Lucas Lechuga’s Miami Condo Investments blog remains the lifeblood of his business, nearly one year after he and his former employer were hit with a $25 million lawsuit by a developer who said Lechuga defamed him.
The lawsuit — dismissed on Jan. 6 after parties in the case reached separate, confidential settlements — stemmed from Lechuga’s speculation about the prospects for Opera Tower, a 56-story, 635-unit condo project built by a prominent Miami developer, Tibor Hollo.
Lechuga predicted that the development, in Miami’s downtown Brickell district, was "doomed" and would have a 50 percent default rate. But Hollo said the main impetus for suing Lechuga and his employer, mega-broker Esslinger-Wooten-Maxwell, was an earlier, Nov. 25, 2007, blog post claiming the developer "went bankrupt in the 1980s" and to expect "a repeat performance within the next six months."
Although Hollo acknowledged having been in some tight situations in his long career as a developer, he’d never resorted to filing for bankruptcy — something Lechuga could have double-checked in public records, he told Inman News at the time.
The case captured the attention of real estate bloggers nationwide — in part because Lechuga’s broker at the time, EWM, cut its ties with him when the company was named as a defendant in the suit (Hollo’s complaint alleged that EWM shared liability with Lechuga, even though he’d started the blog before becoming associated with the broker and maintains it himself).
Some observers worried the lawsuit would have a chilling effect on bloggers and lead them to think twice before speaking frankly about local market conditions (see story).
In a public apology published Dec. 19 on his Miami Condo Investments blog — a post apparently stipulated by the pending settlement — Lechuga said his claim that Hollo went bankrupt in the 1980s "was completely untrue." He added that he’d been "proven wrong" about contract closings at Opera Tower, and that he wished to "publicly acknowledge Mr. Hollo’s contribution to Miami’s skyline."
According to the order dismissing the case, both sides are paying their own costs and attorneys’ fees. The cost of Lechuga’s defense was covered by EWM’s errors and omissions insurance.
Although he’s barred from talking about the terms of the settlement, Lechuga said he’s working for Keller Williams Realty these days and that business has been picking up lately (EWM did not respond to a request for comment; Hollo could not be reached for comment Wednesday).
The Miami condo specialist said he’s actually intensified his coverage of local market conditions in his blog. Although he’s not worried about facing another lawsuit, he acknowledges being more careful to verify information and make it clear when he can’t confirm a rumor he’s heard.
"My blog is my lifeblood," Lechuga said. With many local buyers still on the fence or unable to obtain financing, he said the blog helps him reach an international audience who are a crucial source of "cash buyers" for the speculative Miami condo market.
"If I didn’t have my blog, I wouldn’t be able to reach out to those buyers on a day-to-day basis," Lechuga said.
He said he also gets listings from the blog, and looking back at a spreadsheet of past closings he determined that he could attribute all of his business with the exception of a couple of referrals from family and friends to the words, pictures and videos he posts online.
Every couple of months or so, Lechuga reports on the closing rates of major Miami condo developments. The most recent report, published Dec. 14, included statistics for Opera Tower, which Lechuga said had achieved a 37 percent closing rate.
The report is popular with readers, he said, many of whom are trying to gauge the risk of buying into a new building. For developments that have been selling units for some time, "25 to 30 percent (or below) should cause an alarm bell to go off, and they should say, ‘Maybe I should look elsewhere,’ " Lechuga said.
Low closing and occupancy rates can make it hard to obtain financing — a consideration for both buyers and sellers — or lead to other problems down the road, like increases in homeowner association dues. Many lenders want to see even higher closing rates — 70 to 80 percent — and units in the hands of owner-occupants, not just investors, Lechuga said.
Recently, Lechuga said he’s also begun compiling statistics on rental rates, which can be critical to investors or second-home buyers who are hoping to generate income from a condo purchase. Those buyers want to know what condos in specific developments are actually renting for, not just what owners are asking.
Lechuga said he intends to continue adding new features and information to the blog, because it brings him business and makes working with clients easier.
One trend Lechuga is tracking on Miami Condo Investments is the phenomenon of bulk sales to investors. At one 500-plus-unit development where the asking price for condos was once going for $400 per square foot and up, Miami Condo Investments reported that an investment company paid about $13 million for 60 units, or $200 per square foot.
"A lot of Realtors are not gung ho about transparency," Lechuga said, because they are worried about disintermediating themselves from consumers. "I don’t agree with that. It makes my job a lot easier, (because) it gives them the tools to go out and do the investigatory work themselves, and then contact me when they are ready to buy."
The last two weeks have "been pretty crazy," Lechuga said — not because the $25 million lawsuit hanging over his head has settled, but because of an uptick in interest from prospective buyers.
Part of the increase is seasonal — the Miami condo market is always slow in the summer, and then picks up over the holidays, he said — but buyers are looking for deals, even if closings are limited by the lack of available financing.
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