Investing long-term in Miami, FL (Duplex or Condo)

[Joey B.]

Hello beautiful people of BP! I need some advice and insight. 

My main question is for condo-purchasing: If I purchase a condo in let's say Brickell or Wynwood, could I say it is more likely to rise in value long-term (15-20 yrs) vs. a duplex in Miami shores?

I have been living and renting in many different areas of Miami for the past 7 years and officially committing to purchasing a property somewhere in the area. I am looking to invest ideally south of North Miami (which includes Miami Shores / Biscayne Park), North of Coral Way (which includes Brickell / Downtown Miami) and East of Allapattah (which includes Wynwood and Midtown). 

I have been pre-approved for an FHA loan of 3.5% up to $515,250 for a duplex (looking for at least a 4bd/2ba), and based on HOA fees, I've been approved for about $450,000 for a condo (looking for at least a 1bd/1ba).

My plan for the long-term is to own the property for at least 15-20 years. Short-term is to move into the space by January 2022 (as my lease ends then) and live there for at least 1-2 years.

If I get the duplex, I would house-hack until it was my time to move somewhere else and rent both spaces within the duplex. If I get the condo, I would just rent it out after my departure in 1-2 years

Thanks in advance for reading and for any advice or insight you may offer to my situation and/or question above!

-J

[Bradley Sriro]

Hey @Joey B. I would lean more toward the duplex if I were you. From an appreciation perspective, over the long-term I don't think one will necessarily outperform the other by a significant margin. With owning the condo, you will have some disadvantages that don't come along with owning a duplex. The condo will have monthly association fees that will significantly eat into your bottom line once you move and rent it out. You also have the possibility of getting hit with special assessments over the years... these assessments can often be in the thousands of dollars. On top of that, while you live in the unit, you will not generate any income to offset your monthly mortgage payment. 

If you opt for a duplex however, you have a few advantages over the condo purchase. 

1. You will be able to house hack and rent out the other unit which should cover a good portion of your monthly mortgage payment. Once you move out and rent out both sides, you should be able to cash flow. It will be very difficult to cash flow with the condo if you do a long-term lease and most condos do not allow short term leases.  

2. You have the option to put less money down and thereby leverage the banks money if you choose. 

3. You don't have any association fees and/or special assessments to worry about... not to mention the general headaches that sometimes come with associations in general. Keep in mind that most association fees are not capped and they can rise significantly over the years. 

As @Malgorzata Sadowska mentioned, trying to buy a condo with FHA is virtually impossible. If you do go the condo route, you would ideally want to find a building that is Fannie Mae approved. Here is a link to Fannie Mae approved condo projects:

Fannie Mae Approved Condo Projects

Hope this helps... Best of luck!