First-time buyers benefit from condo conversion
When Peter Savio started sales at his Rycroft Terrace condominium conversion on April 26, nearly 2,000 prospective buyers showed up at the on-site sales office and literally “camped out” for three days to take advantage of below market prices.
Savio acquired the Rycroft Terrace, the former Pagoda Terrace operated as part of the Pagoda Hotel, two and a half years ago with the intention of converting the 162 units in the five-story building into affordable condominiums. At that time, interested buyers were placed on a mailing list, pending final approval of the project by the City and County.
“Once the the conversion was completed, we went to market with fee simple one and two-bedroom and studio units at prices within range of first-time homebuyers,” Savio said. “The response was overwhelming. It demonstrated that buyers are out there just waiting for the right opportunity to take advantage of low interest rates and become homeowners. If the price and the location and the product are right, they are even willing to camp out for three days to make sure they don’t miss out.”
Savio, who has completed approximately 10,000 condominium conversions in Hawaii, set up a tent in the front parking lot of Rycroft Terrace at 1550 Rycroft St., where the buyers congregated. He observed that many of them were young first-time buyers who already knew each other or who made friends while waiting to file applications.
“When the buyers camp out, I also spend the night with them … I have always done this on my projects,” Savio said. “I was there during the entire process until the last application was filed. The end result is that we sold out all one and two-bedroom units and a third of the studios. Forty-five of the 66 studio units are still available. We have since upgraded them with new carpeting, new paint and new kitchen appliances, and are selling them for between $123,480 and $126,480 fee simple.
“At those prices, and based on an interest rate of 5.25 percent with 5 percent down, monthly out of pocket for your mortgage and your association fee could be as low as $1,149 with covered off-site parking. Keep in mind that the interest rate quoted would not necessarily be the rate at the date set for closing, Oct. 2 of this year. If the current low rates continue to prevail and, of course, depending on the buyer’s credit rating, people could get in for an entire percentage point lower, which would decrease the monthly payment.”
He noted that local residents with income as low as 30 percent of the median for the area as established by the U.S. Department of Housing and Urban Development, or HUD, would be in a position to qualify as purchasers, and that most affordable projects today are selling at 120 to 140 percent of the applicable area median income.
“Our project is priced to appeal to the lower end of the income spectrum, not only young, first-time homebuyers but also older people who like the convenience of being in town,” Savio said. “For anyone who doesn’t drive or just prefers to take the bus, it doesn’t get any better than this location, which is close to three bus lines. Also, this Rycroft-Amana Street neighborhood is pretty much built out, therefore quiet, while within walking distance of Walmart, Don Quijote, Ala Moana Center and Ala Moana Beach Park.”
Savio has been involved in numerous real estate projects in the area over the years. In addition to the Rycroft Terrace, he also purchased the Pagoda Hotel and venerable Pagoda Restaurant with its landmark koi pond, the parking structure and an office building, all developed by H. T. Hayashi in the 1960s. He has upgraded common areas of the Rycroft Terrace, which include a swimming pool and recreation center with party room, and completed extensive improvements to the hotel. He added that the Pagoda Hotel will continue operations under the management of Aqua Hotels and Resorts.
Rycroft Terrace condominium sales are being handled on-site by Savio Realty.