San Diego’s Hard Rock Hotel is getting a lot of attention these days. Investors are picking up units as quickly as they come on the market and tourists and locals are spending lots of time and money at the hotel. If you’re not familiar with the Hard Rock Hotel, click here, or here, or here. Currently, there is only one lender that I’m aware of that will provide buyers with loans there – Independent Bank. However, IB will only provide limited financing(short term ARMs with 30% down) on properties that already have loans with them.
Most purchases have been in cash and I don’t think that will change for a long time. When I looked to see how many more short sales/foreclosures there might be, I was surprised at the number of people who had paid cash for these condos when they purchased them from the developer. From what I could tell, there were 109 condos that were purchased with cash, prior to 2009(the first closings were in late 2007 and almost all units were sold by mid 2008). So for the most part, about 25% of the hotel(there are 420 condos total) was purchased by cash buyers!
Since those “original” purchases, there have been 113 more transactions that have resulted in a zero loan balance: I state it this way because some of these “transactions” were a result of the bank foreclosing on the owner and some were new cash purchases(all of which eliminated any debt on the property). So now, there are 222 properties in the Hard Rock Hotel that are owned free and clear. This also means that there are 198 condos that still have loans. The majority of these properties have between a $350-450K loan.
Will all 222 of these condos end up short selling for foreclosing?! Doubtful. My guess is that some of these owners have so much money, they don’t care they they’re upside down and they’ll just hold on to them forever, or at least until they want to sell and get out(without short selling). Then there are others who don’t necessarily have endless amounts of money, but enough to cover the loss they’re experiencing (my guess is between $500-1500/mo depending on the loan amount and unit). Some owners will choose not to short sell or foreclose becuase they don’t think it’s morally acceptable and some won’t becuase they can’t afford to let their credit scores go down.
All in all, my guess is that we’ll see another 100 or so condos come up for sale as a short sale, or REO(mostly as a short sale though). Seeing how there have been about 30 sales this year, 100 more short sales doesn’t sound bad at all.
For those of you who own at the Hard Rock and are thinking about selling it, please let me know. I’ve completed several short sales there with JP Morgan Chase, Independent Bank and Waterstone. I’m currently negotiating sales with East West Bank and Bank of America. I’d be happy to explain the process and give you my honest opinion.
You can contact me, Denny Oh, at 858-243-2092 or [email protected] Thanks.