The buyer-financed model has proved surprisingly popular — especially considering the unit buyers become mere unsecured creditors should something go awry with a project.
“In 2011, there were a lot more sellers than buyers and we thought, ‘How are we going to do this?’ ” said Studnicky. “But there was enough demand from South Americans looking to move money to South Florida.’’
A pivotal factor, Spiegelman said, was having a well-established developer like Pérez doing the project. “Not everyone could put a trailer on a property and start selling it,” Spiegelman said.
Related ISG is overseeing sales of Casa Costa, a condo project composed of two 15-story towers and 393 units in Boynton Beach. Related bought a distressed note and completed the project.
More recently, Related formed its own in-house sales arm, Related Realty, which has been marketing a host of Related projects in conjunction with Miami-based Fortune International Realty, a competitor of ISG led by Edgardo DeFortuna.
Matt Allen, executive vice president and chief operating officer of Related, said Related decides case by case whether a project is handled in-house in cooperation with Fortune or steered to Related ISG.
“It all depends on the market we’re in,” Allen said. Related ISG is “actively marketing one of our projects now,” he added, pointing to Casa Costa.
In addition to handling pre-construction projects, the Related ISG venture also handles condo resales and other real estate transactions through several general real estate offices.
Besides the Related ISG venture, ISG, for its part, has continued to line up marketing and sales agreements with other developers.
Among other things, ISG is handling two major condo projects for New York-based Property Markets Group: the 58-story Echo Brickell project and the 11-story Echo Aventura project, which includes two buildings and 190 units. Echo Brickell, at 1451 Brickell Ave., will have far larger units than the typical Brickell condos and is aimed at owner-occupants rather than investors looking for units to rent, Studnicky and Spiegelman said.
Echo Aventura, which has 70 percent of the units under contract, is under construction and scheduled for completion in the first quarter of 2015. Echo Brickell has reservations on 70 percent of its 180 units, but they haven’t yet converted those reservations to contracts, Studnicky said. The ultra-high tower is to begin construction around April 2014.
“We’re on target to sell out Echo Brickell at a blended [price of] $1,000 a square foot. That’s the highest price in the history of Brickell Avenue, but it’s a spectacular building,” Studnicky said.
Selling yet-to-be built condominiums that are typically little more than a patch of dirt, a snazzy website and a glossy brochure when sales are launched takes special talent. Developers plow big bucks into sales offices to provide a real space for buyers to visualize their purchases. Technology is playing a growing role in sales efforts.
“We have to build the product in a computer so they [the buyers] can see it in virtual reality,” Spiegelman said. “The conversion of those images is what is necessary to convince first, a broker, and then a potential buyer that this will deliver a promise.”