Daney Cabrera is the owner of The Daney Group, an expert real estate group in Miami. She works with her team daily to assess the inventory related to houses for sale in Miami and the real estate industry during the pandemic. Unfortunately, there is currently a lack of inventory.
Cabrera attributes the lack of inventory to the current interest rates. She notes that they are “at rock bottom.” As a result, many homeowners have refinanced their homes and bought investment properties. These investments give them extra income from renting out the units.
Rental prices are currently high, while mortgage rates are low. This creates what Cabrera refers to as passive income.
An area where there is a surplus of inventory is in condominiums. In Doral and Brickell, there are anywhere between 30 and 50 units for sale in the high-luxury market. In Cabrera’s opinion, this is because of the difference in return on condo rentals.
On a single-family home, people can get a seven or eight percent return. On a condominium, that rate goes down to three percent.
“I believe that a lot of investors are moving their money because the condo market isn’t giving them the same return,” said Cabrera.
Cabrera believes the purchasing process plays into the surplus in inventory for condominiums. It is harder to qualify for a condo than for a single-family home. This is not just because of the buyer, but also because of the bank.
The bank must approve the building and financial status. Many buildings do not have the right reserves or insurance coverage for bank approval.
Many families have been struggling financially during the pandemic. The competitive real estate industry could prevent these families from purchasing homes. Sellers are looking for the highest and best offers.
People may not be able to get a deal to reduce the price. With closing costs included, home-seekers may find themselves spending more than originally intended.
Despite these difficulties, Cabrera believes this is a good time to buy property. The interest rates are very low, which makes this a perfect opportunity.
To those hoping to buy a single-family home, Cabrera notes that they should aim to decrease their debt. You should not use more than 50 percent of your credit card line, because that lowers your credit score. Cabrera adds that you should be on no high lease payments. You should also have at least $30,000 saved.
For anyone looking for a condominium, Cabrera’s first piece of advice is to not fall in love with the unit right away.
“Understand the year of construction that the building was built in,” said Cabrera. “You don’t want to buy something that is so old and has proper coverage for insurance property and reserves.”
If the building has no financial reserves, unit owners will have to pay for damage. This includes damage due to hurricanes and other incidents. If the building has a reserve, unit owners will not have to pay for these damages.
Overall, Cabrera’s advice is simple. “Buy now, work on a good deal, and lock in a low interest rate.”