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Investing in Miami: the fine print of the contract that causes headaches for Argentines

Miami is one of the favorite destinations for Argentines when it comes to investing in real estate. However, lured by property prices and the dollar gains they will be able to make on future rentals, many do not take into account the cons, the fine print of the contracts, when they become owners.

The warm climate, low taxes and high quality of life, combined with the ability for many to work remotely during the pandemic, made property in South Florida more in demand than ever in the past year.

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In fact, official Miami-Dade data indicates that the sale of apartments in condominiums increased 43% and set a historical record. With tickets that start at $ 200,000 (studio apartments) and can go up to $ 600,000, the new projects exhibited the posters of sold out (Sold) 90 days after its release.

What is the fine print of investing in Miami

The fine print of the contract brought many headaches to those inexperienced who did not think about the expenses in dollars that would generate them having a property in that city and today they rethink the investment made.

In Miami the rental contracts are for one year

  • While the ordinary expenses have a reasonable cost, as long as it is a fairly new building, of less than 10 years; As you age, due to state regulations, “it is necessary to pay extraordinary expenses that in many cases are very significant and they keep the earnings obtained from a year’s rent,” he details. Solange Esseiva, director of H54.
  • On the contrary, if it is a relatively new venture, “the money obtained from the rent is enough to maintain the costs of the apartment all year long, as long as when you do not have a credit for more than 30% of its value“.
  • The conditions for rental contracts in Miami depend on each building and are for a year. “This means that if the tenant does not renew, it is feasible that we have the apartment unoccupied for at least a month and depending on the state that has left it it is possible that it will have to be painted, generating that single fact the loss of 10% to 12% % of annual gross profit “, specified Esseiva.
  • Furthermore, most of the buildings in Miami do not allow temporary rent by arrangement of the condominium association, setting as maximum limits 2 or 3 rentals per year. “Thus, they prevent the owner from taking advantage of a rental alternative that will give him the possibility of maximizing gross rent or better coping with adverse market moments,” he said.

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Therefore, before buying, you must check whether or not rents are prohibited in the condominium and if there is any clause that allows it to be rented once the year of ownership has passed.

“You always have to look for those condominiums that have less rigid rules, although there are very few that allow you to rent them temporarily all year round”, clarified Esseiva.

  • Meanwhile, if the person who buys an apartment She is a foreigner, she needs to have someone to attend to the tenant and take care of carrying out the necessary repairs. “For this you have to hire a Property Management, whose cost ranges from u $ s 50 u $ s 100 dollars a month, by department, “said the owner of H54.
  • In addition, to protect the investment it is essential to hire a annual fire and civil liability insurance, “Another cost that in principle nobody says anything,” he warned.
  • Finally, for the purposes of not paying the inheritance right Structuring the purchase through a Florida corporation is advised (not in personal name), which has a significant annual cost over the rent.

What is the net profit on an investment

Currently, a department of 60 m2 in the Brickell Ave area and Downtown Miami rent for u $ s 2500 per month, which gives a gross annual profit of $ 30,000 (7.5% of property value) but a profit net of u $ s 9,165 (2.29%).

“We get to this number if we deduct the annual cost of the building association (u $ s 5335), the real estate tax (u $ s 8000), the fire and civil liability insurance (u $ s 1000), the corporate structure ( u $ s 1000), the real estate rental commission (u $ s 3000) and the Property Management (u $ s 600) “, specified Esseiva, who warns to take into account all these items before closing a real estate transaction.

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HELEN HERNANDEZ

Helen Hernandez is our best writer. Helen writes about social news and celebrity gossip. She loves watching movies since childhood. Email: Helen@oicanadian.com Phone : +1 281-333-2229

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