Investor spiffs up run-down Wellington condos,

but prices some residents out

Article Courtesy of The Palm Beach Post

By Kimberly Miller

Published June 9, 2011

An apartment building turned condominium, pillaged then deserted by investors, it has been rejuvenated by a bulk buyer who recycles units back into rentals with prices in the $1,200-a-month range.

But some remaining boom-time buyers feel conquered rather than liberated by the New York-based company that purchased 90 units in late 2009.

  

The $4 million-deal gave the group control of the homeowners association, which includes the power to raise fees, levy assessments - and reject new buyers.

  

Owners and Realtors complain that the association has hiked dues while blocking new buyers so it can snap up units for itself.

    

The association argues it's protecting its 

Palm Court condos that sold for about $220,000 are now worth $43,600. The bulk owner rents units for about $1,200 a month.


investment by barring people without the means to meet condominium obligations.

 

"We've taken the eyesore of Wellington and turned it into a very nice place to live," said John Slattery, who, as director of acquisition for the bulk buyer, is president of the Palm Court homeowners association. "There were drug dealers, pit bulls, derelict cars, garbage everywhere. The place was a disaster."

  

As real estate's rule changes turned the tables on winners and losers, Palm Court's discord is mirrored in shared communities throughout Florida.

  

Glory-day investors hoping to pad their retirements now make payments on homes worth a pittance of their purchase prices and in communities where they have little say over the future.

  

At the same time, bulk buyers cleaning up after the party want to make the most of their acquisitions, which can mean expensive improvements, the costs of which are shared by all.

  

"These bulk-buyer deals have given power to people with money who can trample rightfully and lawfully on the rights of owners unlucky enough to have bought at the wrong time," said Jan Bergemann, a homeowner advocate who runs Cyber Citizens for Justice, a DeLand-based watchdog group. "They charge assessments to pretty up the place and line their own pockets."

John Slattery, director of acquisition for the firm that bought 90 units at Palm Court, and now president of the community's homeowner association, says, "We've taken the eyesore of Wellington and turned it into a very nice place."


Palm Court started in 1987 as the Pine Cones apartments, a covey of two-story buildings nestled amid towering pine trees near the intersection of Wellington Trace and West Forest Hill Boulevard.

A Miami developer bought the 120-unit complex, reselling individual units at about $220,000 .

  

About 30 people inked deals to buy, only one of whom planned to live there full time, Slattery said.

Then the market crashed.

Remaining owners are now trapped with units valued at $43,600.

"It was a very bad investment," said Christina Butzer, who bought a unit in 2007 with $22,000 down and an adjustable-rate mortgage.

Butzer, who rented out her unit, said she paid her bills until increases in her mortgage payments and association costs forced her out.

With the higher costs, Butzer said, she struggled to get tenants because they could pay hundreds of dollars less by renting from Slattery or in nearby developments.

"The property is now gorgeous, but he knew we couldn't afford it," Butzer said. "I felt like he was just going to keep assessing us. It's not worth the fight anymore."

Another owner, who didn't want to be identified, said she had bank approval for a short sale, but the association put a lien on her property for back dues, effectively killing her chances of selling. She expects the bank to foreclose soon.

ABC Properties, the parent company of the bulk buyer that took over Palm Court in December 2009, owns and manages 185 buildings in 11 states.

Its additions to Palm Court include a putting green, dog park, basketball hoops and playground.

Security cameras were installed, tennis courts refurbished, a fitness facility put in.

All of it cost money.

Slattery said monthly homeowner fees were raised from $137 a month - a teaser rate that he said was set by the original developer - to $265 a month.

An assessment of $2,959 per unit was levied in April 2010 to help pay for enhancements.

The lone owner-occupier of the 30 original purchases is pleased with the changes.

"The place has really cleaned up," said Robert Roca, who bought his 980-square-foot condo in July 2006. "Since the new association took over, it seems like nice families are moving in."

Slattery established rules, such as no vicious dogs, and requires renters to prove a gross income 2½ times the monthly rental rate.

After the initial 90-unit bulk purchase, Slattery said, he's acquired 10 more units. Six of those had gone into foreclosure. He picked up most of those for between $30,000 and $40,000 each.

Debbie Smith, broker/owner of Home Run Real Estate in Lake Worth, said the Palm Court association "refuses everything" when outside buyers are interested in the remaining units.

Smith's firm handles sales for federal mortgage backer Fannie Mae, which owns several Palm Court units after foreclosing on them.

"These prices are so good and it's in Wellington and people want to live there," Smith said. "I've probably had nine offers turned down."

Florida law gives associations the "right of first refusal," which allows them to reject buyer offers, but then they are required to submit their own offer on the same terms.

"They offer $20,000 less," Smith said. "It's self-dealing."

Slattery said he's never formally exercised his right of first refusal but acknowledged he's told people not to apply.

One man from Canada wanted to pay cash for a unit and rent it out, but he couldn't prove a U.S. income, Slattery said.

Another cash buyer sought a unit for her unemployed daughter.

"I said, 'Don't bother; I'm not going to approve her,'" Slattery said he told the woman. "Just because they can pay cash doesn't mean they can continue to pay the assessments."

Slattery said he wants to own all of the units but isn't going to break the law to get them.

And he's going to avoid bulk condo deals in the future.

"It's been a total headache," Slattery said.

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