Investing in Miami Luxury Real Estate? – My 5 Golden rules for Luxury Condo buyers in South Florida.December 2, 2016
I recently sat with a client in their condo who bought their unit 10 years ago at the previous height of the market. We sat down to talk brass tacks. This was a second home that was used 3 months of the year. Looking over their financials I realized that they had actually lost money over the last decade. How could this be?
I personally have handled clients who in the 10 years have taken what amounted to the same dollar investment and tripled their money!
Admittedly, snowbirds and second home owners are unlikely to see the same investment returns as someone who is using the property all year round as a primary residence or those who rent it out 100% of the time but they should and can ‘have their cake and eat it’ which means having a superb place in the Sun which pays for itself and in many examples ends up making money for the owner as well.
This leads me to explore what is the best Luxury Condo for second home owners or ‘Snowbirds’?
For this I have 5 golden rules. I will point these out then lead to which projects I currently like.
My 5 Golden Rules to Invest in Miami
1 Crap in. Crap out
I always say that when it comes to investments, chose something that cannot be replicated 1000% times over. Mass-produced anything holds little to no value, it is not luxurious. Crap in, Crap out.
2 Recognize True Luxury
In Miami we have seen so much construction and although much of it promotes a glossier, sexier lifestyle, it does not always deliver. Buildings with high density (lots of units), sometimes a huge condo on a tiny lot and buildings in which you have 12 units per floor and 3 bedrooms cramped into 1,300 SF. This is not luxury and should not be accepted as such, no matter how it is portrayed in renderings. I won’t name names in my blog, but if you call me I will tell you my opinion and give examples of condos to avoid.
3 Know the Local Market and South Florida Real Estate Trends
My 2016 Miami Real Estate Report and other reports help identify which markets are going up and which are going down. By using measurement indicators like: ‘Months of inventory’, ‘Price per SF averages’ and ‘% increases’, I can start to guide you on where to focus. I say ‘start’ because this is the first step and there are more variables to take into consideration moving forward such as South Florida real estate trends and Miami real estate forecasts.
4 Understand the wider market but avoid generalized advice. It won’t serve your specific needs!
It is often said that mainstream media have a lot to answer for. I have come to have a love / hate relationship with mainstream real estate news. Sometimes it’s really spot on, other times it’s so completely off track I cannot help but either laugh or want to scream. Ultimately, avoid generalized articles that talk about Miami as a whole. I have come to appreciate that within every neighborhood market of Miami, there are huge variations in consumer behavior, and within that price levels create huge differences. If you really want to get good solid advice you have to drill way down. From city to town to street to condo and sometimes even floor level. Please see my end of year 2016 Report for a better understanding.
5 Don’t follow the masses blindly
‘If every investor is running in one direction you run in the other’ OR as my mother would put it ‘If everyone ran off the cliff would you follow them?’
Sheep do not get rewarded they get slaughtered! There are a number of luxury condos that have overwhelmingly attracted investors. Promoted as ‘good investments’ and bought up on mass, these units end up being rented with a 80% tenancy ratio to home owners. This is a big mistake for long term investors as they are highly unstable; prone to price fluctuations and large scale ‘sell outs’. Investors buy on mass and often sell on mass.
Miami Condo Projects I actually like!
With so many projects that fall into the traps mentioned above, which projects do I actually like.
When it comes to resales, give me a call, there are many.
When it comes to pre construction there are really just a few. Here are 2 of my favorites.