A ‘Parallel Real Estate Market’
The San Francisco Chronicle reports on a ‘parallel real estate market.’ “Condos for sale on cruise ships. May be coming to Bay Area soon. It may be a stretch to call it a real estate tsunami, but putting plush condominiums on seaworthy cruise ships is drawing interest from developers, investors, entrepreneurs and gilt-edged hotel companies eager to plumb a new market.”
“Condominium ships are ‘a very small piece of the market,’ according to Michael Paladino, a Fitch Ratings analyst who follows the cruise ship industry. ‘Certainly the large cruise operators haven’t expressed interest in this market.’”
“Pitched by their champions as exotic and novel alternatives to traditional condos for landlubbers, privately owned waterborne condos exist on just one major ship, the World. Four years ago, when condo buyers on the World felt disgruntled about the ship’s ports-of-call itinerary, they formed an owners association and bought the ship. The vessel is now a co-op.”
“Condo Cruise Lines President and CEO Mark Boyd said his company’s first ship, presently a floating casino in Hong Kong, will be converted into a condo carrier this fall in Singapore. Boyd said suites on the 560-foot-long ship are listed from $500,000 to $1.2 million for one-room units to three-room penthouse suites.”
“In addition, there’s a $20,000 monthly fee for a package that includes all shipboard meals, television hook-ups, a health club, housekeeping services and Internet access, Boyd said.”
“Many shipboard units have been sold to Californians, he said.”
“‘They’re buying property in Arizona and Las Vegas, where prices are more sane. We have what those people are looking for: No property taxes, you don’t have to buy furniture, don’t have to set up cable TV, every meal is free.’”
“According to Boyd, ‘We get a range of buyers, (a) guy who says, ‘I’ll never set foot on it. I can rent it for four times my mortgage, rather than two times my mortgage, as it is on land.’ For condo owners who want to rent out their units, the company says it will charge a 30 percent rental management fee.”
“Mixing condo owners who want to live full-time or nearly full-time aboard ship with vacationers who rent for short periods could create an uncomfortable mix, said Fitch Ratings’ Michael Paladino. ‘There could be a difference in how people take care of the units, and you could get different types of people,’ he observed.”
“‘Given that his company’s first ship is reportedly 80 percent sold, Boyd said he plans to push ahead and amass a fleet of five ships. ‘This is a parallel real estate market,’ he said.”
‘I’ll never set foot on it. I can rent it for four times my mortgage, rather than two times my mortgage, as it is on land.’
If this ship could be profitably operated this way, wouldn’t these guys just run it themselves? And they are going to charge $20k a month and tell you the food is free? Interesting that they are pitching it to folks in the Bay area. 80% sold? ha!
Mayber he meant to say, “I loose four times as much money renting on the boat, rather than loosing only two times my mortgage, as it is on land.”
I’m not sure where his other rental properties are, but you certainly don’t get 2x your mortgage for rent in the Bay Area.
There are already plenty of people renting their second home and third homes and they are losing their shirts. I am renting a vaction rental on Kaua’i for a month and it is going to cost about $5,000. These are $1 million dollar homes on gold courses, some with far-off ocean views, other shared amenities in the devilment. These are 3 bedroom/bath places with big living rooms, outside space, pool or shared pool, cable, DSL, built within the last 5 years. I mean nice.
Now if they rent it half the year (LOL, every one I looked at was open in the time I wanted, November), they have $30K of gross income. The time cost of money or the loan for the $1 million at 5% would be $50K. Development fees maybe $8,000/year. Utilities, cleaning, repairs maybe $20K/year. OK, now you are $48K underwater. Well you do get a tax break LOL, so you are only $32K underwater at 33%.
If you don’t make it on appreciation you are screwed. The worst part is that because of the oversupply, these houses won’t get rented out but they will cut their throats trying to get some cash flow. There is absolutely job market on Kaua’i. It is all tourism and not that much of that. Living costs are high. Good luck.
A fool and his money are soon parted!
This market is exclusivley for those who think they are rich!
Who else could afford $20,000 / month food bill?
A $20,000 HOA fee ? I’d love to see how they justify the price of that !
They’re not making any more ships, you know.
LOL!
ive gotta camper shell can i sell it as condo
Parallel questions:
“If this hotel could be profitably operated this way, wouldn’t these guys just run it themselves?”
“If this apartment complex could be profitably operated this way, wouldn’t these guys just run it themselves?”
Well, as a baby boomer, I’m going to definitely sign up for a unit, especially with that worth-it-for-sure $20,000 per month maintenance fee. Yikes !
This story reminds me of the story of the guy that made his own island out of recycled bottles. He named it Spiral Island
Also saw a show on Discovery channel about a guy who want to create city of floating ships which can attach to eachother. They would have hundreds of propellers distributed on their bottoms and could move this island around.
I suspect that the idea is that this is a sort of floating CONDOTEL. Directly selling actual units to individuals, rather than borrowing to fund construction is a way to bypass the banks and get a project funded in spite of an inability to get financing. Wait, right now money is about as loose as its ever been, interest rates are low and underwriting very lacking… Then I guess this is about getting your ship paid for by greater fools.
This is a parallel real estate market,’ he said.”
Perhaps California is in a parallel universe and everything happens here just slightly before everyplace else. And when everyplace else catches up, California jumps to another place in time.
Oh crap. You mean Mexicans are going to take over the world??
Over 50% of America’s under 5 population is Hispanic. They might not have control of the US now, but will surely have the vast majority of citizenry in 50 years time.
(Example: the middle school down the street from where I live in California has a racial makeup of 72% Latino…)
“I can rent it for four times my mortgage, rather than two times my mortgage, as it is on land.”
He’s smoking the wacky tobacky.
I would like to know what “Land” properties he is referring to because I am a buyer if it is anywhere here in the USA.
‘This is a parallel real estate market,’ he said.”
Parallel to what, Bizarro World ?
I’m taking deposits now for my new condo development, Yellow Submarine Acres ! Yes, now you the average citizen can live aboard a REAL nuclear powered attack submarine ! Each condo tube is a remodeled missle silo with working launch doors, watch out for that RED button ! Live a life of ease on the Yellow Submarine. Lobsters Garden and oxygen supply extra.
You are 38 years too late:
“Hello Down There” Given the chance to live in a simulated underwater home for a month, a scientist convinces his family to take advantage of the offer. Once the family agrees to move in, underwater mayhem occurs!
Was that show called the Aquanauts?
Does that mean our boat condo buyers are called AQUANUTS???
Did the local Realtor send a frogman every week with updated listings to shove in the airlock door ?
The movie ends with the experiment a success when the underwater house gets publicity and proves a hit with the California type housing investors.
So is it a “liquidation sale” if your home value “sinks”.
You unlock this door with the key to your new flip. Beyond it is another dimension - a dimension of second mortgages, a dimension of shipboard condos, a dimension of mindless expenses. You’re moving into a land of both shadow and substance, of debt and fantasies. Look, there’s the “for sale” sign up ahead. You’ve just crossed over into the Real Estate Zone®.
Dammit, Cote wins the thread again.
I’ll argue with Robert (though rarely), but I don’t mess with him.
I only mess when the subject of Prop 13 rears its ugly head. (I think we have a tacit truce in place for the moment…)
I didn’t even know there was a contest. Stanleyjohnston beat me to my original comments about parallel universes and Mo Money took my second choice of Yellow Submarine and Seattlemoose had me laughing with liquidation. At best I deserve honorable mention.
And Chip if I screw up you better challenge me on it. I’m not half as smart as I think I am.
I’m not half as smart as I think I am.
Oh, c’mon. I’m sure you’re half as smart as you think you are.
Maybe even 2/3 - the Twilight Zone parody was genius.
You get major points for anything obscure I have to google like “Hello Down There”. Geez !
Robert, I think you may have come up the name for Ben’s book. Or perhaps “The Housing Zone”.
Imagine “Nightmare at 20,000 Feet” with Ben Jones in the William Shatner role, and Ben Bernanke as the gremlin out on the wing ripping pieces off and flinging them away.
Or how about a prototypical FB as “Rocky Valentine” in “A Nice Place to Visit”? The FB dies of a stroke, but wakes up perfectly healthy in a McMansion with all of his toys and more. The FB assumes that he has gone to heaven, but soon finds out that he is bored to death and cannot leave. FB begs the jovial mortgage broker to let him go to “the other place”, but the broker just laughs loudly and informs the FB that this is the other place! FB tries to claw his way out the door as the broker laughs hysterically.
LMAO!
That would make a nice video to put on YouTube
This reminds me of the classic one-liner someone posted on this blog about a year ago, “If it flies, floats or f***s, rent it.”
“If it flies, floats or f***s, rent it.”
Shall we call it …….the three “F’s” of fiscal responsibility
I think that was me, can’t let the wife see that comment though.
I tried to post on this thread earlier but the damn computer crashed.
I may have to get an Intel Mac.
A lot of my clients are doing exactly that for multiple reasons. With Ventura County and surrounding areas so expensive a few square feet of deskspace is a big deal. With salaries so high the lower support costs and increased reliability more than make up for the price premium. Besides when the Windows OS blows up, infects, whatever a quick reboot into OS X and no more infection. Invariably it isn’t long before it’s OS X all the time. To tell the truth it sends shivers to see XP on a Mac.
It is good to know institutions are looking at the same option.
For more information Contact Captain Boyd at mark@condocruiselines.com
http://www.condocruiselines.com/
The competition include:
Freedom Ship the floating city.
Nexus: Mobile Floating Sea City
I like these more than the “cruise ship casino lifestyle.
I suspect that some form of practical sea going ship may come to reality. I suspect that these sea going homes may also own a few islands in which its owners would also own as a community and in which the ships could dock from time to time. And in which some residents may live part or full time as well.
They showed these ship condos on the TRAVEL CHANNEL . Why not just go on a cruise for a month like my neighbors just did,(they got all the food for free and didn’t have to pay 20K ).
I’m beginning to think that there is a certain group of rich people that just want to blow money because they have to much .
OMG you got that right. Just got thru hearing this bit on McMansions on NPR. Makes ya wanna projectile vomit.
http://www.npr.org/templates/story/story.php?storyId=5525283
Interesting read….
Everyone except regular people want in.
Except when regular folks want to keep up with the Joneses
20k a month for food and maid service? You could hire a full-time maid and chef for less than that!
For $20k I’d expect the maid to go down… with the ship that is.
You are in rare form today, Robert. Independence must agree with you.
and on a regular basis at that.
That is the point that most RE perma-bulls don’t get when they invoke Moneyed Immigrants.
Why would any rich foreigner want to buy a million dollar McShitbox in Anaheim Hills, when if they stayed home in Peru, Costa Rica, Nicaragua or nearly any other developing country and have a real mansion with a real security service, real maid and real chef for the same price.
The moneyed immigrants don’t need to come here for the opportunities.
Are they going to have condo-planes next? It’s just crazy enough to happen.
Condos on Venus. They aren’t making any more planets.
interestingly we just had a flyby of an asterroid.. I suppose some realtor may may get the bright idea of trying to sell lots on the asteroid.
Listings for spots on the asteroids could include “amazing views”, “see the galaxy”
Any stories about large “airships” filled with helium that permanently float in the sky selling condo space in them. I suppose that no one could beat their view.
The air ship could sell advertising space on its side to help offset the operating costs. They could include some rentals to help offset the costs as wll.
$20K/mo - each owner better get steak and lobster served each meal by his/her personal naked maide/butler (depending on preference).
Why can’t you just fund the $20K/mo out of your investment gains?
i dunno, lurch looks better in a tux
Hmmm, I wouldn’t want naked-type people serving me lunch. I’m not an Ancient Roman. Maybe naked after lunch, yes ?
And Happy 4th of July to everyone here, or in any parallel universe And to those of you who have no idea where your July mortgage payment is coming from.
I’m assuming the 20k covers the cost of moving it? It does move right? Your condo goes to fancy places? Or does it just sit docked?
What a bizzare idea. There was an aircraft carrier for sale a while ago. Perhaps that could be the industrial loft living of the floating condos.
Say it’s $100.00 per dinner for surf-n-turf 30 days a month. That’s the first $3,000.00. Add in fresh 500-count sheets every day at $75.00 a set (no laundry here, fresh every day!). That would add $2,250.00. Now $100.00 per day for a personal servant, $3,000.00. See? We’re already up to $8,250.00 per month! It’s easy to get to $20,000.00 from there! Just add breakfast and lunch, plus a lot of high-priced booze, plus… plus… I dunno. Massages? Happy endings?
Unless… unless… unless the management company was screwing the tenants? But that could never happen!
“They’re buying property in Arizona and Las Vegas, where prices are more sane.”
[cut!! take two!] They’re buying property in Arizona and Las Vegas, where prices are less insane
[cut!! take three!] They’re buying property in Arizona and Las Vegas, where prices are completely insane — just not AS insane.
[cut! that's a wrap!]
” . . . every meal is free.”
SHUHHH?? Sure, and that $20k/month guarantees it! Chump . . .
Just to be the devil’s advocate for a second. A cruise ship needs a large crew (which also has to be housed and feed), consumes fuel, has port docking fees, registration fees, insurance and maintenance costs. Food and housekeeping is just a small share of the monthly operating costs. Just crossing the panama canal can cost $100,000 for a cruise ship which many have do to on a regular basis when they are redeployed from one seasonal market to the other. $20,000 per month is quite steep, but I would not be surprized it is not too far from operating costs per cabin unit.
9:19 PM ET 7/4/06 JAPAN CENTRAL BANK TO END ZERO-INTEREST RATE: WSJ9:19 PM ET 7/4/06 JAPAN CENTRAL BANK TO RAISE INTEREST RATES NEXT WEEK: WSJ9:19 PM ET 7/4/06 JAPAN TO RAISE INTEREST RATES FOR FIRST TIME IN 6 YEARS: WSJ9:19 PM ET 7/4/06 JAPAN INTEREST RATE TO BE RAISED 25 BASIS POINTS: WSJ
According to what I am reading on wsj.com, they have not done it yet, but they probably will at the next meeting. They may also stand pat if this round of sabre-rattling causes the Tokyo stock markets to fall between now and 14 July.
Of course, they have to do it eventually.
same principle should apply -
“In resort areas - given the number of days people actually use their second home - staying at the Ritz for $500 a night could be a much better deal. Do the math; it’s not pretty.” - http://www.moneyweek.com/file/10891/six-months-to-housing-hell.html
I believe I have read this commentary before….Moneyweek reprinted it ??
Orthogonal Real Estate Markets are the next big thing really. I wouldn’t put to much stock in this.
Captain Stubing researched this!
LOL!!!
I’ve taken a few cruises and there is a world of difference among ships that were built in the last 5-6 years and those built prior. Ships age faster than whores. If these babies were constructed in the ’90s (or, much worse, earlier), they probably do not have anything close to oceanside balcony and view acreage as modern ships. I went to the site but could not find an age.
As a very rough analogy, think about a classic car. While they look nifty and it’s fun to say you own one, they usually are far less pleasurable to ride in than the current counterpart.
Good point. Not to mention that the major cruise lines are adding inventory by leaps and bounds. Check out the stock prices of Carnival and Royal Carib. Down, down, down for the past couple of years. Why? Because passenger growth in the cruise biz is flatlining while the inventory keeps growing and growing.
Refitting an old casino ship from HK into condos is the wrong idea at the wrong time. The only reason to do this is to siphon off some of the speculative RE money while there is still some available. My guess is that this will turn out to be an extremely poor investment for these folks. But you gotta admire the company for trying to mine a new vein in the RE mania.
so did Suzanne. She recommended $25,000, so it would get someone to cover her own mortgage.
I added a few new articles.
#31 I Want My Bubble Back!
#32 It’s a renter’s market
#33 Las Vegas project canceled(George Clooney’s Project)
#34 Shiller: Long-Term Perspectives on the Current Boom in Home Prices
#35 ALL BOOMS BUST!
#35 Suzanne Researched This Commercial(Video)
Agents of Change(this site)
The Nastiest Wife on
Television
#36 High housing prices helped slow population growth last year(San Diego)
#37 The boomer bust
Thanks John….I enjoy these reads….
CAPTAIN NEMO ESTATES!
I thought this real estate folk were on crack. Now I know they are on crack. What a freakin joke. $20,000 per month for what. Food, gym. This is getting really dumb.
If you go to the CondoShip web site and take a look, the only conclusion you can draw is that this is a HUGE scam that will go under and suck all the idiots money with it. There is no way they can outfit a 560ft ship with all the ammenities that someone paying 20K a month (on top of their initial cost) would expect. 560 ft is the same lenght as a Spruance class Destroyer, which takes about 1 minute to walk end to end. I would think any resident of the condoship would eventually feel like a prisoner and get sick of their neighbors real quick. Imagine being in your condo building and then put out to sea with 100 of your neighbors close by, or better yet a never ending stream of “visitors”. It would absolutely be horendous. The only buyers this will appeal to will be completely idot speculators that believe the sales B.S. Just the 20K a month fee is about $665 a DAY. I’m taking my entire family (4 of us) on a Disney cruise for 7 nights and my total cost is $3500, and that includes extensive activies on board, etc. No “cruise” vacationer will pay anywhere close to what would be required to turn a profit for an investor in this venture. Also, note that the expected life of the ship is only a few decades, … and anyone familiar with ship maintenance knows that every few years a ship needs to go into a shipyard for an extensive maintenance period. What do the “residents” do then? Guess they are so rich it doesn’t matter and they will just jet off to their mansions. I’m sure the 20K a month still applies even when the ship is not habitable.
It is getting really difficult to explain to my kids why we don’t live like people on lifestyles of the rich and famous. This bubble is a virus spreading across the planet. I can’t wait to explain the ugly side of this, so they can learn a life’s lesson.
Of course floating homes will usher in all sorts of nifty new RE lingo
1) RE agents and children first
Own a home in Hawaii, Tahiti, and Fiji with one easy payment
2) You’d better buy or else you will miss the boat
3) Homes never sink
4) Unrealistic sellers had better lower their planks
5) We expect rough seas followed by a return to calm
6) Home for sale, 3 bunks, upgraded galley, and 1.5 heads
7) Let us help you float your loan
9) Our motto is “full speed ahead”
10) The executive suites come with their own lifeboats
11) Let us take you on a 3 hour tour….a 3 hour tour
12) No you don’t have to use the poop deck if you have a head
13) Don’t worry ladies the captain said he will go down before any of you have to get wet
14) No pets on the poop deck
15) Would you like to see the golden rivet?
16) Let us make your sail
17) We expect smooth sailing
18) No property taxes (as long as the ship keeps moving)
19) Don’t be left in the wake, buy now
20) A home in every port
sorry…it’s late and I have seen too many fireworks
sounds like a floating dorm room, complete with sea sick owners puking in the toilets. Even comes with a dining hall plan for $20,000 a month.
Here are other attempts to variations of this.
One is called the Nexus city
Another is called Freedom Ship.
Here is a description of the how that floating city will work.
Correction.
This is the website for Nexus: Mobile Floating Sea City.
so how good IS the school district?
Comical… Just Comical…
BHAHAHAHAHAHAHAHAHAHAHAHA
What happens if you go “underwater” on this investment? How should one “bail” himself out if this happens?
“slowly cruising around the world, hugging the shoreline, and completing one revolution every 3 years?”
Freedom Ship: meet Freedom Pirates.
As long as your new condominium stayed more than 12 miles from shore, there could be some interesting “business opportunities.”