Platinum Properties Investor Network Says Cyclical Bottom May be in Sight for Miami Real Estate Investors

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With a -6.9% return on investment in 2011, more gloom is in store for Miami condos but sunshine may be in store for single-family properties

Platinum Properties Investor Network

Miami represents one of the most notorious bubble markets in the United States. According to Platinum Properties Investor Network, Miami’s prodigious rise and precipitous decline have served as a warning sign for the potential disaster that can await income property investors attempting to time value bubble markets.

Miami is a unique market area since it is segmented between two distinctly different classes of properties. These two classes are single-family homes and high-rise condominiums. The importance of distinguishing between the two comes from the fact that high-rise condominiums bore the brunt of Miami’s value free-fall while single-family homes are showing signs of stabilization. Platinum Properties Investor Network believes that investing in Miami condominiums is still problematic.

The collapse of values in Miami began in 2007 and continued through 2011, as properties were lost to foreclosure at record rates. Most of the value collapse in Miami was driven by the high-rise condominiums that came to exemplify the real estate bubble. For investors who purchased at the market highs, Miami has been a roller coaster ride of value destruction as leveraged losses escalated higher and higher. As 2011 comes to a close, many forecasts are indicating that Miami will begin approaching its bottom.

Upon hitting its cyclical bottom, it is likely that Miami will regress back toward a very modest rate of long-term appreciation. This process will be impacted by the release of foreclosure inventory that is being held by banks in the hopes that it can be introduced to the market after values have stabilized. There is a slight possibility that investors who buy into Miami at the right time can realize some value appreciation that comes from regression back to fundamentals off the cyclical value bottom. However, cash flow from properties in Miami is still quite low, relative to the current market values.

According to RealtyTrac, foreclosure filings rose in Florida, where 23,569 properties were reported in August, a 5 percent increase from July, but 59 percent below the level reported for August 2010, according to the latest RealtyTrac® U.S. Foreclosure Market Report. Florida had the seventh highest rate in the country with one in every 376 housing units with a foreclosure filing in August.

Five market areas that are currently favorable for income property investing include:

  •     Atlanta, GA – Population to grow 43% by 2025
  •     Dallas, TX -- Favorable business and tax climate
  •     Indianapolis, IN – One of Forbes top 10 cities
  •     Phoenix, AZ – The main Southwest commerce hub
  •     St. Robert, MO – Rapid job growth for next 5-10 years

Forecast Methodology
Platinum Property Investor Network uses return-on-investment (ROI) predictions for each individual market are based on three fundamental components not considered by other forecasters. Income property, unlike other investments, is a multi-dimensional asset class. The first is component appreciation (or depreciation), which is based on a composite of forecasts from CNN Money, Fortune and Hartman’s innovative Regression to Replacement Cost™ methodology. The second is leverage. The reason Hartman’s methodology separates appreciation from leverage is to pinpoint how much value is coming from the asset itself and how much is coming from financing benefits when acquiring the asset. The final component of the ROI predictions is cash flow where income property can be compared to bonds and dividend-paying stocks.

The Platinum Properties Investor Network’s model is the only one of its kind that includes a full ROI build. Most forecast reports begin and end their analysis with value appreciation or depreciation. Hartman and his team understand the full dynamics of return on investment and have chosen to create and report a complete ROI analysis for each of the targeted market areas.

About Platinum Properties Investor Network

Platinum Properties Investor Network was created to help people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Designed by Jason Hartman, the company’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs.

Through podcasts, educational events, referrals, mentoring and software to track investments, investors can easily locate, finance and purchase properties in exceptional markets with confidence and peace of mind. For information, visit Platinum Properties Investor Network online.

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Nicole Thome
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