resident in Parkside, said he is on a list of potential buyers for some condo projects. Some of the lists are a year or more old, Barrett said, and the names were collected when the market was much different.He won't be buying any more condos, he said. Barrett had luck with one condo in Parkside and plans to sell his current unit in four to five years. But he had to lower his price to compete with other sellers in his building." "To Barrett, evidence that the condo market is no longer a good investment can be found at Parkside. He notes that about 40 condos were for sale when he sold his unit last summer. Many of his neighbors use their condos a few times a month, and some use it strictly as a place to party on the weekends." "Barrett, who also owns a condo in Sarasota and a condo/hotel unit on Anna Maria Island, hopes to sell those soon. 'I'm spread thin now and that's not a comfortable situation,' he said." "Despite signs the downtown condo market is slowing, developers continue to come forward with proposals. Some developers of other downtown condos have restricted investor buying at the request of banks and other lenders, (agent) Jim Walters said. 'I don't know why you would want to control the investment markets so much,' Walters said. 'The developer makes their money, and an end user ends up there anyway.'"