The infamous condo market of Miami keeps on being a strong magnet for foreign investment, but it’s becoming harder and harder to differentiate investors and residents.
Condo buyers purchasing as their own residence today represent 1/3 of the investors, 1/3 use it for a second home and 1/3 as an investment to rent out. It is a very sought-after alternative in response to a very low rental inventory for the past 2 years. Overall, investors are prevalent in Miami Beach, Downtown and Brickell.
Those who purchase under $1 million tend to look for a return of 5% to 8%. High-end buyers focus on capital preservation and are satisfied with a lower return.
The new trend is about buying a second home as an investment. The more liberal the rental policy, the higher the demand. This way, owners can rent out their properties as vacation homes when they are not using them. In Miami Beach, investors tend to live in their units part of the year. Indeed, about 65% of condos are owned by international buyers – such as Venezuelans or Brazilians – who would rarely spend more than 3 months here.
85% of buyers of preconstructions in the central business district are investors who are likely to put their units on the rental market. The absentee/permanent condo resident ratio is 40/60. Then, there is the influx of snowbirds – those from the Northeast and South Americans. Buildings end up never being fully occupied. Other buildings in Brickell Key such as the Santa Maria are the opposite, as mostly family-friendly buildings that attract primary residents.
Sometimes investors end up using units way more than they anticipated.