Long-term individual buyers dominating Miami condo investing
By Marilyn Bowden
With flippers long gone and institutions looking for bulk deals thinner on the ground, brokers say the condo investment market is dominated by individual investors with longer-term strategies.
The largest investor segment right now, said Edgardo Defortuna, president of Fortune International Realty, is individual buyers looking to purchase mini-blocks of one to 15 units.
"They can rent them out and expect a relatively decent return of 3%-5% a year," he said. "This is particularly true of Brickell and downtown, where rents are going up and demand is very active. Investors really like that type of product."
But Mr. Defortuna emphasized that investors still represent a relatively small segment of the condo market. Most buyers, he said, purchase a unit for their own use.
"Speculation has completely disappeared," he said.
The investor market thrived in 2005-'07, at the height of the boom, said Dario Stoka, a broker with Zilbert Realty Group, and "almost completely dropped out in 2008-'09. Now that prices are low and rents are stable, we are seeing some activity again."
But this could be temporary phenomenon, he said. "As prices rise, that may stop because it will be too expensive to carry a condo in Miami."
In fact, that may already be the case in many instances, said Jay Massirman, executive managing director of Asentus Real Estate.
"The numbers still don't work that well," he said. "They're not covering all the costs with a renter. But savvy investors are happy to defray costs and get in on today's values.
"You can buy a condo on Miami Beach for $500 a square foot and up, or on Brickell for $300-$400 a foot, Compared with condos in Tokyo, Hong Kong, London or New York, where you might pay $800-$1,500 a foot, that's very compelling for those who globetrot. There are some incredible deals down here."
Most deals are cash, Mr. Defortuna said, though financing is much more available than previously, and almost all buyers his company deals with are from outside the country.
"We handled a group of Italians recently that bought 15 units in Icon," he said, "but in general they are from Latin America. In particular, Argentinean and Brazilian brokers are really motivated to sell Miami. The culture there is very much that if you have any cash left over, you put it in bricks, rent it out and hope for appreciation."
These investors are anticipating a three- to five-year hold before prices appreciate, he said, "though it could happen before that."
Mr. Stoka said at least 60% of buyers he works with are foreign investors - "in Miami Beach, Italians and Brazilians, but also buyers from New York and Boston. In Brickell we see more Latins. Brazilians have now surpassed Canadians as the top foreign investors in Miami-Dade."
Miami has always been a safe haven for capital from South America, Mr. Massirman said.
"Their capital is pretty safe here. Brazil is cranking right now, and Argentineans and Venezuelans have been coming for a while. We really have an incredible cross-section."
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