The hot South Florida real estate market has no shortage in investors looking to get in on it.
We are used to seeing lines of people in Miami wrapping around the countless nightclubs and bars on a Saturday night. However, lately we are seeing more people line up for a different reason-South Florida real estate. Hundreds of thousands of dollars is what it takes to get in on the real estate boom that has hit Miami and South Florida and many investors have been know to wait in daylong lines.
One real estate agent and investor that arrived in South Florida four years ago just as the real estate tide was rising has made quite a profit. After investing his entire savings of $15,000 on a one bedroom condo and holding on to it for a year, it was sold and he made a profit of $13,000. With the profit he made on his condo he purchased a house which he is now selling for a $150,000 profit.
His goal now at 31 years of age is to buy 10 homes a year for the next 10 years in which time he will be very well off.
Flipping Too Good to Be True?
Newcomers to the flipping game may be taking a big gamble in the endless maze of condo developments. This massive speculative buying has artificially raised condo prices in Miami and throughout southern Florida. The appreciation is abnormal and in some buildings the units are doubling in price between the times of an initial contract to the closing.
People are seeing 200 %, 300 % and sometimes 400 % profit on their investments in a construction condo. Some people have referred to it as a “gold rush” mentality."
This new trend in condo flipping has helped to fuel one of the biggest residential real estate booms in the history of Miami. There are now estimated between 60,000 and 70,000 condos in various stages of planning, development and construction in downtown Miami alone and it’s these waterfront locations that are making Miami so desirable these days.
Signs of a Slowing Market
Like during the gold rush in the 19th century, those who got in early have done very well, but those who came late to the real estate game may find the prices too steep or inflated for them to see any real significant profit on their property.
One real estate hopeful bought a three-bedroom unit with views of Biscayne Bay for $1.l million and had planned to live in it for the duration of his life. However, the potential profit was too persuasive and he listed it on the market for $1.8 million. He was reported as saying, “it's time to move up and move out".
Some people in the housing industry say that there are signs the condo market may be cooling down and suggest that real estate speculators might end up like those who invested in the dot-com industry.
Even though supply and demand dictates that if you have too much supply, the value of the product goes downy, some real estate experts still believes that the Miami area is still a good bet.
Miami has a growing population with 1,100 people moving to Florida every single day. In addition to that, South Florida still has more and more vacation and second home buyers coming from Europe and around the world daily. In other words, if there are 100,000 units built in Miami, the buyers will come.
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