The Miami Condo Market: The Devil is in the DetailOctober 12, 2016
The Miami Condo Market – Looking for Hidden Elements in the Details
I’ve been selling Miami real estate for nearly a decade and have been through two cycles of Miami condo construction. I feel like I have seen it all, and in the course of 10 years have been surprised both pleasantly and not so pleasantly with the outcomes. I have made it my business to ‘tell it like it is’, but have been careful to not name names on paper for fear of being slapped with a defamation law suit. I am definitely entitled to my opinion (just as everyone is), but I feel a stronger sense of duty to inform and educate. One phone call with me will allow me to voice my concerns and opinions and I encourage anyone who wants to get a sincere inside opinion on the market to call me. Politically correct I am not, but facts, analysis and inside workings knowledge of the market is what I will give you. THATS EXACTLY WHAT BUYERS AND SELLERS NEED TO HEAR. It’s too easy to go to a developer showroom and be ‘romanced’ with renderings, models and any array of marketing paraphernalia.
So let’s peel back the curtain of the new condo market and reveal what you really need to look at….
How do you make sure your brand new Miami condo is exactly what you expected?
If you think it’s expensive hiring a professional try hiring an amateur!
Even before getting out of the starting gate you should engage with a well-experienced realtor. This is especially true when it comes to investing in a new Miami condo. In order to avoid the proverbial devil, one must work with an experienced, ethical and well-connected realtor. A good agent knows the Miami condo market and the team behind ALL the projects. It does not cost the buyer anything and is paid entirely by the seller, so why wouldn’t you profit from the expertise of a true professional? The other benefit about using an experienced and knowledgeable professional outside of the project is that of objective impartial advice; comparable data of the market, opposing projects and opposing opinions. If you come to me and ask for my advice it does not matter to me if you buy one project over another, but believe me many developer agents will want you to buy their project regardless because their driving focus is the commission. If you don’t buy there, then they don’t get paid.
The art of misdirection
When you see a project for the first time it is easy to overlook minor details on a contract or even a project’s attributes. I feel almost immune to the razzle dazzle of the sales pitch in a developer’s showroom and can help you get right to the core of the project.
Step outside the project and notice the neighborhood for heavens sake!
I have seen so many sales centers many blocks away from the construction site. There are always many promises of what is to come in the surrounding area, but in truth developers have no control over this and so it is important to be careful when speculating the changing demographics of an area, especially if the project is being built towards an end of an economic cycle. When you are looking at a new condo in an emerging neighborhood be more cautious than when you are dealing with a condo in an already evolved and mature location. Neighborhoods can and do improve over time, but be aware of the likely speed of change. Putting a new condo in an economically struggling neighborhood does not automatically mean this neighborhood will go from run down to ultra-luxury overnight. Do not assume that the renderings are a good representation of the environment. We often see condo renderings that showcase an environment awash with luxury and glamour around the project, affluent pedestrians and high-end cars are everywhere. The reality may be boarded up shelters and low-income housing, which may improve over a period of time, but it takes many years and is not going to change overnight so be aware.
So much technology is not always a good thing!
The more complicated something is the more chance something can go wrong, just ask owners of an iPhone7! Joking aside the reality is that sometimes pioneered technology means being a guinea pig to a developers fanciful idea. Personally, I don’t like being anyone’s guinea pig, and well thought out, well designed buildings are timeless and don’t need to stand on the shoulders of gimmicks to be No1.
How much risk is the developer taking and how involved are they?
If the developer is not heavily vested in the project how ‘hands on’ are they going to be?
Being vested does not just mean financially, but being on site and around the project. Absentee developers are often ‘out of site and out of mind’. I can attest that the projects that I have seen do well have had the developer on site almost every day watching everything happen.
Avoid heavily ‘investor occupied’ condos like the plague!
I really don’t need to explain this, but some investors are really speculators (very short-term investors who have no interest in holding real estate long-term). A strong balance sheet of these kinds of buyers should be of concern as it tends to result in high turnover and in my experience high turnover inhibits long-term property value. As the saying goes, “when others are bold, be fearful and when others are fearful, be bold”, I would say for real estate, “when many are investing in a building don’t invest and when many don’t, do”. I have found that when you are in a highly desirable property or location with few renters around you, if you do decide to rent out then the returns can be truly ground breaking.
Know the (development) team of your Miami Condo for sale
Always ask yourself: “Who is the architect?” “What has he/she created before?” and “What are his levels of details/Quality of work?”.
Also have a look at the interior designer of the project. Is this a flamboyant designer who likes many colors or is he or she a more subtle designer who maybe looks more at details?
You will also want to check up on the developer. How many buildings has the developer built in the city?, Do they deliver on time? Do they deliver what they promise?
Although some of this research is less obvious and sometimes hard to obtain, an experienced Miami realtor will know the good from the bad and will have seen and been into a number of delivered projects of the architect / designer or developer and have seen them not just when they were new but years after. Your agent will be able to tell you who has the projects that are still prized and respected and whose projects are long forgotten.
Don’t just look at the contractors but the subcontractors too
If you’ve ever built your own house you know this to be true. Often the primary contractor is a good guy, but the subcontractors can really mess the project up. In the last construction cycle we have heard reported faulty car lifts, cracked swimming pools caused by faulty plumbing and a number of other things. All down to poorly chosen subcontractors.
Have a look at the finishes provided
Can the developer provide you with a list of detailed finishes? Are the finishes worth the sales price or are they too cheap for the type of Miami condo you are investing in. Also very important to know is whether everything is put down black on white or “to be determined” or “subject to change”. Look at previous projects from the developer, check out the model units or ask for samples. When you are an out of town buyer, ask your realtor (again please use a buyer’s agent) to visit the project for you and update you on the levels of detail.
Have a look at the floor pans provided
Are the floor plans of the project confirmed already or might they change after you buy? Have a critical look at the plans, be careful that your views won’t be blocked in the near future because of a brand new construction being build next to or in front of your condo tower. Again, an experienced agent can tell you about the reputation of the developer but also please do not shy away from asking critical questions
Make sure you work with an experienced Miami Real Estate agent who can tell you more about the team behind your preferred Miami condo project
Have a look at the amenities
Miami Luxury Condos are known for their amenities. When looking to resell your unit or rent it out, you must know that many buyers value top notch amenities. Have a look at the amenities promised and whether they are confirmed or under negotiation. Have a look at other projects from the same team to see how they deliver different amenities at different price levels. Also have a look at the design team and if possible the landscape designer. This will give you a feel at how “high-end” the amenities and the common spaces will be.