More on real estate madness, when do 100% cash buyers go away? (Miami: transplants, renting)

[Lo Maximo]

Saw Cubanchic's post below and can certainly relate. Been looking at places in the $500k to $675 range and made numerous robust offers on houses only to get told I've lost out to an all cash buyer. This despite having excellent credit, large down payment, a stable employment profile, letters from the bank, etc... I should also note that I've been looking in some of the more desirable areas (Gables/Gove, upper eastside, etc...).

In talking to people about it, it is my understanding that this phenomenon is very specific to Miami although you will see it in some other areas like NY. In particular, I've been told that in Miami it is first and foremost Venzuelans followed by Brazillians and Russians. Large private equity funds like Blackstone have also made massive investments in single home residences (and them renting them out) for really the first time, but I have to imagine the big funds are not going to keep investing in Miami at these price levels. It is quite annoying because it is decoupled from the economy and real estate agents on the sell side now are acting like you have to be an all cash buyer to be seriously considered (i.e. you must pay above the appraisal value).

My question to those in the know is how long this flood of 100% cash buyers is going to persist.? It seems like there can't be an endless supply of these types of buyers.

[Vai Frente]

I'm in the same situation.
Hard to believe I am competing with foreigners to buy a nice Condo in Brickell.
My budget: $500k - $700k
Not sure how long will last ......
Makes me want to say F@#k it and go up to Vero Beach or Jupiter.
Even further north to Volusia County, great deals, no foreign money competing.
Good luck !!

[valicky]

A friend of mine sold her house in a week to a cash buyer. They were New Yorkers.

[tallrick]

End the Fed, and the madness ends. Simple as that.

[doggiebus]

I know two people that have sold to cash buyers, one had the house on the market for three days and the other had it on for six days when they had a contract. Both buyers were locals, just moving locations. Both sellers had two offers, one from a cash buyer and one from a bank financed buyer. Both took the cash buyer because the process of selling to a cash buyer is much easier, than selling to a bank financed buyer.

To the Op when will it slow down with the cash buyers, I don't have a crystal ball. But I suspect there are plenty of people for multiple reasons that it will last for a while. The one buyer who bought my in laws place was a cash buyer and she was downsizing. She took the money from her more expensive home and just payed cash for this smaller home in a sought after neighborhood.

[Alex =]]

Fact:
Miami is home to many millionaires and upper middle class residents. Its middle class is strong. The most economically delicate groups are haitians and transplants from up north that can't communicate in two languages and lack the skills to find a decent job.

Miami-Hater Forumers general opinion:
People here have an empty fridge at home and that they just show off fancy cars they "can't afford".

[Cubanchic]

We were looking for a whole year and just got extremely lucky with this house which I won't feel like I have it until I got the keys in my hand this Tuesday. We probably payed 15k too much but it appraised right at our offer so we are ok.

In regards to your question, right now either super cheap and in your price range is what is going to cash buyers in good areas. I have also seen listing that sit for a while that only want cash buyers change. It took me a whole year every day looking at listings and tracking places to get this one, basically a full time job working with three agents. I think that based on which I have seen it is beginning to slow a little bit or at least not be as frenzied but it will mean you being on top of those place that your agent said was only wanting a cash buyer. I guess this is the new normal.

[Sugah Ray]

Lo Maximo,

i was gonna a buy a property with violations (cash only) a few years ago but didn't. I was always curious who bought that home because I know most Miamiams don't have that kind of cash in the bank. This is what I ound out today:

- The property was sold to what it seems a couple
- A year later they changed the title to a LLC (not sold but changed owership, very weird)
- the property was sold again to another LLC that has over 300 properties in the county. I think the property is being rented.

the original couple also had other properties and opened an LLC for each one. . I need to look further because I'm having Java issues but I smell foul play here

I'm starting to think like TallRick. I think our market is being artificially inflated. Next thing we know I'll be watching Alex Jone's Infowars.

[relocatingresearcher]

Hey, i heard about some loophole for foreign people that come here. Something about avoiding business tax if they change hands every 6 months or less.

[Lo Maximo]

To Doggiebus' point, you are right on that the sellers are going to take the cash offer because there is less risk involved. I think this is much more of an issue for houses/condos less than $650k. There seems to be this dynamic of cash rich outside investors (private equity funds, new yorkers, wealthy latin americans, etc...) buying and then renting out to cash strapped locals. I think the thing that will limit this at some point is that rents can't keep rising when local incomes are stagnant or growing at a much lower rate. I've already heard of an exodus of young professionals from some condo buildings because the rents are getting unreasonable. Hopefully this will slow things down. IF the international money stops flowing (Brazil's economy has already slowed down considerably but have no way to judge the money coming from Venezuela/Russia, etc...), and the RE market becomes dependant on locals it could get real ugly if/when interest rates finally rise.

I shouldn't whine so much because I am benefitting from this as prices in my condo building have gone up some 33% or so over the last year. It's just a very bizarre and frustrating situation as a prospective buyer.