According to the RGJ some residents should receive the keys to their units by June 15th. Read. The article went on to report that five of the eight residential floors have been completed and the other floors and lobby should be completed within 10 days. 68 of the 92 units (74%) have been sold, and the Starbucks is already open. The Palladio will be the first condominium tower to be completed downtown that isn’t a conversion of an older hotel-casino.
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Justin
Shouldn’t your last sentence end in something like “within the last 20+ years”? The Palladio is NOT the first condo tower to be built as such in Reno. Arlington & Park Towers have been around for quite a while now.
GuyJohnson
Justin, you are quite right. I should have qualified that last sentence. Good catch.
Reno Ignoramus
If we want to be precise, neither Arlington Towers nor Park Towers were built as condominiums. Both were originally constructed as apartments, and later converted to condos.
Mike Van H
I personally think it’s great. They put in new trees along Virginia and First front the Palladio. I know of ten future residents who have all emailed me, and all are VERY excited about moving into their new condos. Most of them have toured their future residences and are happy with the quality, etc. This project has seen a LOT of wobbles during its inception and construction, it’s nice to see it nearing a close finally. The green roof looks awesome so far, really adds some punch to the upper part of the structure.
Grand Wazoo
Does anyone know how well Park Towers and Arlington Towers do mechanically? There was a recent post in another thread about a unit in Arlington requiring $20K in asbestos abatement. I believe both buildings were built in the ’60s – how well are they holding up?
Reno Ignoramus
This high rise condo thing continues to puzzle me. Take a look at MLS #70008996. This appears to be a newly tricked out Smithridge condo. Originally built in 1972. Pictures look nice. 1220 sq.ft. Asking $203,000. $166 a sq. ft.
Then take a look at MLS #70010527. This appears to be a newly tricked out Arlington Towers condo. Originally built in 1968. Pictures look nice. 1228 sq. ft. Asking $795,000. $647 a sq. ft.
Now ostensibly anybody considering buying either of these units would have made the initial decision that a 1220 sq. ft. condo meets their needs. Fair enough. Does living in Arlington Towers justify $600,000 more? Does living in Arlington Towers justify 4x price per sq. ft. than Smithridge?
I really don’t want to turn this into another debate about neighborhoods and where is it safest to walk at night. Yes Smithridge borders Neil Rd. to the east. But then Arlington Towers borders the Second Street liquor stores to the north, and the St. Thomas parking lot meth deal clearing house to the west. That’s not what I am talking about. I would like to hear from folks who would pay $800,000 to buy in Arligton Towers how they can justify the 4x cost over the Smithridge. I can understand paying some premium for the “downtown experience”. But a $600,000 premium?
eldiablo@yahoo.com
Water pressure is terrible in Park Towers. HOA fee’s are outrageous and it has been 4 years and I still don’t have a parking space in the garage.
Downtown Reno expererience = bland at best. One can only eat at silver peak so many times or go to one of the many bars down here before it gets boring.
I walked down first street the other night and watched a homeless guy drop his pants and pee all over the sidewalk in front of the Palladio.
For some reason, I can hear every noise that comes out of the tap room bar in my bedroom at night. Sometimes I watch fights in wingfiled park at midnight. All those drunk college kids love to keep me up at night.
Revi Slessinger
To the previous commenter, I live in Park Towers too, overlooking Wingfield Park, and have lived here since they were apartments. My water pressure is fine, HOA fees are ridiculous I will agree with you there. Seeing a fight a month in Wingfield is a minor inconvenience and worth it to watch concerts all summer and see families playing in the river all summer.
Regarding Sierra Tap House, you live downtown, do you expect there to be no bars or activity? If all you’re doing is eating at Silver Peak and going to a few bars, then I would say you aren’t fully taking advantage of all the events happening downtown. I keep myself busy and entertained on a weekly basis within a half mile radius of downtown. Go see plays at Bruka! Go to shows at Pioneer! Go watch the roller-dery girls practice! Go to one of the 5 or 6 galleries downtown and take in some culture! Go see a show at the Reno Events Center! There’s lots to do.
Why didn’t you call the police when you saw the homless man urinate, and give a description? Downtown police know nearly all of the regular homeless downtown. I see how dedicated you are in cleaning up your own neighborhood. You just watch it happen without doing anything. Nice!
To Reno Ignoramous, I can’t believe someone is selling an Arlington condo for that much? If it were new maybe I could see it. I have friends who live in Arlington Towers, and the floors, the entire units, are literally tilted. If I take a ball and set it down on my friend’s 17th floor condo in Arlington, it will roll all the way to the other side of her condo on its own…and you feel like you walk uphill when walking from one side to another. I wouldn’t think of selling my Park Tower condo for $700,000 and it’s around the same sqaure footage. Last I had it appraised it came in the mid 300’s. Isn’t that more realistic?
Mike Van H
I don’t think they will be able to sell that Arlington Towers condo at that price no matter how tricked out it is, sounds like a case of the seller not understanding the current market. Take a look at this http://homes.realtor.com/search/listingdetail.aspx?zp=89501&ml=3&typ=2&sid=9a1efdb8092a4744af4bbd0260918693&lid=1079975607&lsn=6&srcnt=59#Detail MLS #70008317 only 100 square feet less for $385,000. So why the huge fluctuations in condo prices in the same building? Could the one you listed really have $410,000 in upgrades? Both are two bedroom. The $799,000 unit may be on the Penthouse floor (can’t remember if it’s 23 or 24) but I have been in those penthouse units, and they literally are no different than the units on the other floors, no higher ceilings, no larger balconies etc. Maybe the more expensive unit is on the River side, but sorry, a river vs. mountain views is not worth $400K either. So what gives? If two homes roughly the same size in the same subdivision were for sale on the same block, and one was $799,000, and one was $385,000, who on earth would pick the $799,000 one? Good find Reno Ignoramous, I hope the sellers realize their $400K pricing blunder and re-adjust to reality.
Mike Van H
Revi, I think a neighborhood is what you make of it. Let’s not get into the who’s-neighborhood-is-better scenario like Reno Ignoramus suggested. Water pressure can easily vary within the same building.
Downtown has its plusses, I live within blocks of downtown and I enjoy all the amenities, however Iggy has a good point, because Smithridge, while close to Neil and some seriously scary gang action, also has more ‘convenience’ than downtown, meaning there’s a grocery store within walking distance (Trader Joe’s), tons of fast food, an entire mall within walking distance, dry cleaners, basically anything you need you can walk to.
But the more interesting issue is why are units so wildly priced differently within the same condo tower? I found two bed, 2 bath units within 100 square feet of each other priced from $385,00 to $420,000 to $625,000 to $795,000. Guy/Diane, what would be the cause of this, besides sellers who don’t look at comparable units within their own building? Would it be views? Do views really have that high of a price tag attached to them?
Funny you mention the tilt thing. My friend John lives in the north-east corner unit on the 14th floor of AT and I experienced the same thing; sans ball rolling, I did feel a noticeable incline when walking from his living room to his kitchen.
Reno Ignoramus
Grand Wazoo, it seems you may have received some very valuable info here. Park Towers may or may not have a water pressure problem, but apparently AT has an “incline problem”. I find this info extremely valuable, and not the kind of info readily available from, say, the RGJ. This is what can make a blog such a valuable thing. This is so much better than people flinging insults at each other.
Given the substantial price discrepancy in essentially identical units in AT, as described by Mike Van H, I think the explanation is that some sellers think that there are still some greater fools in circulation.
Reno Ignoramus
On Craigslist tonight there is an ad by someone seeking to rent out a unit in the Palladio. The ad says it is for a unit with 1,200 sq. ft. It does not identify what specific unit. The landlord is asking $1,950 a month in rent.
Let’s do some numbers. Based upon current Palladio listings in the MLS, let’s say the owner of this unit paid $500/sq.ft. That would be $600,000. Let’s say he put 10% down and financed $540,000 at 6% amortized over 30 years. That produces a P & I payment of $3,238 a month. Add to that, say, $500 per month for real property taxes, and a HOA fee of $350? (Does anybody know what the HOA fees are?)
That puts Landlord at around $4100-$4200 a month in outgo. If he convinces somebody to rent at his rental price, that puts him about $2,250 negative every month.
Ouch.
This Landlord bought this Palladio unit at more than 300x rent. Can somebody more wise than I explain to me how this purchase can possibly make sense as a rental investment??
What is this person thinking? That Palladio units are going to appreciate 15% annually and so that his $2,250 negative every month is no problem?
MikeZ
RE: “Seeing a fight a month in Wingfield is a minor inconvenience”
WHAT?! A fight a month?! Outside my window? That’s not an inconvenience, it’s UNACCEPTABLE.
Lindie
There is no way a $600,000 condo (or house) purchase will ever make sense as a rental. No way.
Just to get to even cash flow, this place would have to rent for around $4,000 a month. But, hey, this is Reno, land of the big bucks casino workers. Maybe there are lots of keno runners willing and capable of renting a 1200 sq. ft. condo for $4,000 a month for the “downtown experience.”
I’m not sure this place will even rent for $1,950.
derrick
WOW thats an awfull lot of assumption there LOL. I mean that was so indepth you almost had me believing it heh heh.
maybe he paid cash for the unit? So after taxes and hoa’s he makes 1k/month??
Maybe He is renting it out untill his other property sells? and using the rental income to help balance off his loan untill his house sells?
Maybe he is upside down and sideways screwed?
Maybe it sounds like a good deal if you want to live downtown in luxury?
Maybe he will rent it out with option to buy? Who the hell knows!
BUt You hardly have any idea if the guys is losing 2,250 every month.
DERRICK
I think I figured it out. The guy bought this condo for his daughter who is graduating college next year. It’s Her graduation present (he is a nice dad). So while she finishes up school, he figured why not make a penny or 2 while waiting? ahahahah…
ps. happiness is owning your own home and a few shares of aapl.
Mike Van H
Hmmm Reno Ignoramus, the only thing I can think of is maybe somebody really really wealthy bought the unit outright…I.e. paid for entire thing at once. Or, perhaps they put 50% down or more to keep the mortgage payments in line with what they feel they can rent the unit out for. So, my guess is they put down far more than 10%.
DERRICK
exactly Mike. I seriously doubt this guy/girl put down 10%.
Personally id be willing to bet it was either an all cash deal or 50% down like you mentioned.
This may not be the land of big bucks casino workers, but its awfully close to big bucks in california.
Lindie
Yes, clearly that must be it.
Yes, somebody must have invested $600,000, in cash, and bought a condo that will throw off $1,000 a month, after ownership expenses.
Yes, somebody must have invested $600,000, in cash, to buy a condo that will cashflow at an annual rate of return of 1.5%.
Clearly, what better use could somebody have for $600,000, in cash, than to have it generate $1,000 net, per month.
Wow. 1.5% ROI. Yes, clearly, what an extraordinary stroke of investment genius this was.
Thanks for pointing this out to us Derrick.
SkrapGuy
Irrespective of how much money this Palladio owner put down, or didn’t put down, RI’s post raises an interesting question about rents in these high rise condos.(The Palladio is really a mid-rise by big city standards). Do you all think that folks are going to be willing to pay $2,000 a month to rent a 1200 sq. ft. condo?That sounds a bit rich to me. But I don’t know what the going rate is in places like Park Tower or Arlington Towers or the Riverwalk. Anybody have some info on that?
Smart Money
Who cares how much he put down. It does not matter. The point that Reno Ignoramus is making is that there is no value in that condo. Seven years ago you could buy a house in Reno and have it cash flow using a 30-year mortgage when you rented it out. Today the numbers don’t work. Bottom line? Everything revolves around value. And things always go back to their historical averages. So cleary, prices need to come down more to get to “fair value”. Quite simple, really.
Mike Van H
First, I bet the person who purchased that condo and is renting it knows exactly what they are doing, because there are few ‘beginners’ in the $600,000+ market. Second, all of you are assuming $2,000 is too much for a pad downtown for rent. Hardly.
I found two homes in Double Diamond for rent for $1800 a month, I found at least three homes in Southwest Reno for rent for $1800-$2000 a month, and the remaining in that area are $1500-$1600 range, I found at least six homes in Spanish Springs over $1600 a month. All of these are UNFURNISHED keep in mind.
As for condos, the going rate for a decent non-shack condo is about $1100-$1300. Considering Palladio gives incredible views, luxury condo, amenities such as a pool, gym, etc, and it’s downtown, $2000 is more than reasonable. It should also be noted two ONE BEDROOM condos in Park Towers recently rented for over $1300 each, and those are less than half the size of the Palladio for rent.
You guys act like this condo buyer went in stupidly blind or something and bought a $600,000 condo without knowing what we all already know. Do you really think he didn’t do the same simple math Reno Ignoramous did before he committed to a $600,000+ condo? Do you really think he wasn’t aware he couldn’t rent the condo for more than $2000 realistically before purchasing it? I seriously, seriously, seriously doubt he thought to himself ‘Gee I’ll buy this nearly-million-dollar-condo and then afterward see what I can rent it for.’ He probably has a long term plan of renting it for a while, then retiring in it, like the two people I know who rented their Park Tower condos out for $1300 a month. One recently bought it, paid 40% down to avoid a high mortgage, and is living/going to school overseas for 4 years until he plans to come back and live in it. The other doesnt live here, and plans on moving into the unit in about 5 years. I know this because they both placed ads on downtownmakeover.com (which by the way both places were rented out in less than 30 days) and I had in depth conversations with them about it.
The way you people think is so narrow-minded sometimes, the truth is none of you have any idea why that Palladio person is renting his place out for $2,000, and what his long term plans are with the unit.
Why don’t you email and ask him, instead of continually insulting his/her intelligence? 🙂
Mike Van H
I emailed him and asked him….giving him a link to this thread and asking him what the deal is. Considering most people don’t like to be taken for a fool, he may respond. We’ll see!
Mike Van H
Well guess what I got an answer already! People are really nice when you are nice to them (Lindie).
I have no idea what the capital tax stuff is so it wouldn’t be fair for me to comment on his answer, but here is his answer verbatim.
“Simply put, this condo was purchased well over 2 years ago when pricing was considerably less than today’s current asking prices. This transaction is part of a 1031 tax deferred exchange whereby all the proceeds (cash) is being used to purchase the unit. I must rent the unit out for a year before I can move into it in order to avoid taxes. Thus, I can live in it for 2 years and then sale it and utilize my $500,000 tax free gain! I have had interest from several individuals at the $1950 price. However, I have been unable to show the unit to them until I close escrow and take ownership. One is an executive moving from San Diego who is land acquisition manager for a major real estate developer, the other is a couple from Texas who run an internet advertising website and work from home. They both will be viewing the unit in the next several weeks.”
Lindie
Just because it is purchased as part of a 1031 exchange is a bit meaningless. What that means, Mike, is that the owner sold another investment property, and in order to avoid paying capital gains taxes on the sale of that property, he did a tax free exchange into this property. Since under IRS rules the exchange must be “like for like” this property must be maintained as an investment property for a year, then, the owner can covert it into a residence. Then the owner must reside in it as his primary residence for two years to avoid the capital gains tax upon its sale. None of this means anything as to the question of whether this cashflows on a sensible basis.
The only way to know whather this makes any sense at all as an investment is to know the purchase price. I am curious to know how much “considerably less” this owner paid from current asking prices. What did this unit actually sell for? The fact it is purchased as part of a 1031 exchange is irrelevant. Meaningless on the issue of whether the unit cashflows on a sensible basis. Can you tell us now what the purchase price is, or do we have to wait and obtain it on the public websites?
Allen Murray
Good work Mike, just goes to show, that you never really know where somebody is coming from. My dad just put a small office building he owns into escrow. I told him he was asking $100K too much for it as its cap rate was about 3%. It turns out the buyer is completing a 1031 exchange on some mini storalls out of state, and his asking price was just enough to complete their exchange. I guess they were running out of time and picked his property.
Mike Van H
I can email him again and ask what the selling price was, too bad no one has a record of what these units originally started selling for. If he bought it two years ago that was just as they were breaking ground I believe.
He mentioned $500,000 tax free gain, would that be a clue as to what he paid for it or no?
BanteringBear
Mike Van H posted:
“You guys act like this condo buyer went in stupidly blind or something and bought a $600,000 condo without knowing what we all already know. Do you really think he didn’t do the same simple math Reno Ignoramous did before he committed to a $600,000+ condo? Do you really think he wasn’t aware he couldn’t rent the condo for more than $2000 realistically before purchasing it?”
I will happily come right out and say that this guy went into this purchase “stupidly blind”. Most likely with greed. You see, upon reading his answer, he says, verbatim: “This transaction is part of a 1031 tax deferred exchange whereby all the proceeds (cash) is being used to purchase the unit. I must rent the unit out for a year before I can move into it in order to avoid taxes. Thus, I can live in it for 2 years and then sale it and utilize my $500,000 tax free gain!”
He’s nothing but a speculator who’s going to get burned to a crisp. He overpaid for the unit, and is counting on appreciation, not depreciation. Have you ever heard the saying “A fool and his money are soon parted”? Not all flips were low end Mike. There are countless examples of high end flips ending disastrously, some resulting in foreclosure and BK. This particular purchase is a poor example of strong financial acumen.
Lindie
I’ll say it again. The fact this purchase is part of a 1031 exchange is meaningless. Irrelevant. A poor ivestment is still a poor investment whether or not it is bought with tax deferred money. Mike, you continue to be quite confused as to the tax consequences. Yes, the owner here “mentioned the $500,000 tax free gain.” That is just the maximum amount of gain, under IRS rules, that can be realized by a married couple tax free after living in a primary residence for 2 out of the last 5 years. It tells us NOTHING about what the owner paid and it tells us NOTHING about what kind of a gain he may ultimatley realize in 2010, when he plans to sell.
Now the only way we can know whether this is a poor investment is to know the purchase price. It would also be helpful to know the monthly HOA fee and the exact amount of taxes. Then we can know the monthly cost of ownership and calculate the cap rate.
Mike, you call us “narrow minded” and yet you are just as guilty. Anything that involves a downtown purchase causes you to get goosebumps all over your body and your fuzzy thinking gets just as narrow-minded as you accuse others. Do you even know what a cap rate is, Mike? Or are we all just supposed to agree with you that ANY purchase of a downtown property is just fabulous?
Hell, even if this owner “only’ paid $500K instead of $600K, it is still a smelly investment. A ROI of about 2%. At $400K, it a ROI of 2.5% Wow, Mike, Wow.
Plus Mr. Owner here gets to ride the market down until 2010 when he plans to sell.
SkrapGuy
Mike,
We all know that you are this blog’s biggest downtown cheerleader. Fine. But you don’t have to rush in and defend a poor purchase just because it happened downtown. It does not really matter what this owner paid for this unit, because no matter he paid, it is not a sensible investment from a cashflow analysis. (Unless of course he paid $200,000, which I highly doubt).
The rest of the Palladio story remains to be told. In the final analysis, how this onwer ultimatley turns out will depend on where Palladio values go in the next 2-3 years. As we have all seen many times over the past few years, a rising market covers up a lot of mistakes, and a falling market exposes a lot of mistakes.
My inquiry about rental prices in downtown condos was just that…..an inquiry. I don’t live downtown. All I wanted, Mike, was some info from perhaps some folks who live in downtown condos, not a lecture from you about what it is appropriate for me to think. You say, $2000 a month is hardly too much “for a pad downtown to rent.” Well, I continue to be curious about that. Since you answer with such certainty, Mike, I assume you know of such “pads’ renting for such sums. Please identify them for me. Thanks.
Perry
First of all, I know this isn’t San Jose and we don’t have the jobs to support high prices but… I was in the San Jose last weekend and went looking at townhouses being built in south east San Jose which didn’t really look like that great a neighborhood. I was astonished to see 1100sq’ townhouses selling for $625,000 and 2000sq’ houses on 2000sq’ lots selling for $825,000. These developments where almost sold out at these prices and some didn’t even bother having models. I know our market is not on fire but I can’t help but think that as those people retire they will move their money here. I know not everyone but some.
I spoke with agents and people looking at the townhouses. All of them thought the Reno area was a bargain and said they’d thought about moving here. They also read other sites that I know some of you other posters read and visitors to town like the Somersett for some reason. They comment that Reno has excellent weather and tax benefits which are the draws. They compare their traffic to ours and call it light. I like Guy’s post about selling at the right price. I really believe that there is no shortage of buyers just a shortage of realistic sellers. Once sellers cop a clue the inventory will move.
I still believe that homeownership makes sense. I bought a rental house for a relative to live in three years ago with 20% down. They couldn’t afford the down payment but I thought that renting was a waste. They agreed to pay the $200 more per month and moved into the house which is more than twice as big as the apartment and has a garage. They recently checked on the apartment they lived in previously and the rent is now more than they pay me. Now I know that my family member is not the owner but the argument is the same. He makes more money than he did three years ago and his payment is the same. If someone bought the house they’d be in the same situation. Go ahead and tell me that it’s a poor return on my money etc. I should be getting market rate. All I know is I’m getting a house, my family member is getting a deal and I have a trouble free tenant with 0 vacancy rate.
I’m not a proponent of buy now nor would I talk someone out of buying now if they got a good price. The issue of property ownership just seems to be so polarizing. Is there no middle ground?
Mike Van H
First of all, I wasn’t defending a poor purchase, I didn’t KNOW it was a poor purcahse, in fact the first words from my post was ‘I don’t know that much about taxes so it wouldn’t be fair to comment on his reply.’ MY point about narrow-mindedness was you guys were analyzing his purchase at the Palladio when you only knew less than half the story. And we STILL don’t know what he bought it for (he never emailed back again). At least I had the balls to ask him.
I’ve also said several times on this blog that I have NO experience with real estate, other than owning my first home on Holcomb which I purchased in 2003 for $147,500 before prices went through the roof. I’ve also posted several articles on my own site detailing how other major cities are incorprorating affordable housing downtown mixed amongst the higher-end units.
Second, Lindie, I have mentioned multiple times on both this blog and Renodiscontent.com that $600,000+ for a 2 bedroom condo is flat out ridiculous. You may be confusing me with a couple of other downtown Cheerleaders that hang out on this blog, namely Revi. If you look above in this same thread, you’ll see how I criticised someone in Arlington Towers selling their condo for $400,000 more than other condos in the same building. I don’t believe that every purchase downtown is magically delicious by any means. I ASSUMED that someone couldn’t be as stupid as to buy a $600,000 condo(after reading Reno Ignramus’ numbers) and be able to rent it for $1950 unless there were some other determining factors. That was my mistake, sorry.
Skrap guy, I wasn’t giving you a lecture on what was appropriate to think, and I gave you two examples of small 600-800 s.f. residences in Park Towers that rented in less than 30 days for over $1300 a month. Given the fact that Palladio has a pool, and gym, and is brand new, whereas Park Towers is aging, no pool, no amenities, I simply felt $1950 for a 2 bedroom on the South Side of the Palladio wasn’t a bad of a deal in comparison.
I’m a cheerleader but I’m also a realist. I am more openly critical of the City Council and Redevelpoment Agency than most citizens, and I speak up at the meetings. I just want a stable, fun downtown neighborhood, and spend most of my free time contributing to that cause. I just get frustrated over the negativity sometimes, and yes, Lindie, overzealous (but not about a $600,000 condo, just downtown in general. IMO, they need to stop worrying about condos, fill the ones they have, and focus on entertainment downtown. Sorry if I offended anybody.
derrick
dont worry mike you CANT please all of the “have-nots”
Tom
Someone commented about San Jose area condo prices: “I was astonished to see 1100sq’ townhouses selling for $625,000 and 2000sq’ houses on 2000sq’ lots selling for $825,000. These developments were almost sold out at these prices…”
This condition I submit is a reflection of public expectations more than it reflects an analytical determination of value in such a purchase. The fact of the matter is that most people in California expect to pay $600k to $800K minimum for a decent home near a major job center. They are not surprised by that pricing and would not question that price range deeply; actually, the California home shopper is now culturally programmed to pay in that range, for anything within commuting distance of a major employment center. Thus you may be surprised how many $600k to $800k houses there are for sale, just because of that mindset in our state!
When I was representing thoroughbred racehorse buyers at farm sales, I would never tell the breeders the budget range of my buyers–because when you do so, suddenly there are a lot of colts available in that price range. Once the seller knows that the buyer expects to buy a $40,000 colt, that is what it is going to cost to buy from that seller. I think the housing situation may in some ways be similar. These modest to mid-range homes reflect a price that is what our culture has determined people expect to pay, irrespective of the actual bona fides in such value. Is that market pricing? Maybe so. but a big part of that market pricing then becomes `what are the buyers expecting to pay’ rather than `what is the property truly worth which the seller is offering.’
Tom