Good summary and I think the bottom in Miami will be found long before the bottom in Southern California...sometime earl/mid next year maybe. I'm going to be looking, I already find Miami Beach condos fairly cheap for what you get. Only other place I'd look is Caribbean Mexico and the plane flight from NYC and transport makes that a bit less attractive...plus, the infrastructure in Miami during hurricanes makes me feel better than smaller condos building in places like Playa Del Carmen where I'd likely end up buying.
You are allowed to depreciate the value of the building (but not the land) over a period of 27.5 years by straight line depreciation on houses, townhouses, etc. I don't think that Condos are different (but check and see). So for a simple-numbers hypothetical case, suppose you wanted to buy a townhouse for $140,000. If the land is valued at $40,000, and your portion of the building is valued at $100,000, you would get to write off $3,630 a year in depreciation, plus the interest on your loan, property taxes, and insurance, which would likely add up to something like $1150 of a $1300 payment, or about $14,500 a year. I'm sure you can deduct condo fees too. Usually, the loan interest, property taxes, and insurance almost entirely offsets the revenue (rents) collected during the early stages (the critical stage) of a loan, so they wash each other out. So the tax break from depreciation (the $3630) is like gravy. Of course, you only keep the portion of the tax break based on your tax bracket...for example, if you were in the 30% bracket, you'd get to keep $1089 annually. During my first few purchases of townhouses, I would always call the Human Resources Dept of my day job and ask them to add another deduction to my W-2 statement. I figured I could receive that tax savings immediately in the form of less withholding tax out of my paycheck and it would all pretty much wash out at the end of the year. Sometimes that little extra boost to netpay helped me justify new purchases of rentals. Just in case you didn't know, the real power of owning rental properties comes from the leverage. If you buy a place for $140,000, and pay a 10% downpayment plus closing costs you'll shell out about $18,000. But if the value of the property rises at the inflation rate over the long term (say 3%), and you're paying the note down at a rate of 1% of the principal a year, you'll basically gain equity at the rate of 4% of $140,000 or $5,600 per year. Remember that you only invested $18,000 (not $140,000), so your return would be about 30%. This neglects repairs and vacancies, but it neglects the tax break from depreciation too. SM
I can assure you with the upmost conviction ...that buying in Coconut grove is a fantastic idea...walking on the big bridge in key biscayne i counted over 21 cranes going up in front of triple AAA arena downtown/brickell area...and those are only the ones i can see...newer buildings smaller cranes....anyways that whole area in front of triple aaa arena bayside area are adding resteraunts, shops and they are cleaning it up....my take is 5 more years for it to be at par...the coconut grove area is top 3 on my list of places in this area ( key biscayne and coral gables being the others and much more expensive )...easy access to just about anything....
http://www.nomorepropertytax.com/index.php When property taxes on a 500k condo go down from 10k to 3k, the decent ones will be purchased fairly quickly as it will begin to make sense to own vs rent again. The complete elimination of property taxes is dead in the water, but this new plan will pass in one form or another, for at least 50% property tax reduction. Thats the proposal on the table right now... "On the home's first $300,000 in just value, 80 percent would be exempt from property taxes. On the next $700,000 in just value, 70 percent would be exempt. On just value above $1,000,000, 30 percent would be exempt. " Its not really the prices in South Florida that have kept buyers on the sidelines, but costs associated with "maintaining it" How do you explain to a European that he has to pay 15k a year in property taxes on a property which he uses 3 months out of a year? Europeans do not even know what a property tax is, there is no such thing in Europe.
Im stunned at how many people dont know where the burden of proof lies. Do we no longer teach critical thinking in schools anymore?
Not sure what you mean. I'd say the onus is on the shorts. "Broward County's median price in April rose 1 percent to $363,800 from $360,600 a year ago, the Florida Association of Realtors said last week." http://www.sun-sentinel.com/busines...28661.story?coll=sfla-busrealestate-headlines In the allegedly free falling SoFla home market prices rose over the past year. I've said this before, I know real estate valuations all over the country and I don't see Miami/Lauderdale/Palm Beach SFH prices as even expensive let alone frothy. $500k will get one a cute 2000 sq ft home with a pool in a better than average neighborhood pretty much anywhere in SoFla. Yes in Boise or Charlotte that's very expensive. Miami isn't competing against those places. Miami and it's environs attract people from NYC, Boston, Toronto, DC and Jersey. A half mil is a sneeze to those folks. Some of you guy's don't get it. People move here because it's cheaper than the suburban northeast! Hence prices are up 1%. Is that clear?
guy #1:they said the bottom was in, they really did..... *laughs* guy #2: Now how you know the bottom isn't in? They say the bottom is in. Guy #2 clearly has no idea where the burden of proof lies, since he just asked guy #1 to prove it isnt in, when "they" made the assertion, not guy #1 I see this all the time. Drives me nuts.