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Miami Condo Market Outlook for 2018

Condo prices will continue to drop

Condo prices will continue to their slide from 2017, Given that the supply of luxury condos on the market currently exceeds two years and sales remain slow especially the new condos in the urban core that were all bought in a bullish market, while those buyers are now trying to offload in a bearish market.

However Condos listed at $600,000 or below, as well as single-family homes in every price range, signs are pointing up for 2018,

Condo glut at recession levels

“At the end of November 2017, we have five years worth of condo inventory over $1 million in the market,” This is the highest total in one month since the recession in 2008.”

That figure includes condos currently under construction and condos that have hit the resale market. This has forced sellers to recalculate their listings, dropping prices by double-digit percentages. “The average price reduction is around 19 percent.

The New Tax Law  

There were essentially three changes in the new tax law that will have some amount of impact on real estate costs:

1) SALT Deduction - Why people from NYC and SFO need to move to Miami
Previously, taxpayers were able to deduct state and local property and income taxes from their Federal tax return. This still remains the case but is now limited to a cap of $10,000. It seems this will primarily impact high-income individuals or those with more expensive homes (and higher property taxes).

2) Mortgage Interest Deduction
The mortgage interest deduction is now limited only to the interest on a loan of up to $750K (formerly $1M).

3) Increase in Standard Deduction
A potentially more significant impact on how homeowners file taxes is the increase in the standard deduction to $12K for individuals and $24K for joint filers.

Investment Properties
Individuals looking to purchase investment properties have a lot to like with the new tax plan. The limitations on property tax and mortgage interest deductions do not apply to investment properties as investors can still use those expenses when calculating their net rental income or their basis for capital gains (thereby reducing the amount of tax they pay).

Furthermore, the new plan provides some additional deductions for pass through real-estate holding businesses.

*Disclaimer - we are not tax professionals - please seek any personal tax advice from your favorite CPA”

Distressed Deal in the Market
Brickell City Center : 1BD + 1.5 BR | Class A building
Current Listed Price: $475,000 | Total Sqft: 1,040
Taxes : $666 / year
HOA : $800/month
Current Rent : $2,550/ month
Current Net Return after expenses : ~2.8% at the listed price

The prices was reduced from 499K to 475K since the last newsletter. Unit was initially listed at $587,000 initially
ICON - Brickell  : Studio | AiRBnB Rental Investment property | Class A Building
Current Listed Price: $294,000 | Total Sqft: 495
Taxes : 425/ month
HOA : $520/month
Estimated Current Rent : $2,000/ month
Current Net Return after expenses : ~4.2% at the listed price

Only Building in Brickell Area which allows AiRBnB rentals
Spread The Distress Word

Varun Hemraj

Real Estate Advisor
Keller Williams Realty
Copyright © 2018 All rights reserved.

Disclaimer: The information contained in this report was obtained from sources deemed to be reliable. Every effort was made to obtain accurate and complete information; however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. Source

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Real Estate · 55 SE 6th St. · Apt. 4202 · Miami, Florida 33131 · USA

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