Six condos in the now sold out Watermark are currently on the market. At least two – #6B and #8H (above) – appear to be passing along the remainder of their original buyer incentives (two years of paid HOA dues).
And based on a number of reader comments, we can likely expect to see a few more units hit the market in the not too distant future.
UPDATE (3/1): As a reader notes, make that eight relatively quick flips as Watermark condos #4B and #17E have joined the resale fray.
∙ Listing: 501 Beale #4B (1/1) – $919,000 [MLS]
∙ Listing: 501 Beale #6B (2/2) – $975,000 [MLS]
∙ Listing: 501 Beale #7B (2/2) – $1,049,000 [MLS]
∙ Listing: 501 Beale #8H (2/2) – $1,187,000 [MLS]
∙ Listing: 501 Beale #16D (2/2) – $1,649,000 [MLS]
∙ Listing: 501 Beale #17E (1/1) – $759,900 [MLS]
∙ Listing: 501 Beale #19G (3/2) – $1,728,000 [MLS]
∙ Listing: 501 Beale #PH1E (3/2) – $1,800,000 [MLS]
∙ What’s Up With The Watermark “G”s? [SocketSite]
Just for comparison purposes, here’s what some of those units originally sold for in November of last year:
#6B: $830K
#7B: $840K
#8H: $945K
Given current market conditions, some of these flippers may find it tough to make a $200K profit in 3 months.
Thanks Dude!
$1300+/sf?
For that?
Not gonna happen.
Ever noticed those upper floor units at the 219 brannan? They have been there for what, well over a year now? Sometimes I wonder if these owners are commissioned by the Rincon hill developers to just list their units at insane prices for a good comp. Either that or their agents must be having hell of a good time all by themselves at open house.
Dude, are those numbers for real? I have a friend who bought a 9th floor 2 bdrm at the Watermark for 1.245. Either he wuz robbed or the flippers got a great deal (relatively speaking).
Come on people. Could it be the buyers entered into those sales contracts many months before escrow closed in November.
Watermark just wanted to get rid of the few remaining units. I heard that because the profits above a certain margin would go to the Port, so there were no incentives for Watermark to sell those units above what they got to keep. So, lucky for those buyers, unlucky for the Port and you, the tax payers.
wasnt there a sell-off at the watermark and the developers basically “gave” the units away.
it sucks for all the people who actually bought during the “high” times.
as for the watermark, i dont need to say anything about the outsides but the inside is HORRIBLE also. sheez, put this building right next to the soma grand.
the location is the only thing right about the watermark!
Mike – I got the numbers from bayareasoldhomes.com. Not totally sure about their validity, since people have found errors on there before.
Location is just OK, but if I had a choice for the same price, I’d choose Infinity’s building and location hands down. Looking at the huge bleak parking lot (cancel cruise terminal) everyday isn’t my idea of a nice view…
I think the Watermark has some of the best views of the bay, since it’s so close to the water. Never mind the parking lot or that empty pier. I know we’ve covered this before, but a cruise terminal isn’t exactly my idea of a nice view either…
To add to my previous post (10:55am) the building is certainly ugly inside and out, and it’s definitely not what I’d consider luxury finishes. The Brannan and the Met have nicer designs and finishes. Because of these reasons, (and to go back to the original topic), I don’t think these flippers will get anything near what they’re asking.
Now the question is which interpretation of the “first-mover” concept will come to fruition. 15G appears to be first logical turn being purchased at $830k and selling a few weeks after close for $959K! A one-month return of 15% on leveraged money compunds into a crazy compounded annual return. Considering an interest only carrying cost of $4,500 per month ($800K @6.5%), plus property taxes, every month costs these folks at least $5K a month to be a flipper. 5 months and 25K later some of these listings may sell but will the 15G sale set a logical baseline for flipper appreciation or will it prevent future buyers from wanting to fund flipper success?
6B and 7B are owned by the listing agent.
“6B and 7B are owned by the listing agent.”
I think this info just turned these two units into rentals….
” think this info just turned these two units into rentals….”
Let’s hope so. I know I would never buy off a realtor trying to do a quick flip.
It looks like that 15G unit set the pace for these sales. I agree I wouldnt want to buy a unit that a realtor is flipping. But for these kind of returns I certainly wouldnt mind using them if I could get this same kind of return. Definately will have to watch and see what they finally sell for. Clearing $100k in 3-4 months would definately change my life!
Keep in mind that after real estate commission and capital gains tax, even selling 15G for 959k wouldn’t net that much gain as you would think. Deduct the 6% commission and 40% tax and the gain is at $42k. From that, subtract the $25k in carrying costs and you’re left with $17k in profit. Not bad, but that is a lot of work for a reasonably meager gain.
Just curious, but would you buy a unit that an investor (non-realtor) is flipping? What’s the difference?
I probably would shy away from buying any quick flip. One from a realtor feels slightly worse, imo, because of the perception that they may have used their “insider” position to get a deal that the general public couldn’t. Maybe that’s an unfair characterization in general, but I suspect that was what played out with at least a couple of these units at The Watermark.
Forget the “insider” argument for a second (although it bothers me as well). If the condo that’s being sold is such a great investment, and sure to appreciate, then why the heck is the realtor selling rather than holding? Based on the strength of the market, shouldn’t they be accumulating as much real estate as possible? Remember, they’re not making any more land!
There are many reasons why an investor would sell. Uncertainty about the short-term market and desire to ‘lock in’ a gain (bird in hand). Also if the unit is financed, unless the person has astronomical income, the bank is not going to allow an unlimited number of million-dollar mortgages. Plus these units are not occupied so they’re not generating any positive cashflow whatsoever (and they never would, even if rented, unless the owner put down 50% of the purchase price in cash). Finally, the interest expense and property tax are not tax-deductible to the investor since the unit was not the investor’s primary residence for two years, so the carrying cost is extremely high.
OMG! 15G fever continues. Unit 4B at the Watermark, a one bedroom on the 4th floor, albeit with a patio, just got listed at a staggering $919K or 1,147.32 per foot with limited views! [Removed by Editor]
17E, another 1br but with a den per the MLS was also just listed at $759,900. It has a DIRECT view of the bridge where you may be able to figure out what type of coffee the commuters are having if you look hard enough. At least its at a more reasonable price point.
Hire the 15G guy!
Keep in mind that after real estate commission and capital gains tax, even selling 15G for 959k wouldn’t net that much gain as you would think. Deduct the 6% commission and 40% tax and the gain is at $42k. From that, subtract the $25k in carrying costs and you’re left with $17k in profit. Not bad, but that is a lot of work for a reasonably meager gain.
You forgot to include the two years of HOA fees, sellers payment of closing costs that are now routine. Add in some cash back under the table and you could even be down further. But note, your carrying costs are $25K too high on that one: I was led to believe it sold in one month – costs were supposed to be $5K per month
Agreed that there are more costs that could impact the profitability but there could be ways to keep more of your gains. It all depends how it is allocated / calculated.
1)Hopefully an agent would be nice enough to give a break on the listing comission since the agent just got the buy side–grated one uses the same agent.
2) You could ‘potentially’ exchange the gain into another like property (depending on how uncle sam interprets the flip)
3)If you’re a professional flipper, you may be able to offset a loss on another investment (maybe even stock losses)
4) There are other ways to diversify and minimize your gain but that would be the trade secret and it really depends on your personal situation.
“Finally, the interest expense and property tax are not tax-deductible to the investor since the unit was not the investor’s primary residence for two years, so the carrying cost is extremely high.”
That is simply incorrect. I own multiple rental properties and you can in fact claim the interest expense and property taxes as deductions.
I went into some of the units at The Watermark this weekend and most of them look amazing. Last Summer I looked at a unit that was empty and I thought it was nice but, but now that I see how what people have done to thir places on the inside… I am impressed. The location is great, the big windows are great, most of the views are incredible. Seems like there are a few lucky ducks that got a deal at the end of the run, but I think most people paid full price. Hope they enjoy it. Seems like a nice place to wake up in every morning.
5:59 – Interest expense and property taxes are only deducitons for income tax purposes on qualified residences (i.e. primary residence or qualifying second home). If the property is a rental you may offset those expenses against any gain made from rental payments. In addition, there is a deduction against your regular income of up to $25K for rental loses, but that phases out begining at $100K (for those filing as single). Other than the $25K deduction for rental property losses there is no tax deduction for mortgage interest or property tax on rental use only properties.