As a Realtor, I spend most of my day looking at properties in Miami, Miami Beach, and Sunny Isles Beach. Recently, I've been noticing a disturbing trend. I've seen owners of several condo properties "flip" them, making a quick profit. There are several of these properties listed for sale at any given time.
The center of activity seems to be Downtown Miami where there has been a strong demand for condos from all-cash foreign buyers, which has led to bidding wars on bank owned (REO) properties. Condo "flippers" have been attempting to capitalize on this demand by purchasing cheap units at the Miami-Dade courthouse auctions and listing them for resale on the MLS. Some of these units end up being incorrectly categorized on the MLS as "Bank Owned" in order to stir up interest and possibly start a bidding war. Many Realtors have filters setup that will notify them when new REO properties hit the market.
It's a dangerous game that these flippers are playing. In buildings with an abundance of foreclosures like The Club at Brickell Bay (1200 Brickell Bay Dr), they are competing directly with banks unloading inventory. Until condos move out of the hands of the banks and flippers, its hard to imagine any sustained rises in condo prices.
It has been well publicized that bulk investors have been scooping up condos in Downtown Miami at a deep discount. While I wouldn't characterize them as your traditional "flipper", some of these investors have already started to resell their units. I liken their business model to that of an electronics retailer who might buy 10 televisions for their inventory and then sell them one at a time, pocketing the markup in the process.
The Miami Herald reported in August that "Prodigy Capital Investments, a newly created corporation based in Miami, has purchased 10 units in the Brickell on the River South condominium for $156 per square foot". According to the public records, Prodigy Capital Investments has already resold several of these units for prices ranging between $200 and $220 per square foot.
There you have it. People are flipping units as we speak. It will be interesting to see if the flippers are able to consistently make money in the long run.
The author of this post, Marc Knight, is a Realtor and investor
2 comments:
Don't tell me we have to play this same old song yet again.
Flippers are the grease making deals happen. Many flippers lost massive money as they walked away from huge deposits. No flipper should claim "bank owned" if that is a lie.
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