Deal Assessment - New Condo in Miami Beach

[Account Closed]

Hey guys,

I am trying to asses the deal of a condo in 72 Park Miami Beach

https://72parkmiamibeachcondo.com/

The apartment is 1 Bedroom + 1 Den + 1 Bathroom 

755 Sq/f + 195 sq/f Balcony

14th Floor North facing

Price $1,150,000

The building is STR approved and these are the estimated income they sent me:

Daily Rate $530

80% Occupancy

$154,760 Yearly Rent

Management 20% - $30,952

HOA - $12,231

Property Tax - $20,826

Insurance - $1,087

Net Expenses: $34,144

Net profit $89,662 - %7.75

There isn't any other buildings like this in North Miami Beach that can really be compared to, I haven't found any data on AirDNA that can support such an income, and it seems like most new condos in the area are selling for $850 sq/f. 

I am trying to understand if this is a good deal, if anyone can give me "insider" insight into the likelihood of achieving such a return and in general what you guys think of this deal 

Thanks

[Brian Watkins]

Hi Daniel, I live on Miami Beach at the Bentley Bay and have much investment and real estate experience here. 

Nice that you are hustling to find a great investment property.

Much thanks for sharing what you found out regarding 72 Park Miami Beach.

Here are a few of my concerns:

1.) The # of new STR projects, plus new hotels coming to Miami Beach online over the few years.

2.) STR rates have fallen, especially in the "middle range" brands- 72 Park is a mid tier product in the worst section on Miami Beach.

3.) This summer has been the slowest I have seen on Miami Beach since I have been here since 1999. We are become very seasonal, as the record heat index is definitely keeping people away in JUNE, JULY, AUG, SEPT.

4.) There is nothing around 72nd street worth being around. I know the Carillon is on 69th- they sell they are a wellness center with little reason to leave. I see there is Denny's on the corner of 72nd and an IHOP on 69th.  There is not one luxury hotel anywhere near this area.  

THE EDITION (29th) & FAENA (32nd), 1 HOTEL (23rd), W is (21st), SETAI (20th), Ritz Carlton (17th)

I see you did $530 per night x 365 = $193,450 x 80%= $154,760.

I just went on Expedia and see the Carillon at $336 per night.

W HOTEL is $457 per night, 1 Hotel $439, St Regis at $615 per night, I just had friends here and they stayed at the Ritz Carlton for $455 per night.

I would use $530 from OCT, NOV, DEC, JAN, FEB, MARCH, APRIL = $111,300 x .70= $77,910

I would use $336 from MAY, JUNE, JULY, AUG, SEPT at 60%= $30,240

Total= $108,150

Management 20%= $21,630

HOA $12,231- seems a bit too low- new construct is notorious for low balling hoa until handed over to the residents. What does this HOA amount include????

Insurance $1,087

Property tax= $20,826 

Net Profit= $52,575 / $1,150,000 (not sure if this includes closing costs)= 4.57%

I will reach out to my AIRBNB management people tmrw Daniel and ask them what is going on. I'll get back to you tomorrow