August 16, 2007
Charlotte Condos As Investments. No Crystal Ball.Late last night after I checked my day’s work and tucked the big dogs in bed, I sat and surfed. It is amazing what sites come up at midnight and are hard to find the next day. But it’s interesting. Before surfing, I thought I would tackle M and M’s as my next subjects: Mortgages and Management Companies. Instead I cringed when I came across a website that spoke to Uptown.In essence, this person was hawkin’ “Come On Down?…referring to Uptown Charlotte.First, the North Carolina Real Estate Commission frowns on our using our crystal balls. And our own good sense might well do the same. The one thing I know for sure, the only thing I know for sure, is that I cannot predict appreciation. I can speak to my perception of the marketplace. Period.So when I read about the number of sales and the prices and the towers and on and on…and how this is the place for investors because of the promise of appreciation and substantial gain, I say “Whoa?. I talk with other brokers and some of us are being very cautious for our clients…some of us are suggesting condominiums outside the Uptown Loop…because some of us think the preponderance of small, most often one bedroom condominiums are headed for a definite unknown future. If there were a way we could parse the purchasers so we could know how many investors were involved with a project, we might have a more clear picture…and some might say, well, there is a cap on investors. Perhaps, but is there a cap on “second homes??In SouthPark, there is a handsome new project where today there are 40 units for sale. That conservatively is about 20% of the project. Certainly, that project will change as other retail and businesses come aboard, but what if that were your primary residence?In some states, there are laws that prohibit rentals in some multi-family projects…rentals may occur only in dire circumstances. I can only hope that our legislature would take a look at that concept for North Carolina.Back to Uptown. I have a friend who was asked to do a feasibility study for one of the towers. Their answer was, “No?. And then asked why, their answer was “ because I don’t think it is feasible?. Consider that in this market the same folks who often do the feasibility studies for the developers are also the spokesperson to the media. So who do you believe?I am a cautious person. I believe you should be able to get out of whatever you get into…with relative ease and minimal heartache. The normal angst precludes not being able to get a mortgage on your place because there are too many investors. Not being able to get out financially because you are competing with not only new construction but also other, lots of others, in the same marketplace. How many one bedroom condominiums can our Uptown accommodate? Today? In the next 5-7 years.Then let’s think logically…Charlotte is still growing. There is land close to uptown, close enough to build more towers, more mixed use and still have access to the city. Hmmm.Would I rather be able to walk my dog in the neighborhood park, actually have a grocery closer by, have more than 550-750 square feet, be able to hop to the Y as well as the night life and pay less than $300 a sq ft.? Hello!Of course, there are folks who do use the Uptown condominiums as their city pad…some folks do use them as a second home. I am speaking to the general population for whom this is their primary residence, their biggest investment. Single folks just starting out, young marrieds enjoying the street scene, the night life and the glitz.Charlotte is a great little city…growing, energetic, vibrant. The streets are sometimes paved with good intention, the air is less than pure, the people represent both the best and the worst and the mantra or at least, my mantra is always, “Caution, caution?. Even as a real estate broker specializing in condominiums.