Miami Condo

Comments (20)


Miami Condo

By: Chris Anderson, PhD

By this point and time, many people have heard about buying preconstruction condos and some of the amazing profits that have been generated by these investments. What many people don't understand is that there is another way to play the preconstruction investing game, especially for those investors with solid financial resources. Let's take a look at the Miami condo market as a great example.

Right now, there is a Miami condo that originally sold out almost 2 years ago when the prices were much lower but original investors are now interested in reselling their units. This project was one of the first high-rise projects in the downtown Miami area. Recently, similar units at ICON Brickell (on the opposite side of the Miami river) sold out the first tower in 2 days at an average of $550 a square foot. The second tower is now selling at an average of $600 sq ft. For some of these resells in the area, we are seeing close to a $100/sqft reductions in price to around $500 per square foot; and that is asking price. Now is when the negotiations begin.

One strategy is to AGRESSIVELY pursue projects where other investors are about to close. In this case, you have a number of original investors that are hearing that loud clock ticking in their head. that is the clock counting down to close where they will 1) have to close on their Miami condo, 2) have to pay debt service, and 3) potentially try to rent out their Miami condo. You have to realize that these sellers are people that have already made (on paper) great returns, then they may have a lot of motivation to just get most of their profits and run without incurring additional expenses.

As an example, suppose you were able to negotiate a $130/sqft discount on such a Miami condo instead of only $100/sqft. Let's say that results in an additional $30,000 savings on a 1,000 sqft unit. From a motivated seller's perspective, what do they care if they have to drop their profit from $150,000 on a Miami condo to only $120,000. For the right kind of seller, the important thing is that if they know you, as the buyer, can make it painless for them with no additional cash outlays.

For a resell type investor, they may look at this and say well, I will rent the Miami condo out for a couple of years. No, their payments will not cover their mortgage and maybe they end up losing $800 per month. That is only $19,200 over the course of two years. Compared to that $30,000 extra discount they got, that is a small price to pay for the right individual knowing that they purchased their condo at $130 *1000 sqft = $130,000 less than what people across the river are paying for new Miami condos. If you do this type of investment, you need to establish the actual numbers for yourself since these numbers are only provided as an example.

We have used a Miami condo as an example here but these opportunities are going to exist in many places. As projects begin to close, especially in overbuilt areas having lots of investors that are ill prepared to close, that provides an excellent opportunity to find EXTREMELY motivated sellers. One trick to this, in my opinion, is to find those early projects in an area that are about to close since there is tons of equity that the seller can give up to the new investor if that new investor will just pay them some profit and not make them incur any additional expenses.

About The Author

Dr. Chris Anderson is a co-founder of http://www.GetPreconstructionDeals.com and is referenced in many venues including the New York Times and USA Today. Download his free, 30+ page preconstruction investing ebook today at http://www.GetPreconstructionDeals.com/ebook.html.

chris@getpreconstructiondeals.com

Comments

apo 25.07.2007. 19:18

Orlando vs Miami , which real estate market is more likely to rebound? When comparing amenity-filled properties. Or Orlando second home market vs the miami condo market wich is most likely to rebound or apreciate in the long term.

apo

Admin 25.07.2007. 19:18

from what I've seen on the news Miami is not doing well, and orlando is ok

check out
www.realtor.com and check out whats on the market, and go on the web & google the miami condo market, or if you know or can get a recommedation of an agent talk with them about the market

Admin

Justin 17.12.2012. 22:15

How can i choose between the city and the sticks? ok so im commin to a point in my life where i have to choose where i want to live. I've really narrowed it down to staying here in northern PA and moving down to Miami, Fl. I am completely stuck on which to choose because i love the open feeling of the country and the fact you can actually own large animals like horses and big dogs. but i also like the conviency that comes with a city and i've seen some miami condos, and they are absolutley breath taking. I would appreciate it if you could persuade me to choose city or sticks , and please none of that "oh, you obviosly are leaning towards..." cause trust me, im neutral XD. sry for spelling, typed this on my kindle. thnx

Justin

Admin 17.12.2012. 22:15

The city has a lot of conveniences.

Admin

jd_max 05.07.2006. 12:34

How can I hedge my investment in a Miami condo? I bought a condo in Aventura, FL last July, and now I am worried about falling values. Are there any SPECIFIC investment methods to hedge my real estate. Please no general answers - I've already searched "hedge funds" and can't find anything specific. Thanks.

jd_max

Admin 05.07.2006. 12:34

There is a futures product that was designed specifically for what you want to do -- Housing Futures traded at the Chicago Mercantile Exchange. They have a contract specifically for Miami, FL, which would probably be the best one for your situation. These futures contracts are based on the S&P/Case-Shiller Home Price Index.

Right now the index is 278.20 for August 2006 and is predicted to be 255.20 for May 2007. Each contract is $250 times the index, so a August 2006 contract is worth $69550 of house and May 2007 contract is worth $63750 of house. The market is already pricing in a 8% decline in housing prices from August until May 2007 because the index for May is lower than that for August.

There's nothing you can do about that 8% decline in price. But if you think that the decline will be more than 8%, then you would want to sell a May 2007 contract. You will make money if the actual index is lower than 255.20 in May. You will lose money if it is higher than 255.20 in May.

Presumably, the market value of your condo would track the changes in the Miami housing index. Granted, this is not an exact hedge, but specific to the Miami area real estate prices. The best hedge would be to sell your condo entirely, and I don't think you wanted that.

Futures are complicated investments, and housing futures are rather new. However, I think they can be understood if you do enough research and reading. I don't think it's above the person of average intelligence with enough effort.

Housing and mortgage stocks have been so beaten up lately that it's very risky to be going short on any of them right now.

Admin

Aaron 04.10.2009. 20:49

Miami Question, what are some economic hotel I can stay with @ the end of October? I looked up Miami Banana Bungalow is that place safe? What about Flamingo Miami Condos, I found one for rent on the weekend I want to go? Are they nice?

Aaron

Admin 04.10.2009. 20:49

Many good hotels in cheap prices available in Miami. Some are like

Crowne Plaza Hotel International
Embassy Suites International Airport

Miami Hotels http://hotels.americacheaphotels.com/City/Miami.htm

Admin

curtw@sbcglobal.net 19.08.2009. 04:58

I need a good real estate website for Florida. Any suggestions? I'll probably end up in a Miami condo 6 months a year.

curtw@sbcglobal.net

Admin 19.08.2009. 04:58

Start here

http://miami.condo.com/

Admin

Justin 20.12.2012. 00:48

How can I choose between the city and the Sticks? ok so im comming to a point in my life where i have to choose where i want to live. I've really narrowed it down to staying here in northern PA and moving down to Miami, Fl. I am completely stuck on which to choose because i love the open feeling of the country and the fact you can actually own large animals like horses and big dogs. but i also like the convenience that comes with a city and i've seen some Miami condos, and they are absolutely breath taking. I would appreciate it if you could persuade me to choose city or sticks , and please none of that "oh, you obviously are leaning towards..." cause trust me, im neutral XD. Please Be descriptive, your trying to persuade me, not vote. sry for spelling, typed this on my kindle. thnx

Justin

Admin 20.12.2012. 00:48

out skirts of FL, heat is cheap but a/c needed , cost of living ? rent ? gas prices, ?
distance to travel to a store, storms ? very little wild life .
pa cold winters, loss of heat due to power outages, distance to town,
lots of wild life, [food source] , your Age, condition of your car ?

Admin

Justin 18.12.2012. 02:21

How can I choose between the city and the Sticks? ok so im comming to a point in my life where i have to choose where i want to live. I've really narrowed it down to staying here in northern PA and moving down to Miami, Fl. I am completely stuck on which to choose because i love the open feeling of the country and the fact you can actually own large animals like horses and big dogs. but i also like the convenience that comes with a city and i've seen some Miami condos, and they are absolutely breath taking. I would appreciate it if you could persuade me to choose city or sticks , and please none of that "oh, you obviously are leaning towards..." cause trust me, im neutral XD. Please Be descriptive, your trying to persuade me, not vote. sry for spelling, typed this on my kindle. thnx

Justin

Admin 18.12.2012. 02:21

The simplest way to look at it is In the sticks as you say crime is low. Big cities have Lots of crime. In little towns you know lots of people. Big cities you know few. Small town schools are nicer and have less drugs and weirdos. Big city schools have lots of both. For me I wouldn't mind living outside a big metro area so I could travel there when I wanted to do something. But I for one like the simpler life even if I have to shovel snow now and then. Also I would not want my child going to big city schools. She would be lost in the mix and never truly shine.

Admin

george123 10.05.2009. 16:40

Can I get a loan to get a down payment for a mortgage? Its more like I need money for a startup business, for a vacation rental in miami. The condo I am looking at is in a hotel - room goes from 300-500 a night, pays off after 6 days a month rented out rest becomes profit, or i can chose to stay there and take vacations when i please. just need money for a "startup business"

george123

Admin 10.05.2009. 16:40

I don't think there are many banks out there that would loan you as much money as you would need for a down payment on a mortgage. The interest rate would be very high. Maybe if you had excellent credit (FICO score above 720) they would consider it. It's an "unsecured" loan and with this economy, it looks unlikely you would get the money. Honestly, if you don't have the money for a down payment, you shouldn't be buying the vacation rental. My humble opinion.

Admin

Amanda C 03.04.2008. 04:33

Where is the best place to live outside miami dade county that is the shortest commute to downtown miami? I might be relocating to Miami for my job and I have a dog who is a pitbull mix and unfortuately I am unable to live in Miami Dade. Also if I do live in an outside county are they more accepting of pitbulls and pittie-mutts! Thanks! Gracias!

Amanda C

Admin 03.04.2008. 04:33

Kings Point in Tamarac Florida is nice for condo or house

Admin

"Corey" 20.02.2013. 20:01

Where is the best place in Florida, besides Miami, to live if you're fairly young and hip? I am looking to buy a condo in Florida to get away from the cold for several months in the winter. I am looking for a beach community that isn't full of geriatrics, but ecclectic and diverse. I am looking for a community with lots to do in the cultural arena: theatre, art, music, nightlife. Suggestions?

Admin 20.02.2013. 20:01

So you want to become a young snowbird, like millions before you. For 90 years, snowbirds have been coming to the Miami area because of the warm winter nights, theatre, and the nightlife. That hasn't changed except that today, the nightlife is focused in the South Beach area of Miami Beach. Fort Lauderdale would come in second on your list. West Palm Beach would be third.

Admin

Write a comment

* = required field

:

:

:

:


* Yes No