THE DEAUVILLE CONDO RESORT, MIAMI BEACH,
FLORIDA

Question: I am considering purchasing a condo hotel unit in The Deauville Condo Resort. In your opinion, is there any negotiating room for unit prices, or are the stated prices firm?

Answer: Typically at most condo hotels, prices are at their absolute lowest during the first 10% of sales and there is sometimes room to negotiate during the last 10% of sales. The rest of the time, prices usually increase in 1-3% increments as units are sold, and there is no room to negotiate, the exception being if sales are particularly sluggish. With over 40% sold already and sales taking place at a rather brisk pace, The Deauville Condo Resort prices you will continue to see a steady increase in their prices.

Question: With a 15-20% down payment, is financing going to be difficult?

Answer: No, impossible (make that nearly impossible)! Depending on the strength of the individual buyer, they have been able to get 80% LTV for about 25 of their buyers. Typical condo hotels can be financed with 20% down if it's going to be used as a primary residence for its buyer. 30% is sometimes required if it is strictly for investment purposes. This property would fall into that range because with no kitchen, lenders won't consider this a permanent residence.

Question: Is the interest rate much higher than it would be for a regular condo property or are the rates comparable?

Answer: Probably a little bit higher and sometimes rather difficult to secure. That is why the developer at The Deauville Condo Resort took it upon himself to secure end loan financing for his unit buyers instead of leaving it up to each individual to get it himself.

Question: What are the finance rates for these units?

Answer: As of 3/23/04, here are the rates based on 70% ltv (30% down payment): 3 and 5 year adjustable rate mortgages are currently between 5-1/4% and 5-1/2%. 15 and 30 year fixed loans range between 6-3/8% and 6-3/4%.

Question: When would I need to place a down payment, and how much initially down to reserve a unit?

Answer: The Deauville contract calls for 30% down. 10% is due at the contract signing. 10% is due 30 days later, and the remaining 10% is due at closing (unless, of course, you get 80% finanicng).

Question: What is the expected closing date?

Answer: Roughly 45 days from contract.

Question: Is the probability of covering my monthly maintenance expenses more realistic if I were to purchase an oceanfront unit, or would the type of unit purchased not make much difference in monthly rental income?

Answer: Oceanfront units and higher floors are typically more in demand than lower floors with city views, but the additional revenue that they may generate for the unit owners is offset by the higher price the owner had to pay and debt service he has to carry.

Question: Is there a supporting reservation system?

Answer: They are close to inking a deal with an International hotel chain. Of course, I was forbidden from putting this info on any of my written materials because nothing is definite yet. They want to tie down the management firm first as they may want to have input in this decision.

Question: How do the rental arrangements work with this property?

Answer: This is undecided at this point. It will probably be a 50-50 split.

Question: When will it be ready for occupancy?

Answer: By the time you close on your unit, they will have renovated it. You can begin using your unit right away. They are already beginning hotel renovations at this time.

Question: Who's managing the Deauville property?

Answer: No answer yet. They are currently negotiating with a half dozen companies and are closed to making a deal with an unnamed party. This should be concluded within 30 days.

Question: How old is the Deauville Hotel?

Answer: Almost 50 years old.

Question: Is it a star-rated hotel?

Answer: Probably 2.5, but they are shooting for 4-star after their renovation.

Question: Whey will they start taking reservations at the Deauville Condo Resort?

Answer: They are taking contracts already.

Question: Where on Miami Beach is the Deauville located? Is it in South Beach?

Answer: The Deauville is not in South Beach. It is in the much quieter North Beach area, about 15 minutes north of South Beach. There are six luxury condominium developments going up within a few blocks of the Deauville, including The Canyon Ranch Living condominium and condo hotel units. Real estate values in the area should see a real boost in values based on all of this new development, and two years from now, the area will not look the same as it has for the past 50 years. It will be 10X better!

Question: What do you think of the area for families?

Answer: I grew up in the North Beach area myself and loved it. The demographics have changed a bit since the 70's, but I think it's still a terrific place to live. You get all the benefits of living in the city (great shopping, restaurants, culture, etc.) plus instant access to the beach.

The above question(s) were submitted via e-mail by a visitor to www.condohotelcenter.com. The answer was prepared by Joel Greene, a licensed real estate broker with Condo Hotel Center which specializes in the sale of condo hotel units and fractional ownerships in private residence clubs.