Quick profit turns to quick demise for Clearwater Cay Club investors

See if this story sounds family: Developers lasso dozens of resort condominium investors with promises of easy terms and sure-fire profits. Developer fails to follow through when the market turns sour. Investors stand to lose millions.

To see how the scenario played out at Clearwater Cay Club, a 350-unit complex on Tampa Bay, check out this federal lawsuit filed by 23 disgruntled buyers Download cay_club.pdf. Give it a moment to download as it's quite long.

The suit offers enlightenment about how some businessmen played the game during the housing boom. In a nutshell, developers promised a grand resort modeled on Las Vegas' Venetian hotel. Gondolas and canals were even part of the game plan at some point.

For all the millions they poured into the property, investors claim the amenities never materialized and now Cay Club is a "virtual ghost town" where condos sell for half of what they paid for them.

They want their money back and any damages a judge deems worthy.

Comments

[Fuzzy Bear]

Developers lasso dozens of resort condominium investors with promises of easy terms and sure-fire profits.

The old saying goes, "if it sound too good to be true, then it is" Some people fell into the flipper/investor craze during the RE boom. They failed to use common sense and good business decisions because greed in making thousands of dollars clouded their better judgement. The whole RE mess boils down to just some other type of a ponzi scam that fails when the cash flow stops.

It did not matter if it was a single family home or a condo, none of these are good investments. In fact, since 1950, home appreciation has been mostly flat when you deduct the expenses. What people look at is an individual who sold and walked away with $100K. What most people fail to see is that $100k when expenses over the ownership period is wiped out by the expenses paid.

When this project files bankruptcy, the plaintiffs in this cause will end up with nothing, but a good lesson in RE investing.

[Winfield Strock]

This is the tip of the iceberg. Cay Clubs is collapsing in the Keys as well as Las Vegas. All projects based on high investment potential after "upgrades and reovtions" with leaseback payments to cover the mortgage until income stream begins. One major house of cards which began toppling about this time last year.