BRAZILIANS AND MORTGAGES ARE BACK IN MIAMI

Since the dollar has become stronger and condo prices are higher, many foreign investors are financing their real estate purchase. Fifty percent of them used to purchase their properties in cash but now they are turning to non-conventional loans.

A few lenders are now offering non-conventional loans to international buyers. These loans were only delivered to American citizens before. The criteria are tougher for international buyers who have to deposit a large down payment. Lenders also give higher interest rates than they would to residents. However, it still helps international buyers in investing into homes that are more expensive and would be out of their reach without a mortgage.

Let’s not forget that Latin Americans, overall from Colombia, Venezuela, Brazil and Argentina are still investing in the US market. These new loans from banks such as TotalBank, Milford, Connecticut-based Total Mortgage Services, Mount Laurel, and TD Bank, finance their investment.

Today, we are going to study the Brazilian market.

Brazilian investors are looking for an efficient and stable business, different from their risky market. It’s not only about investing in the real estate market in South Florida but it’s also about having a long and safe income.

For wealthy Brazilians, a second house in Miami has always been common. They bought expensive and attractive condos for their own use in this previous cycle. Now, since, their country is going through an economic turmoil, since the unemployment rate is increasing and the rents dropping (5.2% in the last year), the Brazilian investors are looking at Miami as a profitable investment. They have to think about how to diversify their business, investing outside of Brazil.

The rental market offers more protection to the landlord in the US. For example, if your tenant stops to pay in the US you just need a legal support to solve the situation. In Brazil it is quite the opposite, tenants are overly protected. Impossible to evict a family from your condo. Furthermore, in Brazil the tenants renegotiate rents downwards every year. The return rate has declined to an overall 4.4%. In the US the rental market saw a rise during the last 10 years.

As a consequence, in June 2016, Brazil is 3rd on the top of foreigner’s investors, after Colombian and Venezuelans. They had dropped to the 5th place during previous years.

During the gold times Brazilians were investing on luxury condos but changed business oriented on property management. The average vacancy rate now in Miami is 4.9%.

Not only do Brazilians invest as single individuals but more and more they invest in funds that buy real estate. These kind of investments are very spread out in Miami. With the same amount of money a single investor contributes to a bigger investment with higher returns. Thanks to these funds, the single investor will have an annual return of 8-10%. Furthermore, Brazilian investors are also attracted by commercial real estate and hotels investments, for a long term revenue.

We have to keep Latin American focused on the US real estate and especially on Miami. They can invest in a safe environment with a good profitability. Miami’s market is mature enough to provide this type of safe heaven.