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Old 12-15-2011, 07:19 PM
 
4 posts, read 3,500 times
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Default Help on where to buy a condo in Miami Beach

Hi everyone! I am new to the forum and very impressed by the info output.

I want to buy a 1bed/1bath condo apt in Miami Beach/North Miami Beach
for about 100-120k and pay it cash.
My idea is to rent it out for the next five years until I retire and then use it as a winter haven.From what I have checked, prices are at an all-time low and although they seem to be moving slowly upwards, I cannot see the current "mini-buble" that some folks have recenty mentioned on this forum.

From realtor listings and reading the forum and I think these are my best choices BUT I would very much appreciate it you could give me your expert opinion on them:

Condos located on Indian Creek Drive, Byron avenue or Tatum Waterway Drive since it seems to me like a good idea to buy on the Intracostal (great view and much cheaper that ocenfront) and still have the beach within walking distance. Am I on the right track ? Thanks a bunch in advance.
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Old 12-28-2011, 04:30 PM
 
4 posts, read 3,500 times
Reputation: 10
Good people of the forum, kindly tell me if you think I am on the right track real estate-wise. I need to make a decision from 10.000 miles away and yes, I've noticed prices have started creeping up, so I'd like to move fast. Again, thanks for any replies.
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Old 12-28-2011, 06:32 PM
 
5,925 posts, read 3,470,597 times
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You have $100k cash to buy a condo, yet you need to come on a forum to ask where? If I were you, I would take a little of that money and fly out here for two weeks and see for myself before listening to a bunch of strangers on where to drop $100k at.
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Old 12-28-2011, 08:33 PM
 
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Boxus tks for your comment, but work considerations preclude me from flying up to Miami at this time. And although, yes, forum members are strangers to me, I've spent many hours reading posts here and I got the impression that by and large, they are knowledgeble about what they post, so strangers or not I would seriously consider their opinion (if they would be kind enough to express it.)
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Old 12-29-2011, 05:46 AM
 
Location: western East Roman Empire
3,600 posts, read 5,605,775 times
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It is highly unlikely that you will find someone on this sub-forum who is familiar with exact condo buildings at those exact locations (Indian Creek Drive, Byron Avenue or Tatum Waterway Drive, $100-120k cash).

I could help you estimate some numbers, assuming that you seek at least positive cash-flow over five years. It seems that the unknown variables are condo fees and rent. Also, how many square feet are these condos that you are looking at?

capital $100,000

taxes $2,000 (assume 2% rate)
insurance $1,000 ??? (square feet? quality of building, quality of appliances and fixtures?)
condo fee $9,000 ??? (major variable, quality of building?)
mgt fee $1,200 ??? (assume 10% of rent, important to find trustworthy property mgr)
appliance maint contract $500 ??? (optional, but probably worth it)

total expenses $13,700

rental income $12,000

cash flow -$1,700


Based on these calculations, the rental would not generate positive cash flow, but I may be over-estimating the condo fee ($750 per month) and under-estimating the rent ($1,000 per month). However, insurance rates, which will affect both the condo fee (structural insurance) and insurance (inside content insurance, i.e. major appliances and fixtures), are also a major unknown variable going forward. Also taxes will increase over the five years if there is any increase in the assessed value, especially with no homestead discount.

Anyway, you must know the condo fees, what the unit would generate in rent, and establish a relationship with a trustworthy property manager.

Even if those variables work out and the rental generates positive cash flow, the yield would be very low, around 1%, though perhaps better than a bank deposit or other low-yield investment with shady characters like banksters, with some chance of capital gain over the long run during the next speculative bubble.

Good Luck!
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Old 12-29-2011, 08:21 AM
 
Location: South Beach and DT Raleigh
7,737 posts, read 8,797,693 times
Reputation: 5680
Quote:
Originally Posted by bale002 View Post
It is highly unlikely that you will find someone on this sub-forum who is familiar with exact condo buildings at those exact locations (Indian Creek Drive, Byron Avenue or Tatum Waterway Drive, $100-120k cash).

I could help you estimate some numbers, assuming that you seek at least positive cash-flow over five years. It seems that the unknown variables are condo fees and rent. Also, how many square feet are these condos that you are looking at?

capital $100,000

taxes $2,000 (assume 2% rate)
insurance $1,000 ??? (square feet? quality of building, quality of appliances and fixtures?)
condo fee $9,000 ??? (major variable, quality of building?)
mgt fee $1,200 ??? (assume 10% of rent, important to find trustworthy property mgr)
appliance maint contract $500 ??? (optional, but probably worth it)

total expenses $13,700

rental income $12,000

cash flow -$1,700


Based on these calculations, the rental would not generate positive cash flow, but I may be over-estimating the condo fee ($750 per month) and under-estimating the rent ($1,000 per month). However, insurance rates, which will affect both the condo fee (structural insurance) and insurance (inside content insurance, i.e. major appliances and fixtures), are also a major unknown variable going forward. Also taxes will increase over the five years if there is any increase in the assessed value, especially with no homestead discount.

Anyway, you must know the condo fees, what the unit would generate in rent, and establish a relationship with a trustworthy property manager.

Even if those variables work out and the rental generates positive cash flow, the yield would be very low, around 1%, though perhaps better than a bank deposit or other low-yield investment with shady characters like banksters, with some chance of capital gain over the long run during the next speculative bubble.

Good Luck!

Yes, you are probably overestimating association fees and you might be underestimating rent. For the $120,000 range, I'd expect that the building would not have amenities and that the dues would be half that, if not less. I'd also expect that rent could be higher but am not as familiar with rents in North Beach as I am in South Beach.

If I were buying a condo in that price range, I'd make a list of priorities and match them against the various properties. I'd also look VERY closely at the financials of the association and any hidden charges that may be coming your way in the near future. For instance, buildings go through a 40 year inspection cycle that usually result in a large renovation project and correlating assessment. While this is ultimately good because it improves your property value, it's a pain in the ass to live through and to pay.

Things to think about:
Parking
in-unit laundry
property taxes (you will not be able to homestead while you use it as a second home or as a rental property. You will not be protected from a future housing price increase and the resulting increase in your taxes)
Amenities like pools, etc.

Good luck with your decision.
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Old 12-29-2011, 10:32 AM
 
Location: Miami Beach, FL
1,895 posts, read 1,525,203 times
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I'd be very careful about Tatum Waterway, there are lots of older, run-down buildings around there and many Section-8-ers (I was looking for a condo to rent there, but decided against it). Mind you, it's not a dangerous neighborhood, just a bit run down and neglected. As for buildings themselves, it really does vary building-by-building, though I suspect $120k is still on the low side for a proper 1/1 with parking, as opposed to a "junior 1-br" or a studio with street parking. HOA of $750/month is more typical of luxury high-rises than what you'd be looking for, I'd expect around $300-400 for that. Rent for the "real" 1-brs with parking generally starts around $1100.
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Old 01-01-2012, 08:47 PM
 
Location: South Beach and DT Raleigh
7,737 posts, read 8,797,693 times
Reputation: 5680
Quote:
Originally Posted by hurricaneMan1992 View Post
I'd be very careful about Tatum Waterway, there are lots of older, run-down buildings around there and many Section-8-ers (I was looking for a condo to rent there, but decided against it). Mind you, it's not a dangerous neighborhood, just a bit run down and neglected. As for buildings themselves, it really does vary building-by-building, though I suspect $120k is still on the low side for a proper 1/1 with parking, as opposed to a "junior 1-br" or a studio with street parking. HOA of $750/month is more typical of luxury high-rises than what you'd be looking for, I'd expect around $300-400 for that. Rent for the "real" 1-brs with parking generally starts around $1100.
I'm sub $600 for a full service 1 bedroom luxury building with all amenities in south beach. But, it does go higher for the ultra-luxury buildings and for one bedrooms that are north of 900 square feet.
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Old 01-05-2012, 07:43 PM
 
4 posts, read 3,500 times
Reputation: 10
Hi everyone,

bale002: Thanks for your detailed explanation. Yes, I agree with your comments because having done many calculations on different properties, the cash flow comes out either negative or neutral. Which makes me wonder because in most parts of the world condo rental cash flow is positive at anywhere from 5 to 10% anually.
But I figure anything is better than giving your money to a bank and getting a pre-tax 0.50% anual return for the next few years. Plus I really have faith in prices going up again in the next few years. And at least for us foreigners, Miami is one fantastic city.

rnc2mbfl and hurricane man, thanks a bunch for the input. Most usefull.

I am now taking a look at condos on Eastern Shores (Sunny Isles) because prices are very low and the area seems quite exclusive, (a rare combination.) I hope to be able to fly up there next month and make my purchase.
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