What is happening with Miami rental market?

Question

We have a 1br in the Hemispheres complex, on the barrier island (2nd line of buildings from the beach) in Hallandale Beach, FL. 2.5 years ago it was rented in under 1 month for 1450, while similar apartments in the complex were rented 1500+. (This is all 1year rentals, association only allows 1 rent a year). Now as tenant moved out its been sitting on the market for 2 months, only attracting low offers of 1350, not even sure if renters were qualified as we did not proceed with screening. This is currently lowest priced 1br in the complex at 1450, it is a nice unit on 10th floor with nice views,  not over-improved but nice. (MLS#:A10499901 )

It seems that now prospective renters are not willing to pay any premium for ocean properties. I don't see other apartments here  offered at low prices, at the same time they are sitting on the marked longer. Has anyone noticed a pronounced downward trend in rental prices in  Miami area? Is this a dead rental season? Is it a new market reality that rents are 10% lower than 2 years ago? I spoke with 2 realtors and they said rental market was good, at least as usual.

Thanks!

Pavel U. · Answer

Updating 'original' kitchen from 1970 is not an over-improvement, especially if you're not in a C neighborhood. Crappier and cheaper looking units tend to attract lower income tenants. So by lowering your rent you'll automatically start attracting lower income tenants. All my units have higher end finishes, and rarely sit on the market (except for fall/winter months - I'm in Minnesota), and attract higher income, high quality tenants. Also, I recommend hiring professional photographer to take professional photos of your unit. The pictures I saw were taken with an older phone or bad camera, and have someone else's old furniture in there.

Olga Kellen · Answer

a furnished 1br near the ocean in South Florida is really very good for a short term rent... picture your prospective tenant - who is he/she? snowbirds will be interested for sure...

Marc Winter · Answer

@Vera G. , can't answer your question about any downward spiral in your market, however I can respond to having an apartment sitting vacant for several months:  lower the asking price/rent.  You can't make up lost time, and if the property is sitting too long on the market, it will be overtaken by newer listings, and diminish the amount of showings yours get.

Possibly accept the lower rent for a month or two, and have the rent increase to your original price (put that in the lease) to get the unit occupied and cash-flowing again.  You might also consider a bonus to the leasing agent.

Good luck.

Karl Hinkel · Answer

Hi Vera, have you looked into shorter term rentals? 3-6 months would probably bring in a tenant and allow you to rent out your apartment. Also, Have you tried advertising on any platforms?

Karl Hinkel · Answer

Very good point, snowbirds have a big interest in South Florida for the winter. Also, lowering the rent is not a bad idea either. The longer the apartment sits the lower the asking rent may go, not based on the property just based on time on market. Lowering rent and getting a  piece of something is usually better than getting nothing - in my opinion.

Vera G. · Answer

It is another question whether higher end properties provide higher return on investment (I think no). Remodeled and  pricier units (in this complex) also sit on MLS for months, as far as I can see.  1.5 k is not exactly for low income tenants.

However, there is a fair market value in older properties and two years ago it was higher than what i can get now, based on my experience. I am wondering if it is a general trend in Miami rental market today.

Vera G. · Answer

All units in this price range have old kitchen. Remodeled units are 1600+. Other than the kitchen it has been updated.

Again there is a lot of caution on these forums against over-improvement of rentals

Pavel U. · Answer

In my opinion the place itself needs some improvements. It may be the lowest priced condo in the building, but it also looks like 1970. That could very well be your problem. Your choices are either to lower your price by $200/mo, or invest $10,000-$15,000 into it to bring it to 2018 and then increase rent by $200/mo.

Vera G. · Answer

@Marc Winter, thank you for advice, you are right of course about not being able to recover rent lost to vacancy. We lowered the rent however, it is the lowest 1 br in the complex currently, increased renters agent fee as well. The question is, how much lower should we get? The unit is not even paying for itself.

Vera G. · Answer

Rent in new construction is generally more expensive, if it is an oceanfront new construction it is a lot more expensive, a totally different market. Hemispheres and the likes are affordable yet well maintained, a luxury version of the 70s.  Are you saying that market has been diluted by new construction?

Craiglist really did nothing, the only leads are short term. But thanks, I will try Facebook!

What is happening with Miami rental market?

Most Popular Reply