Miami Beach Foreclosure Fantasy

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Getting all caught up in this real estate madness of chasing the next “best” deal to come on the market, certainly has its downsides and pitfalls. This obsession to find the perfect view, size, location, price, and all in a quality and not a distressed building, is at most just a real estate fantasy, a made for “Property Virgin” TV episode.

Here are some of the most common misperceptions that we commonly hear when “foreclosure hunters” visit our Miami Beach market:

• Cash is King; just because you can pay in cash does not mean that you can low ball the seller and offer way below asking. There are MANY cash buyers out there and you have some serious competition. This is particularly the case when bidding on a property in a high demand location or building.
• It’s All about Price; a value added real estate purchase is not ONLY about the purchase price! If the condo you are considering is in a financially stable building, with a high percentage of owner-occupants, a great location, low default rate,  with no major deferred maintenance issues or upcoming assessments, and conventional financing is available to buyers, then you have much less risk of further price deterioration and the safety of medium to long-term property appreciation.
• A Direct Ocean View; if you have always dreamed of waking up in your bed and looking over the ocean in Miami Beach, be prepared to pay significantly more for this direct view! Miami Beach is surrounded by water on three sides and there are multiple islands surrounding us in Biscayne Bay, such as the Sunset Islands, Venetian Islands, Palm Island, Hibiscus Island, Star Island, Belle Isle, Allison Island, and Treasure Island etc.  Therefore, the views vary GREATLY from location-to-location, building-to-building and unit-by-unit. You may just be able to buy that same 800 SF apartment with direct open bay views, as well as views of the ocean, Miami Beach, and the stunning views of downtown Miami at night, located on Treasure Island, which is just five minutes from the beach and ten minutes to South Beach, all for $80,000 – $100,000 less than that direct ocean view!
• It’s Only about Property Appreciation; this attitude will end your excitement and determination in a heartbeat. Real estate is not liquid asset that trades on a public exchange. While speculators enjoyed many years of unrealistic and unsustainable day trading in real estate, this is not realistic thinking or a smart approach to making a few bucks on your investment. Now don’t get me wrong, there are still many ways for a sophisticated real estate investor to make a quick buck in this market. However, as far as the general public goes, if you are buying that much desired second home or investment property in Miami Beach, you have to be thinking in terms of appreciation over five, ten or twenty years. And just as important, the pleasures of owning a second home in Miami Beach brings SO MUCH MORE to your life than just “how much will I make in three years?”
• Something For Nothing; people, stop deluding yourself. This is one of the most desired cities to own real estate in the world, and one of the cheapest! Everyone wants to experience and live in Miami Beach. Our 80,000 residents are truly a global, diverse, multicultural, open bunch of people. Our real estate is limited and we are built-out in most areas. There is a minimal amount of inventory coming online and most buildings are historically protected. Yes, there are a handful of new condo developments under construction on the beach with maybe a total of 600 new units and then that is it. This is not downtown Miami and the supply is limited.
• I Will Qualify For Financing; even if you have excellent credit, no debt and good income, the property you wish to buy may not qualify for several reasons. Nowadays the most common reasons are the lack of or no available condo association reserves, or more than 15% of owners are 30 days behind on paying their maintenance fees. Let’s face it, in the real estate boom days Fannie Mae or Freddie Mac would buy just about any mortgage on the secondary market.  Today, it is a completely different story.

I think it is important to work with the facts and the reality of the current real estate market. Many of our clients have been very successful in purchasing a property in a fantastic location for an incredible price. This is a result of having a realistic plan and working with the dynamics of this almost historic opportunity in our local real estate market.

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