Happy Friday. This is The Shake 🤝 : the weekly newsletter that keeps you sharp.

I have cities, but no houses. I have mountains, but no trees. I have water, but no fish. What am I?

A map.

Here’s what we're dishing up this week:

• Condo Blacklist 🚫 

• Breezy Half A Billion 🤑 

• Weekly Giveaway 🎰 

MARKET RADAR

Condo Blacklist 🚫 

There are some lists you want to be on: VIP, Forbes 30U30, presidents club, top 1% of x - you name it, people strive to be on it.

On the other hand, there are lists you want to avoid: Most Wanted, Debt collections, and this just in - a condo blacklist from conventional lenders.

The secrets out, Fannie Mae and Freddie Mac have a blacklist of U.S. condo complexes that they will not lend to based on new standards, which buyers may discover only after applying for a loan and getting rejected.

This list is only available to lenders and servicers, resulting in a crapshoot 🎲 for buyers when applying for a mortgage.

Many are struggling to understand why the list isn’t public information. Since both sellers and buyers will not know until they are in mid-escrow.

The list is intended to weed out condos and co-ops with deferred maintenance, structural safety issues, or shaky finances.

If you’re an avid reader of The Shake 🤝 the last sentence should ring a bell 🛎️ 

Most of the condos on this list are ripe for deconversion! Making this blacklist a MUST-HAVE for well-capitalized developers looking to pounce on distressed assets 🥵 

FYI - there are 132,000 to 157,000 condo and co-op complexes in the U.S. Turns out the number of buildings on the blacklist is relatively small at about ~1% of total condos nationwide, but it’s growing fast.

We went full Nicolas Cage and did some digging to see what we could find 🔍️ 

We managed to get our shaky hands 🖐️ on a 2022 copy of the ineligible condo list. Now developers are cold-calling us… can you believe that?!

Since you tune in every Friday, we’ll give a sneak peek 👇️ 

The common culprits we noticed:

1. Insufficient insurance

2. Low reserves

3. Delinquent dues of x%

4. Condotels

5. Litigation

The states with the most bad apples:

1. FL (by a long shot)

2. CA

3. GA

4. IL

Once a property is on the blacklist, it’s hard to get off. Fannie Mae stated that if enough documentation is provided to verify the resolution of eligibility issues, the status of a complex can be altered.

However since the list is confidential, Condos encounter difficulties in discovering the reasons for their inclusion on the list or the steps to take to be removed from it.

Overall this will affect condo values by making it extremely difficult for buyers to obtain affordable financing.

It seems a domino effect is beginning to take place on aging condos across the US.

Breezy Half-A-Billy 🤑 

This segment is brought to you by guest author Calder Alfano of Forman Captial

If someone offered you $1 million for your home today, would you take it?

The residents of Briny Breezes, a mobile home community east of the Intracoastal in Boynton Beach FL, are divided on that question… again.

A few want to take the Steve Miller Band route but others are happy to pass on the latest offer for their community: $500 million, which breaks out to ~$1 million per resident or $23 million per acre 💰️ 

Briny Breeze’s residents are no strangers to newsworthy offers: in 2007 they were offered $510 million, but the deal fell through, and in 2020 they pitched President Donald Trump on a $1 billion purchase that included building a Presidential Library and re-naming the community “Trump Town”.

The co-op would need at least 2/3 support from their 500 residents to move forward with this offer but they likely won’t get anywhere near that number.

Individually, the lots in Briny Breezes sell anywhere from $150k-$350k with larger waterfront lots selling for as high as $650k so the $1 million dollars is a significant premium.

Some of the residents are on a fixed income so the rising costs of maintenance and insurance are especially painful, others aren’t as cost-sensitive and see the offer as a low-ball that doesn’t represent the recent increases in land values.

If they do finally decide to sell, the residents of Briny Breeze face a tough question, one that has fallen on all South Florida sellers recently:

Where do you buy next? 

WEEKLY GIVEAWAY 🎰 

Together With Closing Packs

To end each edition, we will be sending one lucky subscriber a special item!

This week’s item is a Portable Bonfire Kit.

How do you win?

We are going to post a closed transaction with some high-level details and whoever can guess the right sale price, wins.

If nobody gets it right, the closest guess wins. If two people get it right (screw us right?!) we will hook you both up!

Let’s kick it off 👇️ 

This UFO of a home is something out of a movie! Landing in palm beach county, it’s a 5 bed 5 bath home with over 2500 sqft.

FIN 🤝 If you enjoyed this week's edition, don’t be selfish — share with a friend!

^{DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.}