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N MIAMI CONDO NEWS — All About Condo Living in the Magic City — Edited by Heinz Dinter, PhD |
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How smart is ‘flipping’ real estate?
Big returns on investments seduce buyers The preconstruction market in Miami has seen some of the highest investor returns in the United States. “People are seeing 2, 3, 400 percent returns on what they invest in a construction condo — over about a year,” Mark Zilbert, a Miami real estate broker, said last year. He emphasizes that waterfront locations drive the desirability in the Miami area. Zilbert estimates that at one point, up to 80 percent of condo purchases were purely speculative investments, made by people with no plans to ever live in one of the tens of thousands of new condos transforming the Miami skyline. Though some people who bought in plush waterfront towers intended to move in, the profit potential became too tempting. That’s what happened to condo owner Darryl Randall. He purchased a three-bedroom unit for $1.1 million, and then listed it at $1.8. He planned on staying here forever, but $700,000 is $700,000. And in a market like this, it’s time to move up and move out. But Randall’s condo languished on the market for months. Then he sweetened the deal by throwing in all the furnishings and his $125,000 dollar Maserati. It worked. The final selling price was $2.3 million. A sudden change in the climate All the little signs were adding up, and by last winter the Florida real estate market had taken a dramatic turn. “It stopped, frozen. Selling investment property was very difficult,” said realtor and investor Peter Celnicker. Celnicker came to Florida as the market was soaring. After five years of savvy buying, he said that by last summer he was a millionaire — at least on paper. Then, almost overnight, the market changed. It was quick — from an absolute seller’s market where one could sell a property literally in 24 hours to a buyer’s market where it can take three, four months to sell a property, Celnicker attributes the chill to higher interest rates and a punishing Florida hurricane season. But he and his investment partners had put some money aside, rented out all their properties, and weathered what they hope is the worst of it. There are a lot of unknowns today in south Florida real estate, where there’s concern that words like “hot” and “flip” may soon be replaced with “chilly” and “stalled.” One reason: Experts now say Miami Beach has perhaps the most overvalued real estate in America. “Construction costs have gone up, prices have gone up and so there is a point, we think, that buyers are reluctant to overpay for an apartment — especially when there’s an oversupply,” said Zilbert. “This is not a ‘get rich quick’ thing. This is a minimum two- to three-year investment. Real estate is a long-term investment vehicle, and you have to be prepared for contingencies. And if you are, then I think it’s a very safe investment. But if you’re just jumping in because your neighbor made $50,000, you could get stung,” Celnicker said. Some realtors say even if the “flipping” frenzy has cooled for some investment speculators, Florida’s got an ace in the hole. It’s still a place where people want to buy homes and condos they actually plan to live in. “We have a thousand people moving to Florida every single day. Then add to that all the vacation, the second-home buyers from Europe and around the world,” Zilbert said. If you’re ready to buy a south Florida residence right now, the market could be working in your favor. Source: www.abcnews.go.com/2020.
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May
5, 2006
• “Flipping” in real estate lingo means buying and quickly
reselling properties for big profits. In south Florida and other popular
real estate markets, it got to the point where people were buying and
flipping contracts on condos before they’d even been built.