Miami Condo Index – Brickell – November 2008

Hey RT,

Suzanne has a way with wives… convincing them to buy homes.

So I’m now into sunny isles due to the low crime rate. Does anyone use collins to drive south to work in the mid-miami beach area? Is there traffic at 8 am and going north at 4-5 pm??? If so, is it severe?

I’m renting and one thing I noticed about some of the sunny isles units, is that they have been on the market for 4-8 months with no bids. When I make an offer I usually subtract the amount that they have lost by not filling the rental and then make a bit better of an offer:

for example: Someone asks 2400/month but empty for 4 months. They are asking for 28800 over the course of a year. Subtract 4×2400 = 9600 from 28800 and that comes out to 19200/12 = 1600/month.

I will then offer 1700/month. I say take it or leave it. Would you rather have a year of income or risk keeping your unit empty for another 4 months without a tenant and then having to cut the price….

This strategy works in south beach because you do this to all 30 people per building all desperate for a tenant. One will take the offer. You people are forgetting. Even if there are lots of suckers willing to pay asking price there just aren’t enough human beings that even need a unit. The speculation resulted in 33% too many units. There is no one to even fill them.

Its like being at a party with 70 girls and 30 guys….

…where 60 of the guys are gay….

sunny isles
collins, starting at about 165th st, is a pain in the morning down to bal harbour. clears up from there. in the evening, it’s not as bad.

“Its like being at a party with 70 girls and 30 guys….”
—

And, your gay.

RT,
How can that be??!!!

I mean, look what AJ posted in the last thread:

“I am not offering my tenants 1 penny discount when their leases come up for renewal in July and Sept next year. In fact I will decide by April if I should raise the rent. The most I am willing to give is to keep the rent the same. If they want to leave, I will show them the door.”

Muir – AJ will show his tenants the door and the tenants will show him what an empty place looks like feels like month after month after month…. When you have lousy cards and you bluff, you have to live with your bluff if the other side calls you on it. In this market, it is best to be reasonable and helpful to tenants with a proven track record….a nightmare tenant could very well put you under. Somehow I think AJ is all show on this and would capitulate if push came to shove esp. as a landlord that already is having to supplement the holding costs of four rental properties each month. Once bad tenant could cost a bundle….and the domino effect could cause all four to go.

In this market, you are always going to see asking prices way above selling prices. When people ask why don’t sellers get realistic in their asking prices, you have to understand the financial situation of a lot of would-be flippers that own these units.

ie. Flipper 1 has $20,000 in assets. He has a loan for $400,000 on a condo that he might be able to sell for $300,000 and that he feels is going lower. He can’t contemplate offering or selling at $300K unless he has the extra $100K to give to the bank.

So he lists it at $400K because he’s got no other option besides to do that and hope for a miracle. You see this over and over. A slow bleed to foreclosure with their hands tied knowing the inevitable is coming

By the way, I would be qualified to teach at the graduate level in several areas….and of course 1st grade too since only 1st graders and graduate students are really eager to learn….

Seriously. I rent in a nice, recent building south of Fifth on South Beach. The ads on, say, apartment.com or realtor.com suggest that the apartment I’m renting is asking an average $1900/mo.

Then I go to Craigslist and there are three of the same units asking (via brokers, pity the landlord) $1699.

Moving is not a hassle, especially if you are moving to another vacant unit in the building and are already condo-approved. The maintenance staff will gladly take my pictures off the wall and move my stuff for $15/hour cash. They’ll even re-hang the pictures while they are at it and take control of the valet trolleys for free.

So here is my landlord’s position: I am an excellent tenant, no late or bounced checks, and he knows I have assets. (Down 40%, but still assets). He is currently charging me $1700. If I leave, he will face the very real risk of several months with no rent, and will use a broker to get a tenant.

Even if he gets $1700/mo instead of the $1,540 I intend to offer, after the broker, it’s still $1,530 for the first year – and he has no idea if the new tenant will clear the board, lose his job, be a pain in the ass, etc.

I changed my mind. I am going to offer $1,500. As an amateur at the landlord game, I have learned the rules quickly. A vacant apartment is a disaster.

Lucas, I really like your statistics (and am so glad you incorporated my suggestions). However, all your stats are pulled from the MLS. I believe they do not include apartments sold w/o a broker, foreclosures, and so on.

Since those sales are the real test of the market, don’t you think you should haircut 10% off the average price in your data? Or at least advise folks that your statistics skew to the over-priced as a result of omitting FSBO deals or foreclosures?

jamie – There might not be any life boats on this ship, but if you were prepared, had your life jacket on hand, knew how to swim etc. you’re much better off to pull through. This market is one that exposes all flaws….it is as if some turned on the lights at 2:00 a.m. at a dim singles bar and everyone became sober…. it is ugly. Or what WB said that when the tide goes out you see who isn’t wearing a swimsuit. Well the tide is more than out….there is a global credit draught and those that were over leveraged or used short term loans for long term needs are getting slaughtered… The inability to refi is killing people who even made modest debt decisions and they are forced to dip into other assets…and stocks are down. We are in a very bad place and the wealth destruction will continue for some time. I don’t think the pessimism has reached its bottom yet… It is time to get your financial house in order and simplify, simplify, simplify…… All hope is not lost yet, when it is then we’ll know we’ve hit the bottom.

Oh and the durable goods numbers will be out soon. If they are anything like auto sales, or even half as bad, scare talk of a recession will come back into the news….don’t fall for it, it is just a scare tactic to push through a socialist agenda. Now if retail sales for 4Q 2008 are off by more than 25%, then we can start talking depression…. Maybe this will really just end as the Great Recession….or my preferred Refi Madness.

#24 I meant “scare talk of a depression”

jamie /Nov 23, 2008 at 3:23 pm Vote:
“Seriously. I rent in a nice, recent building south of Fifth on South Beach. The ads on, say, apartment.com or realtor.com suggest that the apartment I’m renting is asking an average $1900/mo.

Then I go to Craigslist and there are three of the same units asking (via brokers, pity the landlord) $1699.

Moving is not a hassle, especially if you are moving to another vacant unit in the building and are already condo-approved. The maintenance staff will gladly take my pictures off the wall and move my stuff for $15/hour cash. They’ll even re-hang the pictures while they are at it and take control of the valet trolleys for free.

So here is my landlord’s position: I am an excellent tenant, no late or bounced checks, and he knows I have assets. (Down 40%, but still assets). He is currently charging me $1700. If I leave, he will face the very real risk of several months with no rent, and will use a broker to get a tenant.

Even if he gets $1700/mo instead of the $1,540 I intend to offer, after the broker, it’s still $1,530 for the first year – and he has no idea if the new tenant will clear the board, lose his job, be a pain in the ass, etc.

I changed my mind. I am going to offer $1,500. As an amateur at the landlord game, I have learned the rules quickly. A vacant apartment is a disaster.”
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Awesome post!!!

2 good books on the market you guys should consider, enjoyed them both.

Ascent of money by Niall Ferguson
Hot Flat and Crowded by Thomas Friedman

Better Days /Nov 23, 2008 at 9:28 pm Vote:
“Cut all of those numbers in half and then you’ll have something resembling a bottom.”
–
Only half?

@Aj (#30) I recommend The Snowball, the authorized bio of Warren Buffet.

I also recommend that you look up the buildings you have invested in on Craigslist.

I’m simply astounded that you have any idea of raising your rents. You are either an idiot or have idiot tenants.

That would have been interesting Muir because of the really low price!! The HOA rates are high though I suppose it is because it is gated.

This was not a conversion.
Established high-rise (25 floors) gated community of similar buildings plus golf course.
No HOA issues of many units in foreclosure.
It’s actually a nice planned community of high-rises and some low rises with lots of green areas.
–
My point was that it was returning to its Historical price.
Although I did not write why I passed, it should be obvious.
What I imply is that Miami will follow.
–

AJ
in these times…everyone should read (or re-read) mr. benjamin graham’s intelligent investor. it’s lessons are particularly relevant in these difficult days whether investing in real estate or securities.

as for thoma friedman, he’s a hack, although a popular one at that.

RT
don’t think you’ll see a dollar collapse (i’m assuming you’re referring to the dollar v. world currencies). whatever the underlying reasons for such a collapse would also then be relevant to the dollar’s competitors. everything would go in the crapper and the dollar will be no uglier than its other currency brethren.

jamie,
just started seeing your name on this list a couple of days ago. You must be a new guy (or girl?) or an old hag who just changed the name. I am still watching if you fall in the same category as the “arse” hole Mark etc, with your propensity to insult people and hurl abuses at them.
If you are someone new, let me tell you, things don’t work like that on this blog. Lucas may not censor you, but you will get marginalized if you attack people personally and call them names.
I have all the answers to the questions you posed but I will respond when you change your tone and language. If not I don’t give a shit about your posts or your comments.

AJ – Being terse with newbie isn’t going to increase the value of your real estate, sorry to inform you. I hope though that you get one or more sold since that would probably be best since you got way too real estate heavy as part of your portfolio. With that said, I looked at the photos, and quite frankly, I am shocked at the decor….old 80’s throwback stuff (or was that a 1970’s bubble screen TV?) for al yur high falootin’ ways and talk, I don’t think they’d even sell that decor in Wal-Mart in the clearance aisles….maybe Big Lots or Dollar General. Seriously, the decor is yuck vomit. Particle board shelving and furniture? That is just wrong. Other then that dig….that I just HAD to do….hope the sale goes well.

AJ,
The problem is that you lose all credibility when you post something like this:
“I am not offering my tenants 1 penny discount when their leases come up for renewal in July and Sept next year. In fact I will decide by April if I should raise the rent. The most I am willing to give is to keep the rent the same. If they want to leave, I will show them the door.”
ALL credibility.

Muir, actually I had but I never read through the 21 pages of pdf, sorry. I guess we agree then. By the way did you write that?