Bradenton Condo Converter Slashes Prices

When Matt Kihnke paid $15.5 million for a Bradenton apartment complex in March 2005, the real estate investor was primed to become the architect of another condo conversion success story.

That was before the Southwest Florida housing market went soft and became saturated with converted apartments.

Kihnke’s property, a 272-unit complex, is still a third unsold. But if Southwest Florida condo conversion really is a game, Kihnke is an old pro.

He’s converted four Sarasota and Bradenton apartment complexes into condos in the past five years, and knows what he has to do to move units at his Sanctuary of Bradenton spread.

Cut prices.

As a result, the Sanctuary of Bradenton may be one of the most affordable options for first-time home buyers between Tampa and Fort Myers. Kihnke said sales are already picking up.

• Studios at Sanctuary of Bradenton, which was once called Saddle Creek Apartments, sell for $89,900, or a remarkably modest Florida mortgage.
• The most expensive units, 1,055-square-foot lake-view 2-and-2’s, are listed for sale at $139,900.
• To put that in perspective, some of the units were listed for at $160,000 or more 18 months ago.

With the aggressive pricing, Kihnke expects to sell out Sanctuary by the end of the year. In an odd twist, local affordable housing advocates are cheering on the big-city investor’s low-cost, low-down-payment approach.

“I think we can beat anyone in that market,” Kihnke said. “We’re starting to see people that sat on their hands for a bit come out of the woodwork.”

Had the units sold out in 2005, a year when more than 100,000 rental units across the country were sold for conversion, Kihnke could have doubled his $15.5 million investment in less than a year.

But that did not happen.

Advocates for low-cost housing call the slow sales a blessing in disguise.

Rob Rogers, director of the Manatee Housing Authority, agreed, citing the fact that a 30-year Florida home mortgage payment on a $109,900 2-and-1 could be less than $650 per month.

“You can hardly find a two-bedroom apartment in town for that,” Rogers said.

Kihnke is trying to use affordability and accessibility as Sanctuary’s selling points. Buyers, often first-time buyers, are moving in for only $500. Many buyers, even those with suspect credit history, are benefiting from competitive financing.

“We’re not financing at [bad credit Florida mortgage] rates of 8-9 percent,” Kihnke said. “A lot of these rates we’re getting at the 6 percentile.”

Kihnke’s firm, MK Equity Corp., deals out of Chicago, Michigan and Florida. He has recently been at the center of six real estate deals in Sarasota County and Manatee County.

The first was the City Walk conversion in Sarasota. The 70-unit project, which sold out in five weeks in 2002, was a foreshadowing of the condo conversions that hit the Gulf Coast in 2004 and 2005.

“We used to have a lot of investors who would sit on our product for 6-8 months,” he said. “We’re starting to see those investors again. … Buyers understand there is a deal to be had right now.”

SOURCE: Sarasota Herald-Tribune