Hi BP members -- I am investor based in Broward County - South Florida and wanted to get opinion from other South Floridian's. I see new condo's being built on every little piece of land available and am concerned this will lead to over supply. I know lot of people are moving to south florida but the pace at which these units are being built out is staggering.
What are your thoughts?
Too many condos, like Miami in 2006 and 2007, everyone walked away from their 10% or 20% down new condo as the sky was falling.
Still, these are trendy, cutting edge condos that bring in a young, well-educated crowd, a lot of amenities. Smarter minds than mind have done the research and calculate they will fulfill a need and make a profit at $1400-$2900 monthly
I have 3 condos in BroCo and try to console myself that my condos, which rent in the $800 $1000 mark, are not competing with that other demographic...that my tenants benefit from having these other renters become part of BroCo.
Welcome to BP. I love south Florida. It's a healthy mix of culture and chaos.
I think you have good instincts to be concerned, but I think south Florida has other factors that will keep demand healthy.
1) Not everyone wants to live in or own a condo. Some folks can't even touch all the fancy ones going up these days. They have their market, but not all residents are in that market.
2) You can't build west of Miami-Dade, Broward, or PBC and you can't build south or east of them either. PBC can be built up some more and so can't the others but being a limited area peninsula will keep land scarce for fore able future. If push comes to shove and the tides start rising more and more this will make land even more scarce. If sea levels rise another 3-6 inches eventually not even the Everglades will be safe from development, but it will happen slowly. Also, I'm talking 50-100 years minimum for this scenario.
3) Tourism. Broward and Miami-Dade counties aren't bringing in Disney numbers, but domestic and international tourism is quite healthy and those that benefit from it strive every day to keep it that way.
4) Retirees love warm weather and no state income tax really comes in handy when you start taking distributions from pensions and other pretax retirement vehicles.
None of those reason trump market bubbles, speculation, and volatility, but if you invest by cash flow and numbers instead of hunches and gut feelings you can mitigate a good chunk of the risk.
Hope this helps. I too am in south Florida and here to help the way other BP members have shared their guidance with me.
Updated almost 6 years ago
Welcome to the forum Tim. I'm in Miami as well (Coral Gables specifically). I invest in buy and holds and all are condos. I can tell you that none for the new construction units you mentioned will cash flow. Those are for speculation only in my opinion.
If you want to connect or have any questions about the local market feel free to send me a message.
I have bought , sold, rented, and invested in residential property in South Florida since 1985. One thing has been constant; 55+ interest has been strong and the Baby Boomers really like Florida. I have an office in Boca Raton and Orlando and experienced ownership in both markets. It is different, but the most opportunity lies in South Florida where there are more condos, and more 55+ communities than anywhere else. I sold my real estate office 3 years ago and I am enjoying and profiting from rehab flips in the 55+ communities. I have 4 ongoing right now and I am seeking partnerships to take advantage of the markets that are affected primarily by aging resident attrition.
I personally think we are heading into another bubble here in South Florida due to all that new construction (again). Those new ultra modern condos aren't for the locals, yes there are some young professionals moving down for jobs, but many of these condos sit vacant since they are purchased by foreigners as a way to park cash. The older buildings away from the Brickell area actually make decent buy and hold units.
@Richard Kerski I am very interested in working with investors down in your neck of the woods! Could we connect and discuss what exactly your looking for? If not I wish you the best and I truly believ you have tapped into something that people seem to over look! May 2016 be a blessed year for you.
From a macro perspective, high end condo purchases from foreign buyers will face headwinds as the dollar continues to rise.
As properties become more expensive and the dollar makes it more expensive for foreigners to buy US property demand should taper; interest rates also have a role here. As mentioned these purchases are more speculative in nature so we all know what follows next after the music stops...
That being said high-end/luxury condos are their own asset class and that shouldn't mean we can't in other asset classes or that we shouldn't ride this wave in speculative condos. For all we know this trend could continue for a number of years.
Hi Nick Cachaldora
I will be relocating to the Fort Lauderdale area within the next month. I am looking at a very similar strategy as you mentioned above. If you'd be up for it, I'd like to connect when I get settled.
Absolutely. When your ready contact me.
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