New Development - Pre Construction in Miami

[Account Closed]

Hey guys,

I am looking into purchasing a new development pre construction condo in Miami that is STR approved for AirBNB. (Most new projects projected for 2026/2027)

I am aware that the market has seen significant gains both in home prices and rental prices over the past few years.

I wanted to get some feedback on your thoughts of making such an investment where the goal is:

1. Long term hold for appreciation

2. Maximize cashflow via STR (hoping to get 7-8% net)

Second question, with these goals which would be the most attractive area for such an investment: Miami Beach, Miami Downtown, Brickell, Midtown.

Thinking of getting 2 condos (1 bd or 1bd + den) ~$750-1M each

Payment structured are usually 30-40% until project is complete

Thank you

[Alex Giassa]

Hi Daniel, as a Miami-based Realtor who works with investors on new/pre-construction purchases, as far as location is concerned, I agree with your choices of Miami Beach and Downtown Miami.  I would suggest you also consider North Beach (yes, it's a neighborhood within the City of Miami Beach, but deserves it's own consideration for several reasons) and Edgewater (blocks from Midtown).  Here's why I like these neighborhoods:

North Beach - There's tremendous growth in this area.  Starting with the Community Redevelopment Act (CRA) put forth by the city; the Monaco Yacht Club Residences which were completed in 2022 consist of 39 units that start at $3.25mm. There are 600 condo units and 100 apartment buildings in the works and/or will break ground soon. I'd be happy to share with you the CRA info.

Edgewater - North of Brickell and Downtown Miami is a large area with lots of newer high-rises and an incredible number of future tear-downs and developments. It also, currently only has one of the only STR options that has a true a live, work, and play mindset with a generous list of amenities, including restaurant. NOTE: This project will be completed prior to the 26/27 timeframe.

I hope this adds gives you some local insight into what's going on.

[Stephen David Smith Jr.]

Hi @Account Closed,

Purchasing a pre-construction condo in Miami for the purpose of short-term rentals (STR) is a lucrative one given Miami's unique position in the global real estate market. Here's why:

1. Long Term Hold for Appreciation:

• Pros: Miami's real estate has historically shown strong appreciation, especially in prime areas. The city's rising stature as an international tourist and business hub, combined with limited waterfront property, suggests a promising upward trajectory for property values.

2. Maximize Cashflow via STR:

• Pros: As a top-tier tourist destination, Miami promises a continuous stream of potential STR guests. With effective management, properties in the right neighborhoods can yield handsome returns, potentially meeting or often exceeding your 7-8% net target.

Regarding the most attractive area: Each neighborhood you've mentioned offers unique benefits:

• Miami Beach: A world-renowned destination with high demand from tourists year-round. This area often commands premium rental rates.
• Miami Downtown: The epicenter of Miami's business and cultural scenes. It's a magnet for both tourists and business travelers.
• Brickell: A luxurious enclave known for attracting affluent visitors and business travelers.
• Midtown: A vibrant, upcoming area appealing to younger travelers seeking a mix of local culture, shopping, and dining.

Given your budget and the goal of purchasing two condos, investing in a combination of these areas could optimize both appreciation and rental income. For instance, one property in a tourist hotspot like Miami Beach and another in an urban center like Downtown could offer a balanced portfolio. On the flip side having 2 residences in one building does bring efficiencies from a management/ownership standpoint.

Finally, the payment structure you mentioned (30-40% until project completion) is fairly standard for pre-construction properties. Ensure you have a clear contract that outlines the terms and protects your interests. As a broker in the South Florida market, I've witnessed the opportunities Miami offers. I'd be more than happy to discuss further and provide insights tailored to your goals. Wishing you success on your investment journey.

[Ecaterina Katerina Morosan]

Hi Daniel,

1. Long-term hold for appreciation. Yes! As you might know already, a lot of big corporations and wealthiest people of the US have moved to Miami area in the past 2 years as well as families who follow better lifestyle for their children's future and themselves. make sure you buy a somehow unique product (for ex; water view, flexible layout, high ceilings, building amenities etc). 

2. Maximize cashflow via STR (hoping to get 7-8% net). I think 7-8% is an average cap rate for Miami investors to expect at 40% down even if you end up renting the unit as a long-term rental. So you should be good.

[Caroline Gerardo]

Things about condos to consider: HOA fee always goes up and has special assessments so you need reserve funds. STR can be banned. A building with to high STR non owner occupancy doesn't appreciate as buyers cannot get conventional or jumbo financing in the future. Getting HO6 insurance and a decent priced master policy is an ongoing mess.

Miami Beach is my vote for long term value.

[Alex Giassa]

Quote from @Caroline Gerardo:

Things about condos to consider: HOA fee always goes up and has special assessments so you need reserve funds. STR can be banned. A building with to high STR non owner occupancy doesn't appreciate as buyers cannot get conventional or jumbo financing in the future. Getting HO6 insurance and a decent priced master policy is an ongoing mess.

Miami Beach is my vote for long term value.

 Yes, to @Caroline Gerardo 's point - there are condo and condotel options.  Condotels are getting easier to finance, however, not as easy as a condo.

Currently, there are projects with HOA from $1.00 to under $2.00. In some cases, reserves are included in the HOA.

[Joe Biscaha]

@Account Closed I like 72 Park in North Beach. It just topped off and will be ready next year 2024. 

[Kasey Sulheim]

Quote from @Caroline Gerardo:

Things about condos to consider: HOA fee always goes up and has special assessments so you need reserve funds. STR can be banned. A building with to high STR non owner occupancy doesn't appreciate as buyers cannot get conventional or jumbo financing in the future. Getting HO6 insurance and a decent priced master policy is an ongoing mess.

Miami Beach is my vote for long term value.

 I can't speak for Miami but this does not hold true for Waikiki. Prices of legal Airbnb buildings here have skyrocketed. If they come on the market they are sold for top dollar to investors as income producing businesses. 

[Caroline Gerardo]

@Kasey Sulheim Florida and California have major problems with insurance. Hopefully after what happened in Maui, that won't create the downward spiral for HI. I'm not licensed in HI but know John Miller there.  

The insurance problem grows as we keep having more disasters (hurricane, flood, fire, pipe leak claims in the billions). Since condos need two types of insurance and many of the largest US companies pulled out, the cost tripled and with less coverage.

[Account Closed]

Thanks everyone for all the replies!

[Account Closed]

Some follow up questions for everyone:

1. Of all the areas, you suggested to me that there are areas that are more saturated in the construction of STR buildings that will be ready in the coming years when there will be much more competition in a few years on the market - for example Downtown - what do you think is the most strategic area for this issue? Is Miami Beach/Brickell better?
2. What are the advantages/disadvantages of a condo in Miami Beach/Brickell/Downtown?
3. Which area do you think has the most room for future appreciation as large companies and private people continue to enter South Florida?
4. In consideration of risk management, in case of - litigation against STR or saturation of STR apartments in the area, which area has the most value for long-term rent, that is, if I decide to move to long-term rent? And how realistic is it to move into such a building for long-term rent? (STR targeted new construction)
5. In terms of condo features: which features are the most important for an apartment and a building for STR? (For example - a view of the sea, the balcony, high ceilings, and what features of the building amenities

Thank you :) 

[Account Closed]

Quote from @Joe Biscaha:

@Account Closed I like 72 Park in North Beach. It just topped off and will be ready next year 2024. 

 How are the prices compared to presale prices?

I feel like I'm too late to the party on this one.

[Bob Stevens]

I would not touch it. Miami as most of Florida is way over priced. You hope to make may be 7%. Think about it. One downturn and you’re crushed. look at the pricing in the Gables it’s ridiculous. About 950 a square foot for 1500 ft.² nothing of homes it’s absurd. I live in the area and again I would not touch it. All the best

[Alex Giassa]

Quote from @Account Closed:

Quote from @Joe Biscaha:

@Account Closed I like 72 Park in North Beach. It just topped off and will be ready next year 2024. 

 How are the prices compared to presale prices?

I feel like I'm too late to the party on this one.

 72 Park is in pre-construction phase.  Studios are in the $700s.  

[Account Closed]

Quote from @Alex Giassa:

Quote from @Account Closed:

Quote from @Joe Biscaha:

@Account Closed I like 72 Park in North Beach. It just topped off and will be ready next year 2024. 

 How are the prices compared to presale prices?

I feel like I'm too late to the party on this one.

 72 Park is in pre-construction phase.  Studios are in the $700s.  

I know its pre-construction, but my broker told me it's a bit too late as the early birds got the good deals and the good condos for a better price its listed today. 

[Malgorzata Sadowska]

Quote from @Account Closed:

Hey guys,

I am looking into purchasing a new development pre construction condo in Miami that is STR approved for AirBNB. (Most new projects projected for 2026/2027)

I am aware that the market has seen significant gains both in home prices and rental prices over the past few years.

I wanted to get some feedback on your thoughts of making such an investment where the goal is:

1. Long term hold for appreciation

2. Maximize cashflow via STR (hoping to get 7-8% net)

Second question, with these goals which would be the most attractive area for such an investment: Miami Beach, Miami Downtown, Brickell, Midtown.

Thinking of getting 2 condos (1 bd or 1bd + den) ~$750-1M each

Payment structured are usually 30-40% until project is complete

Thank you

 Wynwood-not many condos there. The other one, on the water.

[Derek Latta]

Quote from @Alex Giassa:

Quote from @Caroline Gerardo:

Things about condos to consider: HOA fee always goes up and has special assessments so you need reserve funds. STR can be banned. A building with to high STR non owner occupancy doesn't appreciate as buyers cannot get conventional or jumbo financing in the future. Getting HO6 insurance and a decent priced master policy is an ongoing mess.

Miami Beach is my vote for long term value.

 Yes, to @Caroline Gerardo 's point - there are condo and condotel options.  Condotels are getting easier to finance, however, not as easy as a condo.

Currently, there are projects with HOA from $1.00 to under $2.00. In some cases, reserves are included in the HOA.

You both are correct. I'm a lender in Miami and we use non-QM loan products to finance condotels and non-warrantable condos. Yes, the interest rate is higher than a conventional product but surprisingly not by much. The typical LTV is 70-80% for these types of loans. Usually, for these types of projects you cannot go with conventional financing. Fannie Mae or Freddie Mac won't touch them.

Many buildings allow STR because they realize there are a lot of out-of-state and foreign national buyers wanting to place their money in the Miami real estate market because it is such a good investment. There are a good amount that allow for mid-term rentals (e.g. two rentals per year). Make sure your Realtor does his/her homework to find you the property that is right for your investing needs.

[Bob Stevens]

Quote from @Account Closed:

Hey guys,

I am looking into purchasing a new development pre construction condo in Miami that is STR approved for AirBNB. (Most new projects projected for 2026/2027)

I am aware that the market has seen significant gains both in home prices and rental prices over the past few years.

I wanted to get some feedback on your thoughts of making such an investment where the goal is:

1. Long term hold for appreciation

2. Maximize cashflow via STR (hoping to get 7-8% net)

Second question, with these goals which would be the most attractive area for such an investment: Miami Beach, Miami Downtown, Brickell, Midtown.

Thinking of getting 2 condos (1 bd or 1bd + den) ~$750-1M each

Payment structured are usually 30-40% until project is complete

Thank you

 Your crazy!! There is a bubble that is going to burst. I will not touch anything in FL unless I can get it 20- 30% off ask.  

[Derek Latta]

Hi Bob...there are a few STR condos in the areas you are interested in. There is one right now that is offering a 3% discount and they will pay for three years of HOA maint fee for their 2-3 bedrooms. They only have 54 units left. Not sure if you are looking for the pre-construction to be move-in ready now or finalizing in 2026-2027. There are a few questions I have for you that will help me narrow the list. Reach out to me at your convenience.

[Christian Busch]

@Account Closed I've looked at a lot of the pre-construction buildings and their projections. Most of them are very optimistic about occupancy % and daily rates when they do their projections. I've done the math on a few dozen of the buildings and individual units for buyers and have rarely found something that will truly make you more than a 4% cap rate. The high HOA fees plus taxes plus wear and tear and the intense Airbnb competition (tons of units) in Miami make it difficult. If you want to buy a pre-construction unit I'd rather try to find a project that just launched by a reputable developer (Mast, Related, etc) and buy really early to capture the appreciation that usually happens during pre-construction. There are also a few buildings that were recently delivered where a lot of resales are happening and some of those will be quite attractive to buy in this year. Feel free to message me if you want to chat further.

[Gary Ayer]

Quote from @Bob Stevens:

Quote from @Account Closed:

Hey guys,

I am looking into purchasing a new development pre construction condo in Miami that is STR approved for AirBNB. (Most new projects projected for 2026/2027)

I am aware that the market has seen significant gains both in home prices and rental prices over the past few years.

I wanted to get some feedback on your thoughts of making such an investment where the goal is:

1. Long term hold for appreciation

2. Maximize cashflow via STR (hoping to get 7-8% net)

Second question, with these goals which would be the most attractive area for such an investment: Miami Beach, Miami Downtown, Brickell, Midtown.

Thinking of getting 2 condos (1 bd or 1bd + den) ~$750-1M each

Payment structured are usually 30-40% until project is complete

Thank you

 Your crazy!! There is a bubble that is going to burst. I will not touch anything in FL unless I can get it 20- 30% off ask.  

 Institutional investors such as BlackROCK who just bought all major rental highrises in Miami are the sole reason why this market is completely different than the past one you are thinking about. The only time the market ever crashed in Miami seriously was because there was mortgage fraud going on and then the mortgage industry was regulated. Since then there has not been a major crash so it is impossible for a crash like that to ever happen again. Another thing that is unique to this market is that the pandemic opened up institutional investing in residential real estate by such large companies as Black Rock. Commercial real estate has taken a downturn in these commercial buildings are turning into residential buildings as people are working from home more often. Therefore because of the low inventory there is it 0% chance that there's going to be a crash so if you are going to keep this mindset I would highly suggest you do research on what's really going on with regards to inventory because you're going to lose out big time. I could make a case that yes some of the new construction stuff is overpriced that will come down but with regards to anything else besides that there is no market crash in general that's going to happen. Friendly advice and I wish you the very best of luck.

[Bob Stevens]

Quote from @Gary Ayer:

Quote from @Bob Stevens:

Quote from @Account Closed:

Hey guys,

I am looking into purchasing a new development pre construction condo in Miami that is STR approved for AirBNB. (Most new projects projected for 2026/2027)

I am aware that the market has seen significant gains both in home prices and rental prices over the past few years.

I wanted to get some feedback on your thoughts of making such an investment where the goal is:

1. Long term hold for appreciation

2. Maximize cashflow via STR (hoping to get 7-8% net)

Second question, with these goals which would be the most attractive area for such an investment: Miami Beach, Miami Downtown, Brickell, Midtown.

Thinking of getting 2 condos (1 bd or 1bd + den) ~$750-1M each

Payment structured are usually 30-40% until project is complete

Thank you

 Your crazy!! There is a bubble that is going to burst. I will not touch anything in FL unless I can get it 20- 30% off ask.  

 Institutional investors such as BlackROCK who just bought all major rental highrises in Miami are the sole reason why this market is completely different than the past one you are thinking about. The only time the market ever crashed in Miami seriously was because there was mortgage fraud going on and then the mortgage industry was regulated. Since then there has not been a major crash so it is impossible for a crash like that to ever happen again. Another thing that is unique to this market is that the pandemic opened up institutional investing in residential real estate by such large companies as Black Rock. Commercial real estate has taken a downturn in these commercial buildings are turning into residential buildings as people are working from home more often. Therefore because of the low inventory there is it 0% chance that there's going to be a crash so if you are going to keep this mindset I would highly suggest you do research on what's really going on with regards to inventory because you're going to lose out big time. I could make a case that yes some of the new construction stuff is overpriced that will come down but with regards to anything else besides that there is no market crash in general that's going to happen. Friendly advice and I wish you the very best of luck.

 HMM the title cos I know down here ( who said he's dead,) and my good friend who owns one of the biggest brokerages in Miami says Bob stay away big correction is coming, there very slow.  its already started. She actually wants me to get her rentals in Clev, so to me that says a lot .Look at the crazy high prices in the Gables, INSANELY HIGH. Look how much long there DOM there are and priced drops everywhere. I am not touching FL. Just in my building a 2/2 went from 800k, its now asking 625k, 

I wish you good luck 

[Robert Ellis]

Quote from @Account Closed:

Hey guys,

I am looking into purchasing a new development pre construction condo in Miami that is STR approved for AirBNB. (Most new projects projected for 2026/2027)

I am aware that the market has seen significant gains both in home prices and rental prices over the past few years.

I wanted to get some feedback on your thoughts of making such an investment where the goal is:

1. Long term hold for appreciation

2. Maximize cashflow via STR (hoping to get 7-8% net)

Second question, with these goals which would be the most attractive area for such an investment: Miami Beach, Miami Downtown, Brickell, Midtown.

Thinking of getting 2 condos (1 bd or 1bd + den) ~$750-1M each

Payment structured are usually 30-40% until project is complete

Thank you

 find undervalued land and entitle it and capture the delta of underpriced land. there's a lot of sites that are underentitled. I'd never buy a development unless I was confident in the valuation and there was data to back the feasibility of the build. having preliminary approval is very different than permit ready where you can put a shovel in the ground day one. I wouldn't buy one from scratch if you don't have the experience. especially in miami where it's one of the most expensive places for land in the country. the areas you are talking about can exceed more than 20 million an acre depending on height allowances  

[Jordan Ray]

Hey @Account Closed. What is the status of this post?