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As We See It

[The Strip Sense]

A personal account from one victim of the city’s real estate collapse

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Steve Friess unloaded his Panorama condo for less than half what he paid.

I stepped out on the balcony one last time on Sunday, took in the view and contemplated what might have been. I snapped one last picture of myself on that pied-à-terre, the Strip glistening behind me as dusk approached, and then we left. I didn’t expect to feel so melancholy, but as we walked the corridor to the elevator, a sad silence hung in the air.

No, I wasn’t at the Sahara, but at that moment I could empathize with Sam Nazarian, who bought that pit for $300 million in 2007. Like me, he’s probably muttering to himself: “It seemed like a good idea at the time.”

I also attempted to get in on the Great Las Vegas Real Estate Boom in 2007 by closing on an investment property, a 950-square-foot unit on the 22nd floor of Panorama Towers. The process actually began in December 2004 when my father, his friend and I agreed to go in on an as-yet-unbuilt condo priced at $487,000. We would go on to put down about $96,000—my share, natch, taken from the rapidly accumulating equity in the townhouse I bought in 2003—to close on the place in August 2007, about eight months later than we’d initially been promised.

Our folly was not evident that summer. In fact, CityCenter directly across I-15 had been announced in 2005 and began construction shortly thereafter, bolstering our belief that our investment was solid. I wrote then in the Weekly: “We continue to debate how to proceed, whether to sell it immediately and take our profits or to rent it and take a short-term monthly loss.”

We did put the place on the market through the Panorama sales office, but our expectations were skewed. We believed we’d flip it for, say, $600,000, a tidy profit for all. Reality was, however, that nobody would pay that; in fact, buyers had snatched up similar spaces for $450,000 or even less. Take a loss? Unthinkable in that Vegas era before the notion of depreciating real estate existed.

After six months of not selling the place, we rented it out, recouping about half of the $3,300 it cost us for the mortgage and association fees. My share was $700 a month. Also, the economy and the real estate market collapsed.

I’m not sure why it took so long to figure out how interminably badly this had all gone. We had renters, were getting a tax break on our mortgage payments and losses and didn’t want to believe—or couldn’t imagine—that it would take decades for all this to recover. Some day, we insisted to one another, this will be worth $1 million; we just have to hold on.

But by last summer, we were done. My dad had hit hard times, so I was picking up his share; our renter moved out in June; and we just couldn’t justify any of this any longer. I let a friend who needed to move out of her home live there for a reduced amount while we proceeded through a short-sale, and in January, the unit was officially no longer ours. The final price? $175,000. That’s 64 percent less than we paid and more than $200,000 less than our loan. The bank happily took it and promised not to chase us for the difference.

My friend arranged with her new landlord to remain in the unit, so I’d get to swing by and remember what it was like to tell the gate guard I was an owner. Now my friend’s moving out, too, so we brought pizza up on Sunday for one last hurrah.

Years ago I heard about some uncles of my first partner who lost everything when they went in together in their 30s on some business venture that flopped. I remember thinking how foolish they must have been to have miscalculated so badly.

Now I see. It’s easy. There’s nobody to blame but yourself, and the consequence is that you spend years digging yourself out of it.

And, like me and Sam Nazarian, they no doubt had this thought: “It seemed like a good idea at the time.”

Follow Steve on Twitter at TheStripPodcast or head to VegasHappensHere.com for his blog and weekly celeb-interview podcast, The Strip. E-mail him at SteveFriess@aol.com.
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Steve Friess

Steve Friess is a freelance journalist based in Ann Arbor, Michigan. His work has appeared in the New York Times, ...

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