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South Beach Deal of a Lifetime

South Beach Deal of a Lifetime

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Published by davidwalters
Any poor slob who can get his hands on $110k can become a millionaire with a little help from public officials.
Any poor slob who can get his hands on $110k can become a millionaire with a little help from public officials.

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Categories:Types, Business/Law
Published by: davidwalters on Jul 22, 2013
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07/23/2013

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MIAMI MIRROR 
–    
TRUE REFLECTIONS 
 
Page
1
of 
5
 
Before the Deal of a Lifetime. All photos by Michael Trainer 1020 6
th
Street, 1,990 sq. ft. multifamily dwelling on 5,000 sq ft.
 
THE SOUTH BEACH DEAL OF A LIFETIME
From $110,000 to $1,500,000
July 22, 2013Miami Beach real estate investor Arthur D. Porosoff made the deal of a lifetime in September 2012 when he bought the blighted, two-story multifamily residence sitting on a 5,000 sq. ft. lot at1020 6
th
Street in South Beach for $110,000 from Juan Luis Maldonado, Jr. on a short saleapproved by Bank of America.South Beach streets are paved with gold for savvy investors, but the average Joe would be blessed by fickle Lady Fortuna to find a mere studio for $110,000 anywhere near that prime
 
MIAMI MIRROR 
–    
TRUE REFLECTIONS 
 
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of 
5
 
location, the block adjacent to the new shopping center at Alton and Fifth Street. Porosoff saidhis ballpark price is $1.5 million.Our photographer spoke with Porosoff after noticing the property was sold.
He said it was thedeal of a lifetime. He boasted that it took two years to complete the transaction, and that he hasdone many realty deals in the past thanks to favors from city officials, implying that they helped
him secure the property dirt cheap.”
 Porosoff, when questioned about the low purchase price, said he only wished it was $110k, thatit was actually unimaginable, and that he absorbed liabilities the seller had.He certainly owes thanks to Melinda Payan, who was the listing agent for the property. Payanowns The Truth About Lending company, which specializes in the negotiation short sales for homeowners.
The suggestion that the city had anything to do with negotiating or setting the value is
completely false,” she said. “On a short sale the b
ank is the only one that determines the value.After seven months of negotiating with Bank of America I finally got the short sale approved onthe property. There were three different appraisals on done, and at the end of the day the bank determined the value based on their licensed appraisers.
 When asked for the value of the bank appraisals, she informed us that banks do not discloseappraisal values in short sales. That is, the appraisals are proprietary. As for the suggestion of impropriety, it appertained to alleged cooperation or negligence of city officials in allowing the property to become an eyesore endangering the public. Our suggestion was to impose severalhundred thousands of dollars in fines on the property and to foreclose or seize it, which wouldhave a profound effect on its valuation.Payan initially contacted us after reading our 2012 article on the troublesome property,
„AnAppearance of Impropriety,‟
to inform us that the owner had an active contract to stay with aninvestor who planned to fix up the property and restore it to good condition. She said Bank of America had sent their appraiser out to the property to appraise it, but since they were unable toaccess the first floor of the building, they claimed that they could not appraise the house so thereis nothing they can do but close to file. She did not accept that excuse because there were other ways to view and appraise the property. Actually, loosened boards could have been pulled back for access.
I have forwarded a copy of your article to the asset managers at Bank of America and I believe
that will help a lot,” Payan said.
 
If Bank of America prevents the sale, I will be down therestanding with signs in front of the building and calling the local news. We have to take our town back and clean
it up one property at a time.”
 We asked her about the $110,000 selling price after the transaction took place.
“$110,000
is what it sold for 
,” she said,
 
 but keep in mind it was technically a tear-down thatcould not be torn down because of the historic nature. The property was just a shell the entireinside was gone, no electrical, drywall, et cetera, in really bad shape. The buyer took responsibility for part of the liens, the bank paid a portion. As far as fines go I know we received
 
MIAMI MIRROR 
–    
TRUE REFLECTIONS 
 
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of 
5
 
 payoff letters or demands in writing from the city that were forwarded to the banks and it was a pretty hefty figure.
 Still, it was one hell of a deal, for which the fines were relatively insignificant. Porosoff securedthe property, cleaned it up, painted the exterior, and erected a big sign:
FOR SALE Arthur Porosoff PA Marcus & Millichap 786.522.7058.
There was no permit sticker on the sign. It wasremoved a few days later.The property had become the shame of South Beach as more and more traffic flowed nearby dueto the completion of the new, conveniently located shopping center including a Publixsupermarket. City officials were woefully negligent for two years, until our expose was published, allowing the property to become an unsecured garbage dump and hangout for criminals and vagrants.
The city‟s Compliance Division claimed it was having a terrible time
locating Maldonado, the local developer who bought the property from Michael Plotkin andfamily for $750,000 in 2007. The latest Miami Dade County appraisal has the building valued at$40,000 and the land at $600,000 for tax purposes. County Property records revealed thatMaldonado owned several properties, and that he had been involved in real estate for some time.Apparently he was underwater or belly up.BAC Home Loans Servicing, LP,
Bank of America‟s residential mortgage servicer 
, posted a
 Notice of Abandonment and Intent to Maintain
on the building after our article was published, but it was soon taken down. A
Vacancy Posting Notice
from the bank itself was tacked on the building shortly thereafter and was also taken down. Conditions worsened. We noticed that BAChad already filed a Notice of Cancellation with Florida Department of State declaring that it wasno longer transacting business in Florida, and had initiated hundreds of foreclosure actions fromJuly 11, 2011 to August 11, 2011. On April 29, 2012, Sun Sentinel reported on property codeviolations involving abandoned homes, claiming that it had uncovered case after case in which banks launched foreclosure lawsuits but then stalled or avoided taking ownership. In effect, the banks legally sidestepped responsibility for the empty homes, causing great harm toneighborhoods. The so-called bank walkaways were no longer maintained by their legal owners.The crackheads and vagrants hanging around and within the 1020 6
th
Street abandoned propertywere polluting the entire neighborhood, once known as the
“Seventh Heaven
 
Crackhood.”
 Several originated from a partially vacated building on the next corner, where squatters,including a man just released from prison for raping a little girl, were arrested as a result of our reports. The ex-con had knocked down a wall on the top floor and set up a penthouse for himself,stealing electricity from a utility pole. That corner building is now fully vacated and is under renovation by a developer. A man next door on Michigan Avenue had a sock stuffed in hismouth and was murdered, the case remaining unsolved today. Many of the criminals in the areawere undocumented aliens from Guatemala and Honduras. The crackhead crew was led by alarge Dominican woman who previously dealt drugs and turned tricks in a car parked in front of a Michigan Avenue bodega frequented by undocumented people who enjoyed playing itsgambling machine. She was seen being put into police cars, but the police department had norecord of her. She eventually moved from the abandoned building on 6
th
Street into a cash-rentstudio at 626 Euclid Avenue, where she ran a little night club and made other tenants miserablewith loud music, shouting, and drunken brawls. She liked to show off rolls of cash, and braggedabout paying off cops. The landlord reluctantly ordered her out after the property was twice

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