Real Estate Love Story
As residents and automobile drivers in downtown Miami brace for an ominous high-rise condo boom, a romantic (yet lucrative) episode of urban pioneering is coming to a close. Over the past year Andrew Tobias, one of Miami's leading financial geniuses and the treasurer of the Democratic National Committee, quietly sold one of the biggest portfolios of residential properties on Miami's up-and-coming but perennially seedy Upper East Side. This is roughly the area that straddles Biscayne Boulevard north of NE 54th Street. The selloff of about 30 houses and apartment buildings (approximately 180 units) Tobias owned east and west of the boulevard ended last month, with a sale like this one: Someone agreed to pay $349,000 for a three-bedroom house in Belle Meade that Tobias bought in 1988 for $82,500.
He is author of the best-selling The Only Investment Guide You'll Ever Need, and writes a daily financial advice column on his Website (www.andrewtobias.com). But does this selloff mean that Miami is heading for another recession, like the one in the late Eighties? So severe it froze half-built high-rises? And does it mean that people who paid $430,000 last August for a 50-year-old four-unit apartment building west of the boulevard, which Tobias nabbed for $120,000 in 1992, are going to get soaked by a big bursting bubble?
Lest anyone panic, Tobias did not gaze into a crystal ball and gasp at the sight of an imploding Miami real estate market. It's just that he decided the mission of his property management company, San Remo Apartments, had come to an end.
What was the mission? The answer is contained inside a three-by-five-foot metal picture frame at the San Remo office in Belle Meade Studios, a remodeled motel on Biscayne Boulevard just above NW 76th Street. Beneath some faded snapshots of small apartment buildings is a typewritten paragraph titled "Mission Statement." It says: "San Remo would buy property that was out of control. People were losing respect for their homes and lives. Improving the quality of life is not a destination. You never get there. But along the way you keep making things better. You make good friends and a bit o'cash. That's what San Remo is determined to do."
Improve the quality of life, make friends, make money: "I hope we did a little of all three," Tobias said modestly last week via e-mail from New Hampshire (sounding a bit like the media-savvy Toby in The West Wing). He had been up all night digging out of the blizzard of e-mails that follows him around while he ploughs toward his goal of raising $200 million, which Democratic Party mavens deem the necessary amount to win back the White House.
The "mission," Tobias recalled, began after he read a 1981 Time magazine cover story "pronouncing Miami dead forever, which I took as a signal it was time to invest." On the advice of a friend of a friend, Tobias's first purchase on the Upper East Side was a rundown pad in the Palm Bay Club high-rise overlooking Biscayne Bay on NE 69th Street. He branched out from there, forming San Remo Apartments and buying houses, cottages, and apartment buildings all through the area.
Tobias was already known for blazing trails in sexual-orientation politics and personal finance. In the early Seventies, under a pen name, he released The Best Little Boy in the World, a novel about growing up homosexual. A few years later he wrote the first edition of The Only Investment Guide... while a young writer for New York magazine. These paths would merge with the one he was carving as urban pioneer in Belle Meade, now home to one of South Florida's most cohesive and civic-minded gay communities.
An old New York Times blurb that Tobias uses to market his vaunted investment guide says "only a booby or a billionaire" could fail to benefit from the book. For boobies who recently bought Upper East Side properties expecting prices to continue to endlessly rise as fast as they have been, a rationale for Tobias's selloff may be too late. Obviously there was the profit motive, although he refused to tell New Times how much he invested initially, and what his total profit was. But he did allow that a combination of personal and economic factors also forced the end of the mission. Last year Tobias's invaluable property manager Sal Patronaggio decided to return to his native Buffalo to be closer to family and start working on old, inexpensive buildings there. "He did everything," Tobias says, adding that there is a lot of "rundown, out of favor property" in Buffalo's urban core. As a "silent partner," Patronaggio declined comment.
On the financial side, Tobias confirmed it was a propitious time to sell simply because current mortgage interest rates in the five percent range are not likely to get much lower. The lower the interest rate, the easier it is for people to afford more expensive properties. In other words sellers tend to get more for their properties in this climate.
"When you're losing your property manager and having these really good gains and things, it's just time to take some money off the table and simplify your life," explains Richard Pleban, an Upper East Side denizen who brokered most of Tobias's sales. "A few years ago nobody was interested in these properties, and now they were. And [Tobias] took advantage. [In some cases] a year later they were worth more than he sold them for last year, but he was happy.
"Nobody expected this game to move this fast," Pleban adds. "In the last year, [there has been] dramatic change. There are people who actually want to live on the west side [of the boulevard]." West, meaning more blighted and crime-ridden.
For example, houses that Tobias bought for $60,000 to $80,000 in the late Eighties and early Nineties are now going for $160,000 to $200,000, Pleban says. Some have topped $400,000. He estimates Tobias made "a few million" from the sales, but maintains he hadn't been keeping a precise count.
"About a year ago my telephone started ringing a lot," Pleban confides. "'I want to buy a duplex! I want to buy real estate!' It was the same story over and over. People that never had rental properties before were going into it. 'I want a fixer-upper. I want to flip.' I never heard 'flip' so many times. I think a lot of people are a little late to the party."
Pleban thinks Miami's burgeoning luxury condo market is heading for a glut, and hence a nice price fall. But values of single-family homes, a Belle Meade staple, are not likely to implode because they're in relatively short supply, especially in neighborhoods close to downtown. So people who got a good deal on a Belle Meade house are probably in good shape. And that includes Tobias, when he gets a break from his ceaseless and daunting DNC fundraising mission.
"I'm still high on the Upper East Side, which only looks to be getting better and better," Tobias assures. "And hey, I still own Belle Meade Studios and a vacant lot across the boulevard, and an investment condo in the Palm Bay [Club] -- and my HOME!"
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