A bit of urban myth in that statement. While it's true that Miami is becoming quite overbuilt and also true that a few projects have been postponed, there's been no wholesaling of new condos. The prices in these new buildings (mid 3's for 1bd's, mid 4's on 2bd's) are not particularly expensive. As has been the trend for some time, the buyers are largely Europeans and South American's using cheap dollars. I live in Ft. Lauderdale and there's much supply of existing hi-rise units on the market. Prices have come in around 10% in the past year. However rents are PUMPED down here. A friend of mine from Chicago is trying to find a 1bd. Under a thou a month in a "good" neighborhood is unheard of and in hi-rises we're talking 1300-1600 a month. In SoBe a nice 1bd can be 2k a month. So although I think prices will still come in a bit, on a p/e basis things here aren't real stretched.
You're right... it's "Property Ladder" on TLC with Kirsten Kemp. Too many of those shows to keep track of. I just remeber them at the end of the show rolling off the weeks sitting for sale and just the mortgage payment being deducted, like that's the only expense. LOL
I noticed the same thing. Actually saw a couple on separate channels where the "flipper" didn't recover costs. On a side note, it's interesting to see the variation in personalities and business practices of the various "flippers". Some seem to have a lot of integrity, but others actually paint the dead grass green.
Hello Pabst. We have some relatives in Ft Lauderdale too, beautiful area. By your own figures, a 1 bdrm sells for $300K, not too expensive (that's not a very nice 1 bedroom btw... on Key Biscayne, a 1 bedroom went for upwards of a million, 5 years ago). What are carrying costs for a $300K, 1 br? Adding in Principle, Interest, Taxes, Insurance (keeping in mind that every time you buy, the former taxes are adjusted upwards, and all our insurances have gone up an average of 60% this year due to hurricanes). I would guestimate with reasonable accuracy that your monthly payment would be around $2500-$3000 a month at 5% down and a 6% rate (which as an investor, you will not likely get). If it's a condo, this is not factoring in your monthly fee, which in some upscale units can run $1300 a month alone. So your monthly payment for a newly bought $300K 1 br condo is average $3500 a month, and you want to rent it for $1400, which is considered 'expensive', right? So out of pocket, for every month you own this condo, you will pay $2100, if it's rented at a relatively high price of $1400. Rented out, in one year, for the priviledge of owning this condo, you will pay $25,200. When you sell that condo, you have closing costs, doc stamps, recording fees, and probably a 6% real estate commission, plus whatever repairs (renters usually leave some surprises), so off the top, say 8-10% of your 'profit' before closing. Add in a 1 year carrying cost of $25,200. So at the end of 5 years, you have spent $125,000 out of your pocket, and will face $30,000 in closing costs if the market remains flat... and you sell for that same $300,000 you paid for it. On the other hand, if you sell for $450,000, you have made a teensy profit. Compare this to potential stock market losses if the market remains flat. It didn't cost you $150,000 to sit on a $300,000 investment. Which looks cheaper?
A 300k condo down here will cost someone around 2k a month out of pocket. Keep in mind both interest on mortgage and property taxes are deductible. Plus Florida has no income tax. So Florida trades at a premium for New Yorker's who "shelter" passive income by claiming legal residency here. Also you can't lose your home to a creditor (ex-IRS or loan collateralized by your home). I'm not saying financially it's a good do. Neither is owning an expensive car. We all have vices though......
Tell the truth now.....that is beijing in that picture.....LOL!!! Btw, I have been checking out condo properties in the SoFLa/SoBe area and Pabst is right on with his pricing.
I was in Beijing this past summer... it looks just like downtown next to Miami's bay... you'd have a hard time telling the 2 apart except your Beijing pix doesn't have the ubiquitous grey smog that Beijing really does 99% of the time. The amazing part is that it's not only Beijing that has tower cranes everywhere you look... every single Chinese city I visited of 7 all had the same massive skyline under construction, including tiny cities like WeiFang, Chingdao and Suzhou. Unbelievable. Pabst, even at $2K a month, with deductions, you aren't breaking even by renting... assuming you have a tenant ready willing and able to move in and stay there til you sell and close. Either rents go way up, or prices begin coming down for investment income to be profitable again like it was 10 years ago. You are right that anywhere in Florida makes a viable 2nd home for tax and other purposes... but it's not a good, albeit justifiable, investment... just like most nice vehicles.
It's a valid point in that scenario as well. By nature I'm a bearish guy. On everything. But as I mature I'm beginnig to see a trend toward the Brazilianation of the developed West. Haves vs. have nots. You either own property, equity and commodities or you're living with Perdro and his 12 cousins in some dive that'll soon cost a thousand a month in Shantytown. Wage slaves without investment are going to be fucked. You'd might as well BE Pedro if making 12, 15 or even 20 depreciating bucks an hour is your gig. When there's 400 million people in this country and a quarter of them are impoverished blacks, Latino's, Slavs and small town "meth-America" scratching at your doors you'll only WISH you were living in one of those bubblesque homes. Want my honest opinion. In 20 years one of those ridiculously overpriced 1.7mil 1900 sq ft beach cottages built in 1931 in LaJolla or Solana or Laguna will be 4 million. Too many people with cheap money chasing too little insolation. Everything's going bid except labor.