Renters Market?

This question came in from a reader:

Hi Boom or Bust,

Could you please discuss what the current market means
for those who are looking to rent or lease? Does this
mean it is better, worse, or the same than those
looking to buy.

I think this would be an interesting post since many
of your followers probably have similar questions.

If not, could you reply to my email and let me know
what you think? And if you were looking for the best
deal in Miami for renting, where would you look?

Thanks so much for your help!

————–

Response:

Could you please discuss what the current market means for those who are looking to rent or lease?

The current influx of condo units is creating a glut in the rental market as well, particularly since there is such a high investor-owner rate. Apartment complexes are having to compete with the condo rental rates, because many investor owners are putting their units out to rent while they buy themselves time waiting for more favorable market conditions. This is good for renters in that it places lessors in a competitive bind. Some owners are so desperate to lease out their units that they are resorting to transient occupancy for tourists.

And if you were looking for the best deal in Miami for renting, where would you look?

It depends on where you want to live. The Brickell Yacht Club has rental ranging from the $1,500 to the $4,600 range depending on square footage.

One Broadway, also on Brickell, has a spread from $1,300 to $3,200

As you would expect, Brickell is rather pricey compared to Edgewater, where BayParc has rentals ranging from $1,000 to $2,200

I would check out the Gables/Coral Way Corridor and Simpson Park area for some more inexpensive yet desirably located apartments.

Renting in Condos Versus Renting in Apartment Buildings

Apartment complexes will have more reasonable deposit requirements than condos. If you’re renting in a condo, then the association is likely to request a deposit from you–this is in addition to the typical first and last month deposit required by the lessor.
So, you would have to be paying two deposits.

Tying up your money in such a way for a condo rental is only advisable if you are considering eventually acquiring a unit in a certain neighborhood or development and would like to sample the lifestyle before committing. In this respect, its an excellent way of knowing what you’re getting into before delving in. Other than that, condos will put forth more restrictions in all respects for renters.

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23 Comments

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23 responses to “Renters Market?

  1. Verticus

    Good advice. How ’bout lease-to-own where monthly payments count towards the unit’s mortgage?

  2. That would be ideal and it pertains to condos. A lot of owners would be receptive to such an agreement.

  3. mikey

    As a renter you have a lot of bargining power at this point, if a condo association requires a deposit insist that the owner put it up. Check Craigslist and other free sites, realtors don’t charge you anything to use them, but they charge the owner, who if they are looking at a certain number to break even will include it in their price. (one good site is through UM, they have an offcampus housing listing which you can use even if you aren’t a student) If I was going to rent I would go onto the Miami-dade clerks site to make sure that the owner was not in foreclosure. As far as negotiating you might want to know how much their mortgage payment is. (wiith a little research you can find their mortgage and then do a little math) Plenty of stuff out there, no need to pay too much

  4. Luis

    It’s true. If there’s a time when renters have clout, it’s in today’s market. Some owners aren’t willing to come out of pocket but they will negotiate with the association if need be. You could even split the deposit between the owner and the tenant.

    • Comment Not often do I encounter a blog that’s both etdeaucd and entertaining, and let me tell you, you may have hit the nail on the head. Your idea is outstanding; the difficulty is something that not enough individuals are talking intelligently about. I am v

  5. Keep in mind that most owners ask first, last, and security. However, you can offer First and last. Depending on the owners financial health, especially in this market, you will get a good deal.

    I also think there are great deals in Aventura and Sunny Isles.

    Peter.

    http://www.SantiagoLabs.com

    • You pay the taxes on the profit. You cautclale the profit by deducting from the selling price the following;Your cost (what you paid for it)Any improvements you made to it (you need receipts)Realtor commissions on the sale.Closing costs.Whatever is left is your taxable profit. You also have as a single individual a deduction of $ 250,000 every three years from capital gains so you only pay taxes on any gain above $ 250,000 ever three years.Talk to your accountant.I hope this puts a smile on your face. Was this answer helpful?

  6. Considering how the proposed tax solution making its way through the legislature is not offering much relief to commercial property owners, would it be advisable for someone who owns a commercial condo to sell the unit rather than lowering rental rates in order to compete for tenants?

  7. Its different for office condo owners, since there isn’t a glut in that market. The over supply exists in the residential sector. Vacancies are decreasing in the urban market for office space and $/psf is increasing plus there is a slight rise in new office construction. So, for all intensive purposes, office condo owners are in a much better position when it comes to weighing their options.

  8. I know I said commercial, but what I meant was residential condos that owners rent out to tenants.

    As it is right now with the property tax situation, it’s almost not even worth the hassle of owning such a property. If owners are going to have to lower rents in order to compete for tenants over the next two years, then I’m wondering if it would be wiser to just sell the unit right now.

    Because realistically, how much more property value can condos accumulate over the next five or ten years if the market is glutted with condos?

    • I simply deeirsd to thank you very much once more. I’m not certain the things that I could possibly have undertaken without these thoughts discussed by you on that question. This has been a real depressing concern for me, but taking a look at this professional way you resolved that took me to weep with fulfillment. I will be happy for this support and even hope you recognize what a powerful job you have been putting in educating the others thru a blog. I know that you have never got to know any of us.

  9. jps

    As someone looking into moving back to Miami soon, this was really helpful. Thanks!

  10. Carlos,
    It’s better, if one can, to lease the unit, wait for more flippers to get flushed out of the market, foreclosures to decline, and end-buyers to file in to the market, before selling under these unfavorable conditions. This may take a while and many investor-owners can’t afford to continue coming out of pocket while they wait for a market recovery.

    Given the unprecedented level of new construction, infrastructure improvements, planned public space projects, and foreign investment, property values here will rise significantly over the next decade.

    JPS,
    Welcome back to Miami!

  11. mikey

    Some people can’t afford to sell, and are left with no choice but to rent. If you bought in late 2006 and need to/want to sell now, you may have to dip into your own pocket to sell. I.e. bought for 350,000 can only get get 340,000 for it now, and still owe 350,000 because they bought at 0 down interest only. To sell you would have to come up with 10,000 plus any fees for the realtor. That or they walk away and let it foreclose

  12. Carlos, no prob, good questions.

    Mikey, finding a tenant in those circumstances is a godsend. It just goes to show how favorable market conditions are for renters right now, and I don’t see things getting better for owners any time soon. There are way too many units in the construction pipeline.

  13. It’s also important to keep in mind that rental corporations will raise rent every year at their discretion; worse yet you are tied down to a corporate contract. I’ve been renting for years in Miami and would much rather do so from an individual condo owner where it’s easier to negotiate.

    I have a friend who used to live at Mirador (previously Morton Towers) on South Beach and it was crazy how they raised the rent on her studio every year; then again, it was like living in an oversized shopping mall. Convenient, but you pay the price.

    Try mid-beach, but avoid waterfront. Rent fees here are very reasonable and you get more bang for your buck. Also, transient rentals are supposedly illegal unless the building is coded for such residential purposes … Xavier, do you have more info on that?

    As far as the market goes, I’m just going to say that my father works for a major architectural firm in Miami (he’s an architect) and it is so dead right now, it’s really not funny. Buildings are not being completed. Firms are starting to speculate away from Miami. They are all sitting around twiddling their thumbs, even the autocad guys.

    • I always advsie to dress the part. For example if your going for the role of a waiter then dress like a waiter, the role of a banker wear a suit, its all helps you visually when we review tapes. Its works for you and not against you. For period pieces though, I’m not saying you have to go dress in full period costume but perhaps wear your hair in a old fashion or a retro blouse etc. Its better than turning up like its Saturday night in Essex!

    • Normally I’m against killing but this article slaughtered my ignorance.

  14. Good points. when dealing with an apartment complex, negotiating lease terms is definitely more difficult than with an individual condo owner.
    However, condo associations have an aversion to rentals, because the higher the lease rate in a community the lower the chances are to procure association loans. through a quality of life standpoint, renters are often associated with unruly and often destructive behavior in they eyes of owners. So, the association can place caps on rentals, force deposits, and aggressively impose rules and regs on owners with problematic tenants.
    Most associations have tight restrictions on transient occupancy, but there are quite a few exceptions depending on the declaration of condominium and the policy a board of directors adopts. The company has to have an agreement with the association. Bentley on the Bay and Icon are two examples of associations that allow it. Miamihabitat.com and premiervacationrentals.com offer more info.
    The residential market is hurting right now, but things will smooth over once buildings get topped off and occupancy settles the dust. A pick up ion the office market will help propel the recovery. Great feedback LBS!

  15. lwg

    Not only are condo unit owners more willing to negotiate rents with versus apartment complexes, they’re also more interested in maintenance and making repairs to the place.

  16. I would say “follow the cranes”. Some of the yet unfinished buildings, originally intended to be sold, will have to become rental properties. These guys will be the most desperate right now and willing to rent at attractive rents. Or better yet, do a lease with option to buy on one of these properties as another person mentioned here.

  17. IWG,
    More efficient maintenance is usually true of condos. Unless the owner lives in Jersey, or it’s the Association’s responsibility to fix.

    Dave,
    That’s a great point. Some may switch to office. Great blog concept you got going. I’ve added you to my blogroll. Look forward to seeing it evolve.

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