Multiple Condo Ownership Could Be New Trend

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Multiple Condo Ownership Could Be New Trend

ANDREW ASHBY | The Daily News
 

CONDOMINIUMS EVERYWHERE: The Lofts at South Bluffs is one of the newer condominium conversions Downtown. A company called City Dreams is working toward helping multiple investors buy part of a single condo. -- Photograph courtesy of Henry Turley Co.

While multiple people investing in a single condominium might not be the hot trend Downtown right now, a local couple is working to change that.

Ray and Ruth Werfelmann are forming City Dreams, a company that will help several buyers invest in a single condo in the Downtown area. With that in mind, they have placed an advertisement in the March issue of Memphis Downtowner magazine.

The Werfelmanns, who own rental properties in Horseshoe Lake, Ark., want to create a pied-�-terre, which is French for "foot to the ground" and is a common term used in the New York City residential market for a temporary or secondary residence. This differs from a time share in that investors actually own part of the property instead of just some time in it.

Floating a balloon

When it finds a group of investors, City Dreams will set up the condo as a limited liability corporation and then sell shares.

"It would be no different than, say, opening a restaurant and selling shares to people who believe in the restaurant's viability and profit," Ray said.

Ray will handle all the contracts and present them as a package to investors. However, he said he's looking for a particular type of investor.

"I don't want to push anyone away, but I don't need people who aren't interested in doing this and cooperating," he said. "It is a shared property and you have to find the right people to put together."

One of the reasons he's placing an ad is to see what people are looking for in a shared condo.

"With the (ad), we're basically finding out if the market is there," Ray said. "If that's the case, we can move rather quickly and would probably want to."

Maybe, maybe not

"We want people who want a toehold in Memphis without all the costs. You're either a one-ninth or a one-twelfth owner in a piece of real estate that will go up in value. Your share will go up in price as the unit goes up in price."

- Ray Werfelmann

A local rental property owner who wantsto find multiple investors for a Downtown condominium

Cindy James, a real estate agent for Henry Turley Co., lists condos for The Lofts at the Ballpark next to AutoZone Park, but hasn't heard of too many instances in which multiple investors have bought into a single condo in the Downtown market.

"I've seen hints of it, but that's it," she said. "It's not something that's prevalent in Memphis yet."

James pointed out that the Downtown condo market is still young.

"The different trends that go with the condo market will come along," she said.

Mike Parker, who also works for Henry Turley, sells condos at The Lofts at South Bluffs. He said he hasn't seen this trend in his particular building.

"I can't say I've heard it catch on in Memphis, but I'm sure we'll probably get more and more people doing it soon," he said. "We already have a lot of people from out east who use places as a weekend hideaway, where they can come down and watch Grizzlies games or go to AutoZone Park or whatever else."

Part and parcel

The Werfelmanns initially are looking for groups of nine or 12 people for their first condo venture. With nine investors, each person would get six weeks in the condo per year, with three weeks in the summer and three in the winter. With 12 investors, each person would get a month.

The first year, the condo's schedule would be set on a rotating basis. After that, the owners could set up a board and decide how to manage it.

"We want people who want a toehold in Memphis without all the costs," Ray said. "You're either a one-ninth or a one-twelfth owner in a piece of real estate that will go up in value. Your share will go up in price as the unit goes up in price."

One advantage could be that the costs on a condo are defrayed, with homeowner association fees and other costs spread among several investors.

Another potential advantage is flexibility, with investors able to do whatever they want with their portion.

"There are all different kinds of plans with shared properties," Ray said. "There are many ways you can set this up to make it viable for interested parties, for people who want to have a part of Downtown Memphis."

The potential is there

Tracie Gaia, a Realtor with the Garland Co., handles many condo sales. While she hasn't sold a single condo to more than one buyer, she once had two sets of parents with children in medical school buy a small Downtown house together.

"They said, 'We're going to be paying rent anyway, we might as well buy an investment,'" Gaia said.

That was before the Downtown condo market exploded, but Gaia said she doesn't see why it wouldn't work now.

"With the growth of Downtown, I think it's a wise decision," she said. "You've got condos out there, and it makes complete sense."

Carol Lott, a Realtor with RE/MAX on the River, hasn't yet seen multiple investors in a single condo.

"I think we're ahead of our time for a time-sharing development," she said. "I think you see time shares more in places like Colorado, where people want to ski not just for a weekend, but for more than one week out of the year."

Lott said that even though the condo market is growing fast, prices are still excellent.

"So I don't think people have to go in as a group to purchase a unit that I think they can easily buy as a second home, which is what we're seeing a lot of down here," she said.