All Forum Posts by: Jeffrey Chan

keep a chunk in reserves, try to do a BRRR. I wouldn't stop investing. people who invested in 2009 and 2010 during peak fear and uncertainty did great.

I don't see any slowdown in construction and new development as a result of concerns about rising water levels.  New homes are built well above the water table.

Be careful. There may be a prolonged downturn and as is usually the case with a recession and in general the economic conditions get worse, the first thing people cut is discretionary spending which includes travel. So if you do buy, be prepared to carry the costs if travel doesn't bounce back quickly. Also, you may have a situation where there is excess supply and too many providers of STR chasing too few customers, resulting in price discounts across the board. STRs are not my thing but if I were to do it, I would plan for low occupancy, and lower than previous rates. Remember, the market can remain irrational longer than you can remain solvent.

The inventory of legitimate triplex and quadplexes from Miami-Dade up to Palm Beach Counties is very low because historically, not many were built.  Unless you can make it work with duplexes with generally low cap rates for Tier 1 metro area, it's going to be tough.  I don't know DFW.

pour nearly one

If you’re telling me that you have 0 hospitality experience then I would advise against the hotel/motel. It seems that your problem is you don’t know where to start. I recommend picking an area of real estate covered in the BP book How to Invest in Real Estate, chapter 4 – Real Estate Niches, and go from there. At least BP members will be able to answer your questions. Hotel operations is a niche that’s not listed there and you may not get the help you need if you run into trouble. You have a lot to learn about the industry before you can even intelligently evaluate items (a) and (b) in your post.

Close to Miami, I would say every strategy listed there in the book is viable as a relatively repeatable strategy with the exception of small multifamily. In Miami-Dade and Broward Counties, historically, there just haven’t been many triplexes and quadplexes built so you’ll be waiting a long time to find a good deal. An alternative if you really insist on triplex and quadplex is building your own ground up which I can discuss with you more if you wish. Otherwise, just pick a strategy and work at it – in today’s market before the Chinese Wuhan Coronavirus affected us all, you could have made money in every one of those niches with the appropriate know-how and effort.

It may be a bit self-serving of me to recommend to you raw land and development because I am a contractor and would want to build for you but Miami being a major tier 1 city, there is a lot of competition for single family homes because it’s the easiest niche to deal with. Large multifamily – hard to find value adds at or close to the top of the market cycle plus low cap rates in Miami overall to boot. Commercial, mobile homes, notes, I have no experience with (except building commercial and mixed-use) and thus no comment. With raw land, developing single family homes and/or small multifamily, there’s much less competition – people are afraid of construction which is an added barrier of entry compared with fix and flip single family homes. You are also not competing with the large homebuilders like Lennar because they need to build scale and are out at the outer fringes of Miami where there is still enough available land. Yes there is more risk and a longer timeline from the start of the deal to exit but you should also be making significantly more than the average fix and flip for the effort to be worthwhile. If your friend knows development, partner up with him, start with something small, and see how it goes. With a local and reliable contractor like myself to hold down costs and schedule to the extent possible, that’ll be the best mitigating factor for the riskiest part (construction) assuming you buy the land at a good price, and have the correct expectation for selling price when it is done.  I can tell you from experience that building a single or two family house is not a complex process at all.  Building a multifamily building becomes significantly harder and riskier and more complex the bigger it is but for the smaller properties, it's no big deal at all.  

At $500K, without additional financing, you’re not going to be getting much at all in Miami Beach. Do you have any experience in the hospitality industry? If not, I would recommend learning more before you set your sights on a hotel/motel. With single family to small rentals, or fix and flip, you’re dealing with a product (house, apartment) which every adult in the whole world has experience with either as a renter or an owner. The sale/rental of houses and apartments is repeated every year all over the country by the millions, so there are no real unknowns. You can even read through the mistakes of other BP members to understand how badly your investment could go.

Hotels/motels and hospitality are a whole other ballgame. My first cousin works in hotel management based out of NY for an operator that operates nationally and I listen to her experiences with the South Florida market. The company regularly has to fly her from NY down to Florida to run things because the qualified and reliable talent pool down here is so limited. Your idea of “outsourcing of the hotel/motel” might not be as easy as you think. Any hotel operation would be reliant on people, and as is the case whenever you have staff, you have to deal with the possibility of turnover. This is just information she passes on to me – do your own due diligence.

Have you considered the possibility of a prolonged downturn? Whenever the economy tanks, leisure, travel, and restaurants are the first to go. If you buy now, make sure you buy conservatively – always remember that the market can remain irrational for longer than you can remain solvent.

With that much potential money, have you considered new development? The old school way of buying a plot of land and building a lot of cookie cutter homes is dead – there’s not enough land left close to central Miami. If you look at the big homebuilders such as Lennar, they are building houses far away. The next development trend near central Miami is vertical – low and mid rise apartment buildings.

more pics of the

concrete foundation pour

pouring the concrete for the foundation

When I first got to Miami and started looking at multifamily properties with 2-4 units in Florida, I discovered that very generally speaking, the higher up you go to 3 to 4 units, the fewer there are.  There are however a lot of illegal subdivisions, "bonus efficiencies," illegal buildings on lots zoned for single family, it's all crazy out there.  Make sure you check your property against the Miami-Dade property appraiser's website (google Miami property search and click on the Property Search Landing Page).  Enter the address of the subject property and see what it's zoned for.  The most absurd thing I came across was a single family zoned lot with 5 separate structures on it with 6 families living on the property. 

Listed on MLS at any one time, half the triplexes and quadplexes could be "fake" the last time I checked - do your own due diligence.

I'm not saying this to discourage you but be prepared to be very patient like @Alejandro Valdes, and get ready to sort through a lot of junk.  It's an unfortunate reality that generally speaking, in Miami-Dade and Broward counties, there never was mass production of tri and quadplexes and thus, inventory is generally low.