It’s Not About the Money…It’s About the Sun, the Fun and the Rings!!!
July 9, 2010
by: Lucas Lechuga
They say Rome was not built in a day. I tell you tonight that the Three Wise Men of Miami have built Downtown Miami within a night. The Three Wise Men offer not gold, frankincense and myrrh but instead development, commerce and beer. The drinks will flow in Downtown Miami. The crowds will cheer, the people will spend and those who might be fortunate enough to witness NBA’s greatest team will be merry. This is an era of Miami basketball that will be long remembered, but never forgotten.
As I sit in Downtown Miami listening to the sounds of car horns filling the sky, I can only think of one thing. This is the single greatest moment for the City of Miami. Bigger than the movie Scarface, which put Miami on the map. Bigger than Miami Vice. Bigger than all of the rock stars, models and paparazzi who followed the celebrities in the 1980s to their paradise enclave. That was their Miami. Today, I present to you the new Miami. This is the beginning of something bigger and better than any developer or city official had ever envisioned for the city. This is Miami Bitch! And Miami’s Three Wise Men will proliferate an era within Downtown Miami within two years that could never be achieved within two decades.
Miami was the hotbed of the recent national real estate crisis. The epicenter of investor speculation. The Godfather of mortgage fraud. Prices tumbled here 50-70 percent from the peak. It was ripe for the picking. Miami was where real estate investment dreams were made. This was it. This was the moment where five years from now everyone who was fortunate enough to be connected to the City of Miami could say, “Damn…I coulda, shoulda, woulda”. Tonight was the moment where In one fell swoop, that was all washed away. Long forgotten.
LeBron and his crew, made up of Dwyane Wade and Chris Bosh, made the statement that it’s not about the money…it’s about the sun, the fun, the glitz, the glamour, the neon lights and the championships. The three perennial athletes proved tonight that it’s more about their legacy than it is about the benjamins. It has been written that Benjamin Franklin once started off his day by asking the question, “What good shall I do this day?” and ending it with “What good have I done this day?”. There’s no question that the newly crowned Kings of Miami have done very much good for the City of Miami and ohhhh so much good for Downtown Miami. It’s not about the money. It’s about the good of the city and, as I’ve said for weeks, LeBron James joining the Miami Heat, will do more good for the city than ten condo developers building ten glitzy high-rises could ever do for the city.
Best day in the history of Miami? That’s a bit of a stretch.
[…] It's Not About the Money…It's About the Sun, the Fun and the Rings … […]
Did everybody get employed with a raise along with the Heat announcement?
Sounds like a puff piece from the National Association of Realtors…
I thought that was the day Art Teele shot himself!
Yea I think you’re pushing it bit. Maybe had one too many cocktails while listening to the car horns. Have you been around the area near the arena? People are going to flock there and then flock right out. (And I have lived 10 blocks from the arena for over 6 years.) You sound like a real estate broker from 2004.
I also vote “The King” as the worst nick name ever.
Joe – So if that wasn’t the best day or night for Miami, what was? Marlins championships? Yawn. That didn’t do much for the city. What event in the past has changed the city dramatically? You don’t think a superstar like this will have numerous affects on the city?
So surprised how people can not see the type of impact this will have in the city. In Chicago alone, they estimated in the papers that if Lebron signed there, he would bring in 3 BILLION dollars more revenue for the entire city per year. Sooo, even if “only” brought in an extra 1.5 BILLION for Miami, that is not a good impact? No one thinks more restaurants, bars, buildings will be built and SOLD if there is a big attraction in a city like Miami?
I have to edit my comment. It is $3 Billion over, 6 years. That is still a lot of money for a city. I can’t think of anyone else or event that can have that big of an impact.
http://www.chicagobusiness.com/cgi-bin/article.pl?articleId=33441
This is huge for Miami.
I agree 100% with Lucas, Fred and all the others who can see that this news is nothing but positive! For all you depressed, negative folks go ahead and find something more to complain about. Miami is now on the map. This will have awesome consequences for Miami and the real estate market. This is the best stimulus package any city could get.
DML
“This is the single greatest moment for the City of Miami. Bigger than the movie Scarface, which put Miami on the map. Bigger than Miami Vice. Bigger than all of the rock stars, models and paparazzi who followed the celebrities in the 1980s to their paradise enclave. That was their Miami. Today, I present to you the new Miami. ”
Take it easy on the melodramatics, Lucas….
I must say, as a resident of Miami, I am highly embarassed if (a) LeBron, (b) Scarface, (c) Miami Vice and (d) Parties w/ Versace/Stallone/Madonna are considered Miami’s “greatest moments.” That’s just cringe-worthy.
If you had to call out one specific instance I think this should definitely be near the top if not the top. This is not like simply winning a championship. This guarantees increased economic activity downtown for years to come. This process has clearly overshadowed the NBA finals. The Miami Heat is now the “team” of the NBA. Years from now there will be people in all cities walking around with Heat jerseys. And this from a team that didn’t even exist 22 years ago. All Heat games will pretty much be televised in all markets. This will literally change the landscape of downtown. Heck that’s one of the first things that the ESPN analysts said after Lebron’s decision and I doubt he’s also a Miami Realtor.
On national television, in one of the most famous (or infamous) moves in sports history, the most famous basketball player announced that he’d rather play (and live) in Miami over world class cities like NY and Chicago. And Chicago would have arguably had the best roster to win a championship next year with him. You can’t buy that kind of publicity. I don’t know how many times I’ve heard in the last week that Florida has no income tax. If anyone didn’t know they definitely know now.
Immediately you can expect a couple more thousand fans at each and every game. That’s over 75,000 people heading downtown each season. Then add the almost 20,000 people at the extra playoff games they’ll be winning. Downtown bars, parking, hotels, etc. are all going to benefit from this.
Think of things like the plans for a new downtown convention center and Miami WorldCenter. Projects like these look 100 times better overnight.
Miami isn’t really a basketball town and one wouldn’t expect it to be considering they’ve only had a team for about 2 decades and considering the other other pro-sport options. But having Lebron, Wade and Bosh on the same court pretty much changes that overnight. And none of the other sports are really located in as good of a location as AAA.
[…] This post was mentioned on Twitter by Marc Kevin Hall, Lucas Lechuga. Lucas Lechuga said: Impact LeBron James will have on Miami: @KingJames #lebronjames #chrisbosh #dwyanewade #espn #MiamiHEAT #freeagency[…]
The rise in attendance at Heat games is a huge negative for downtown. Four hours of closed streets is not a positive for any homeowner in this area. Many of the buildings featured in this site will suffer tremendously.
WildBill
“The rise in attendance at Heat games is a huge negative for downtown. Four hours of closed streets is not a positive for any homeowner in this area. Many of the buildings featured in this site will suffer tremendously.”
This clearly points out that you simply want to present everything in a negative fashion. Having a successful downtown sports franchise helps out every other single downtown that has one but is will somehow HURT Miami’s downtown???
If Miami struck out and Wade went to Chicago and was stuck with just Chalmers and Beasley you would be arguing the exact opposite that now Downtown is doomed because attendance at AA will drop even lower.
The prospect of a championship team is great for Miami, but I fail to see how this is going to pull Miami out of its real estate slump.
Here in Boston we have pretty good basketball, baseball and football teams, and two of the teams play their games downtown. The owners of the Celtics still have an empty condominium tower downtown with over 100 unsold and vacant units, now going on two years, and the developer of the W hotel and condominiums recently filed for bankruptcy (with another 100 unsold condominiums).
The problem is that the “core” of Miami is NOT a sports city. Check out downtown/SoBe during the Superbowl… it’s just another day. The suburban areas care about and support the sports teams, but the rest of Miami could care less. That’s pretty much due to the transient/international nature of downtown/SoBe. Most people are here part time or full time for only a couple years and never develop into fans. It’s different in places like Philadelphia/Boston/Chicago where you get generations of sports fans in the household.
Shaq was the biggest thing in basketball coming into town with the promise of multiple championships… It made kids in Pinecrest excited.
This people on this site have selective amnesia. The old Heat/Hockey arena brought in very little real estate improvements to the area. The area around the Orange Bowl is a trash bin. A sports arena will only bring in a mass amount of traffic. The current AA arena had hundreds of parking spots removed due to these buildings that you are now pitching. This area cannot handle a packed arena. The residents of Park West better hope that attendance doesn’t reach 20,000.
From CoreLogic numbers this week:
In West Palm Beach-Boca Raton-Boynton Beach, 20.3 percent of loans were 90 days or more past due in May. That’s up from 15 percent in May 2009.
In Fort Lauderdale-Pompano Beach-Deerfield Beach, 22.8 percent of loans were 90 or more days past due vs. 17.5 percent in May 2009.
In Miami-Miami Beach-Kendall, 28.2 percent were 90 or more days past due, up from 20.7 percent in May 2009.
In Orlando-Kissimmee-Sanford, 20.6 percent past due vs.16 percent the year before.
—From Sun Sentinel article.
I agree that you don’t have generations of basketball fans in Miami. But how would you considering a basketball team didn’t even exist 23 years ago. Even if all the new fans that attend the games are from the suburbs all that does is bring money from the suburbs into downtown which is clearly a benefit for downtown.
Besides this is how Dynasty’s are built. If they make serious runs for the championship over the next 5 years and win it a few times you will have created a climate to bring basketball fans in and create some history for them to be a part of. If MJ never played for the Chicago Bulls that team would pretty much be irrelevant. Kids attending these games with their dads watching the Heat win championships will be fans for years to come.
Wild Bill, you don’t think that stadium will be sold out every home game? If so, you are underestimating this whole thing. If you do some research you will see what the avg attendance was in Cleveland before LeBron got drafted and what it was after. You can find online how much revenue the team and city was bringing in every game when he played.
Sorry to burst your bubble but I’ve lived in many cities on three different continents and I have never seen a sports arena bring positive development to a neighborhood. Yankee Stadium, Wrigley Field, The Orange, they add nothing to the neighborhoods where they are located. The fans come in, park their cars and afterwards they leave. There’s very little in downtown Miami to attract city dwellers.
This is all hype! Lebron said “I’m gonna take my talents to South Beach and join the Miami Heat! Was that a Freudian slip?
I have never been a basketball fan but this news got me glued to the TV. Drew is partly right. Scarface and Miami Vice are not a measure of milestone moments of this city. But then again Miami is a young (100 year) old city with not much of a history.
Gixxer in post 11 summed it up the best. This is a big deal for downtown.
Wild Bill is irrelevant. He will whine and bitch about everything.
These are the events that will top the Lebron news as ground shaking development for Miami.
1. Miami will host 2018 or 2022 Football World cup.
2. Miami will be chosen to host the Summer Olympics ( wont happen in our lifetime).
3. Miami will host the World Expo.
4. 10 fortune 500 companies announced that they are moving their headquarters to Miami.
5. Property taxes are abolished and replaced with sales tax.
Anyone else is free to add to this list.
“A sports arena will only bring in a mass amount of traffic.”
Then how do you account for the countless sports arenas that bring more than traffic??? I worked on the the new Washington National stadium project here in DC and I can assure that it has helped to revitalize that area. It really depends on the location of the Arena and the planning involved. You can’t drop a stadium in the middle of nowhere and expect things to happen naturally. It takes a combination of a good location, a good plan and a good team.
They pretty much had no success in the old arena. They were even getting ready to move the franchise to another city at late as 1997. They didn’t even become decent until after that and then move to AAA in 1999.
Average per game attendance is already over 17,000. Every single game from here on out will now be sold out. Go to the website and try to get season tickets and this is what you get:
“Thank you for your interest in the Miami HEAT! We’re so glad you’re interested in becoming a season ticket holder. We’d like to put you on our waiting list because over the past few days, we’ve sold the bulk of the seats from our available inventory. But in the next day or so, we’re going to release additional ticket inventory.”
Downtown has been adding restaurants, bars, etc. to the tune of 40 per year. This is only going to help to sustain them and bring more.
Here is an article about the Lebron leaving Cleveland and the possible economic impact there:
http://www.nba.com/2010/news/07/04/james.economy.ap/index.html
“Assuming the average person spends $20 to $30 downtown eating,” Sydnor said. “You might lose about $20 million a year from people coming into the city from the suburbs who wouldn’t come otherwise.”
Skeeta – Wrigley Field brings nothing to the neighborhood!?!?! Please tell me that was a sarcastic comment.
Reality Check,
Last season, the Miami Heat average home attendance was about 17,770 which is 90% of seating capactiy. Assuming every game is a sellout, you are going to bring an additional 1,500 people or so to Downtown during home games.
Also, worth noting is that the arena was sold out for Shaq’s first 3 years.
Maybe Shaq single handedly started the downtown development boom? Do we all have Shaq Diesel to thank for Icon Brickell, Epic, Novecento Brickell, Mary Brickell Village?
JL,
No shit Sherlock that’s what we’ve been saying all along. Reread post #12 and #23. 19,600 – 17,730 = 1,870 more people for each home game. There are 41 home games so that’s an additional 76,670 fans each year coming into downtown. Then add in probably 8 extra playoff home games at 19,600 each game and that brings the total of additional fans each season to 233,470. In 2006 there were a lot less options for entertainment downtown. Heck, half the condos weren’t eve built by then. Downtown is clearly a happening area where people are choosing to live. This only add to that.
People here seem to be making opinions on Miami based off of the OLD downtown. There are probably 160 new businesses, 10,000 new condos and 12,000 new residents in downtown just from 2006.
lol @ skeeta, it’s named Wrigleyville for pete’s sake. I was just there on Friday night, most fans take the train in, the area bars and restaurants were still crowded with people spending money 10 hours after the game.
Cocaine is the biggest thing to happen to Miami.
You people are out of your freaking minds. Best day in Miami’s history? A boom for downtown? Are you guys on crack?
And you, Gixxer 1000, should be ashamed of yourself. Study after study after study has shown that sports arenas are, at best, revenue neutral for cities. If sports arenas and sell-outs are so great, why did it take over 10 years of haggling to get the Marlins stadium approved and under construction? (And the Marlins play TWICE as many games per year as the Heat and have a higher seating capacity.)
Beyond all that, as JL just mentioned in #25, the Heat had this guy named Shaq a few years ago. He was kind of a big deal for a while, but I don’t think he was the reason 50 new condo towers were built.
If you guys want to applaud Lebron’s arrival, that’s fine, but I suspect a lot of you will be embarrassed if you come back and read these idiotic comments a year or two from now. Frankly, I’m a little embarrassed for you now.
Joe -Wild Bill- JL, Dont hate on miami so much. why cant you guys be happy for miami just for once? It is not important if this is going to make the downtown into another manahttan. It is just a great news that someone preferred miami over New York Or Chicago and said no to billions of possible extra dollars by being in those big cities. It is very positive for the image of miami which has been battered of late.
I would not be surprised if the 3 of you hold hands to do a rain dance and pray that a big hurricane hits miami. you all should be ashamed of yourselves.
Gixxer,
I understand you aren’t smart enough to make it in the NE. But seriously, a mediocre intellect down in FL won’t make you a genius. It will make you another NE failure that thinks they’re a genius because they moved down to FL.
You get lost -EXTREMELY lost- trying to extrapolate every piece of data you can find. Yes you will get 10%/1,500 more people per home game (and home games will be sellouts like they were in the Shaq era). However, only a mental midget would extrapolate that to “the total of additional fans each season to 233,470.”
Hello!!! the smarter analysis is to say the same subset of 1,500 additional people will be showing up for each of the home games. This doesn’t open up Downtown Miami living to 100’s of thousands of new eyeballs.
In reality, it only motivates a couple thousand more white and Cuban fans from Pinecrest and Coral Gables -who already happen to know plenty about Brickell- to make the trip while the native downtown inhabitants complain about the inbound traffic that makes it harder for them to get to South Beach during game nights.
You need to live here to have a chance at understanding the culture.
phelps — No one is “hating on Miami.” We’re just pointing out this little thing called “reality.”
Lebron saved $6 million in taxes by signing with Miami instead of Cleveland, and $12 million in taxes by signing with Miami instead of New York. It’s not like he took a 50 percent pay cut to come to Miami.
As for downtown, I’m sure LeBron will help with attendance, and maybe some restaurants, etc., will do a little extra business. But that’s it. He’s not going to sell condos or spur development. A lot of the comments above are just looney tunes.
phelps,
I’m not hating on Miami. I’m laughing at people who don’t live in Miami and try to extrapolate events using a mindset cultivated from a different city. Let me state it again. People who live in Downtown/SoBe tend to be transient and or part-time internationals. Sports are not a high priority (except in teh Burbs) and nothing will change that. Instead of getting enthused on a game night, people downtown will probably get more annoyed by the traffic. It’s just how it is down here… don’t fight it.
Joe,
The main argument against sports arenas is that they simply divert money from other leisurely activities and I don’t completely disagree. But in this case it’s pretty much irrelevant because I’m not arguing that this will do good for Miami as a whole in the short term. I’m simply saying that this will divert more money into downtown and therefore DOWNTOWN will benefit. Will most of that money come from the suburbs and other close areas like Ft. Lauderdale…yes. I just saw on ESPN that is projected that downtown will lose $48m in business each year. I guess you could argue that they’re not really losing that money because the people will simply spend it in another area of Cleveland.
As a side note people are gathering right now for the welcoming party for the Wade, Lebron and Bosh at AA Arena. Do you really think all of these people are simply going to go home and none of them are going to walk next door to Bayside to spend money?
Now over the long term I think this will provide additional exposure for Miami and help to solidify Miami as a world class city.
JL,
My argument has nothing to do with buying condos. I’m talking about additional people downtown who would otherwise not be there spending money to park, eat, etc.
Again they are reporting that the decrease in business in downtown Cleveland due to Lebron leaving will result in $48m leaving their downtown. So it doesn’t seem unreasonable that the increase in business in downtown Miami would be somewhere near that amount.
Joe,
“As for downtown, I’m sure LeBron will help with attendance, and maybe some restaurants, etc., will do a little extra business. But that’s it. He’s not going to sell condos or spur development. A lot of the comments above are just looney tunes.”
That’s my exact point. Bar, restaurants, etc. will do extra business and help the growth of new businesses making downtown an even more desirable place to live.
Lebron choosing Miami just goes to show what I and some others have been saying all along, that Miami/south Florida is a special city and the same rules that applies to most places in the country can not be blindly applied to Miami when it comes to real estate market. That being said I fail to see how having Lebron playing for the Heat will change things drastically. It will have somewhat of an incremental positive effect but i don’t see how it will magically raise the standard of living of the people of Miami, it will create more lower paying jobs maybe a few more people will get hired at the bars and a few of them will get together to rent out a few more downtown condos. For the most part we are talking about low paying part time jobs being created. Attendance will be high for the first few seasons but the teams will definitely raise ticket prices until attendance starts to decline. Remember Miami has so much going on during basketball season, it is not like being in Cleveland in the middle of January.
Definitely a positive for Miami though.
Gixxer: only tourists go to Bayside. Maybe you’ll figure that out when you move here.
Gixxer: twice above you’ve mentioned the economic benefits of people spending money to park their cars. How the hell does anyone other than the monopolized parking garage/surface lot ownership benefit from charging $25 a car. “Pumping dollars in the local economy,” right? I’ve heard that line before…
Again, if you lived here, maybe you’d know that a certain parking lot tycoon controls almost all of downtown parking and spends his profits on Ferraris and Fisher Island condos. And Manhattan co-ops.
I think it is a great thing that the Heat has some more star players….Lebron definitely is the headliner. It will definitely create a continued national buzz and some marginal positive economic effect. What would make a much bigger difference is for the three stars to make coordinated service announcements encouraging education and getting a high school degree (and to go back for a GED as the case may be). Now THAT would have a real positive effect for South Florida across the board. Just think if star students got to go to a game for free and meet the players with a photo-op too. The Heat games are quite the production and a lot of fun.
With that said, I don’t think this is the hallmark of a new Miami….good golly, we need more models (which has really been curtailed in the last few years), rock stars, and high profile entertainers……not just (usually not the brightest) athletes (and I know quite a few pro athletes). Miami needs more of the mystic of being like a Hollywood of the east coast. Promote what you got….tropical paradise. Burn Notice probably has a bigger positive effect than LeBron.
Drew, I am a local and I go to Bayside. I find many restaurants that are value for money.
“Derek Fisher, at an impasse with Lakers, to take a meeting with Pat Riley in Miami”
http://www.latimes.com/sports/la-sp-lakers-derek-fisher-20100710,0,4281740.story
I live at MARQUIS and the traffic issue on game nights is way overstated…..locals know to just stay off Biscayne…(granted not easy to do if you live at ONE MIAMI)…. from our building or 10 MUSEUM or MARINA BLUE or 900 it’s just a right turn out of the garage and then 2 blocks to the 95 and it is easy to get anywhere…..
LEBRON is obviously a HUGE positive for downtown Miami…..you can debate the exact $$$ but the national publicity alone can create faster progress in this area….
Miami is a loser’s city.
R u guys really that naive to think he chose Miami cuz he loves it?
Talk about perks under the table
And by the way, did u see his announcement: “I am going to South Beach”? Lolol
U probably only worry about this if u live in Miramar or Homestead..
Sobe people couldn’t care less..
You guys should check out the history of Roddy Burdine Stadium. Go visit the area. Show me what sixty years of having a stadium has done to revitalize that area. Why so little mention of Little Havana real estate investments on this site?
The attendance numbers for Miami Heat and Marlins games in the last few years don’t add up. Many people have stated this. I think they count Mediterranean Fruit Flies not actual people.
A.A. Arena was never built with proper parking. Parking figures were estimated by using a parking lot figures within a billion mile radius to the arena The arena, nightclubs and performing arts center all use each other parking lots. Someone is going to suffer. Who will suffer the most? I doubt it will be real estate owners in the area. After all they live in Miami and Miami is the best city in the world.
http://www.usatoday.com/money/industries/travel/2010-07-10-miami-image-lebron-james_N.htm
Renter Tom said at Jul 10, 2010 at 12:33 am: “Miami needs more of the mystic of being like a Hollywood of the east coast. Promote what you got….tropical paradise. Burn Notice probably has a bigger positive effect than LeBron.”
USA Today article at Jul 10, 2010 at 8:30 am: “• Hollywood East. With LeBron’s entrance — and local film incentives recently put in place — Miami Dade County expects filmmakers to spend a record $125 million in the county next year, estimates Jeff Peel, the county’s film commissioner.
The hit TV shows CSI Miami and Burn Notice both are filmed there.”
Why the hell would filmmakers spend more money in Miami just because Lebron came to town? Is Lebron also a star of major motion pictures, too?
I know some of the people on this board were in fantasyland, but some of these Lebron comments have proved it once and for all.
Swiss luxury is right. The traffic issues around AAA is overblown. But the traffic at the Miami river bridge at ICON is another story.
RT is right on, ….good golly, we need more models (which has really been curtailed in the last few years), rock stars, and high profile entertainers……not just (usually not the brightest) athletes (and I know quite a few pro athletes). Miami needs more of the mystic of being like a Hollywood of the east coast. Promote what you got….tropical paradise.
But CSI Miami is actually shot in LA with just a few shots of Miami thrown in between. That is not right. They should film in Miami.
Joe, these comments only show that they are forever hopeful and you are eternally depressed. You need some happy pills bro.
why bother — I’m not depressed in the least. I just don’t go through life completely ignoring reality. The idea that Lebron James is going to change the face of Miami is utterly ridiculous. What can Lebron do for Miami that Shaq couldn’t do? Shaq was way more mainstream by the time he came to Miami, from the NBA to movies to TV commercials.
Seriously, Miami, show some self-respect. It’s nice Lebron is coming to town, but that’s it.
Joe – My comments were not about LeBron causing more filming in Miami but that the area needs more and more and more filming which creates a mystic across the globe. The USA Today article continued to say “Also, now that James will live in Miami, Peel expects the star’s upcoming film project, Fantasy Basketball Camp, to be filmed there.” But that is a pretty small project.
Apparently a banner airplane company got some business out of it since a plane just flew by that said: “Garcia Smoked Sausage Welcomes King James To Miami”.
This should put to rest all negative arguments: Especially read this in the page 2 or the original article ”
The LeBron Effect showed up Friday in ways big and small — even pumping a little energy into the real-estate market. Edgardo Defortuna of Fortune International Realty said he had phone calls from fans in Brazil, Venezuela and Argentina — including one Argentinian who told him he’d buy an apartment at the Icon in downtown Miami if de Fortuna could score him Heat tickets.
Agent Penni Chasens of Cervera Realty said LeBron’s move convinced a buyer to cough up an extra $100,000 to sign a near-$1 million deal at a condo at the Marquis near the American Airlines Arena”
LeBron means big bucks flow to Miami
.A day after his big announcement, the `LeBron Effect’ was already being felt in South Florida hotels and restaurants.
Miami Heat Welcome PartyMiami welcomes the three kings of the Miami Heat as Lebron James, Dwyane Wade, and Chris Bosh join the NBA team in a spectacular show at AmericanAirlines Arena on Friday night.CHUCK FADELY
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[email protected]
Like a shot of espresso to a recessionary hangover, news that the NBA’s most sought-after free agent is “bringing my talents to South Beach” created instant excitement Friday for tourism promoters, hotels and others who stand to win when stars swarm into Miami.
Call it the aura of LeBron James, one that brings with it the cachet of celebrities in and out of the game, and the prospect of fresh dollars flowing in. “LeBron isn’t just a basketball player, he’s a brand, and that brand is sold worldwide,” said accountant Tony Argiz, a partner with Morrison, Brown, Argiz and Farra.
MULTIMILLION IMPACT
Argiz threw out an economic impact estimate of $500 to $600 million, factoring in the increased value of the Miami Heat franchise, the multimillion-dollar homes Bosh and James are expected to buy, and the potential bonus of multiple Miami playoff series over the next five years.
Neisen Kasdin, lawyer and former Miami Beach mayor, said he thinks the Heat triple play could be more significant to the city than the Marlins stadium now being built in Little Havana.
“This will have some of the Art Basel effect on Miami,” said Kasdin, referring to the cultural and business development spurred by the highly successful fair. “You have a happening event that draws the world’s attention to the community in a way that makes people want to invest.”
That kind of real economic impact takes years. But already Friday, the LeBron Effect was showing up downtown as well as in Miami Beach, where ailing boutique hotels like the Gansevoort South, Shore Club and Sagamore could use a boost.
James was ensconced overnight in one of the 25 rooms he’d rented at the W Hotel in South Beach. The reservations team at the Fontainebleau Resort was busily fielding inquiries for package prices with Heat tickets and had received “numerous requests” from sports agents about throwing events at the resort’s cabanas and restaurants and nightclubs, said president and general manager John Rolfs.
“You couldn’t have scripted it better,” said William Talbert III, CEO of the Greater Miami Convention & Visitors Bureau.
The signings brought an immediate shift in press coverage. “Look at what has happened in the last 24 hours,” PR specialist Tadd Schwartz, who promotes downtown, said. “We’ve spent the last year talking about the condo crash, foreclosures and the oil spill. For the past 48 hours, all of that has changed. Now we’re talking about LeBron and what that brings.”
South Beach restaurant magnate Myles Chefetz of Prime 112 reported a jam-up of text messages from pro athletes, sportscasters and regular diners wanting to make sure they’ll still be able to get a table at Prime 112, the sports celebrity haunt where D-Wade watched James’ nationally televised lovefest on ESPN Thursday night.
It’s at places like Prime 112 where the NBA-celebrity connection thrives, and hospitality types are salivating that heat over the Heat could help pull the Beach and a developing downtown scene out of the stubborn economic slowdown.
Former Miami Dolphins safety Louis Oliver, who now promotes social events that attract professional athletes, likened the buzz to the Beach of the 1990s, when it shot into the stratosphere as an international party center.
“You may have to make reservations months in advance to go to . . . top places,” Oliver said. “It’ll pick up everything from hotels to taxis.”
why bother,
I have to disagree with you and RT that Miami needs to be further promoted as a tropical paradise. This is already what Miami is know for. In fact Miami isn’t known for anything as most people simply think South Beach as soon as you say Miami. That reputation is already solidified in the mind of pretty much everyone. So to me the real opportunity for growth is the promotion of the city and more precisely downtown. As I have mentioned before when talking with other young professionals at several different graduate programs you can see that the image is shifting.
Currently most young aggressive professionals head to metropolitan cities such as NY, Bos, DC, Chi, etc. and then after they achieve success and are tired of grinding out 12 hour days and 6 day work weeks they begin to think about moving to places like Miami or getting a second home there because of their few vacations. That to me is slowly shifting and having a metropolitan downtown is a large part of that. And having a downtown located sports team competing for the championship year in, year out helps to showcase that. Again remember the Miami Heat didn’t even exist 22 years ago, Miami is a NEW city.
Here is a good example of what I’m talking about. Manchester Business School, a school located in the U.K. chose downtown Miami as the place to set up a satellite campus in the Americas:
http://southflorida.bizjournals.com/southflorida/stories/2010/06/07/daily5.html?surround=lfn
“The launch of the MBS Americas Centre in Miami is an exciting development for the school – giving us a presence in one of the most important business locations in the world and provides students in the Americas who seek a world-class M.B.A. access to a truly global program,” MBS Dean Michael Luger said in a news release.”
Bringing 600 executive from around the world to study in Miami which they label as “one of the most important business locations in the world” helps lead to real growth. This is what needs to be promoted to provide strong substantial growth in Miami. South Beach will continue to sell itself.
Having LeBron, Wade and Bosh playing in Miami is a _very_ positive thing. The economic impact will be positive. Peopel throw around numbers and they may be right, but at a minimum, the effect will be positive.
The biggest impact will be the positive PR/Buzz being generated about Miami. I am willing to get bet that tourism, conventions, movie_studios are more likely to come to miami now then before.
The directy impact of extra tickets/parking will be minimal. Also, with the exception of Bayside, there are no restaurants/bars within walking distance. Maybe if they had a convenient way for people at the AAA to get to Sobe, Coconut Grove, Mary Brickell Village, etc, the impact of having all these people would be positive. I think if they had a metro mover station directly inside the AAA, it would be good. Right now, you have to walk 2 blocks to get to the metro mover station. Also that station is not desinged to move large numbers of people.
I have been to a few heat game and after the game, we walk to the car and drive back to Coconut Grove (where I live).
Gixxer 1000 – I don’t know why you comment so definitively on things you don’t know. You don’t about marketing either apparently. Miami has a lot more to do to create “the mindset of the mystique of miami as a tropical paradise” filled with sun, fun, beach, sea, and beautiful young people. The word “Miami” needs to evoke positive emotions and desire. Not old people, crime, lousy service, and humidity. With respect to businesses, you target market to them the economic benefits of locating here. TV shows and movies go a very very long way to creating this mystique and are far more effective then direct government efforts…and it is free! Having Miami and South Beach in popular songs helps too. LeBron is a positive for sure….but he can always go to another city and another town…..the sun, fun, beaches etc. stay…… (or at least until global warming puts it all under water! LOL).
LeBron means big bucks flow to Miami
A day after his big announcement, the `LeBron Effect’ was already being felt in South Florida hotels and restaurants.
BY DAVID J. NEAL, MIKE VASQUEZ, ELAINE WALKER AND JANE WOOLDRIDGE
[email protected]
“Call it the aura of LeBron James, one that brings with it the cachet of celebrities in and out of the game, and the prospect of fresh dollars flowing in. “LeBron isn’t just a basketball player, he’s a brand, and that brand is sold worldwide,” said accountant Tony Argiz, a partner with Morrison, Brown, Argiz and Farra.”
“Argiz threw out an economic impact estimate of $500 to $600 million, factoring in the increased value of the Miami Heat franchise, the multimillion-dollar homes Bosh and James are expected to buy, and the potential bonus of multiple Miami playoff series over the next five years.”
“Neisen Kasdin, lawyer and former Miami Beach mayor, said he thinks the Heat triple play could be more significant to the city than the Marlins stadium now being built in Little Havana.”
Never pin your hopes on a single individual……..ESPECIALLY athletes! They can get injured (numerous), drive drunk and kill someone (what’s his name), drugs/steroids, soooo many athletes fall – Tyson, Vick, OJ, even Tiger Woods.
http://www.foxnews.com/slideshow/sports/2010/07/09/athletes-broke/#slide=1
Anyway, let’s hope LeBron does well and he and the rest of the team represent Miami well too.
RT – I didn’t mean to jump on you above. For one thing, I thought someone else was using your handle, since it started with “Renter Tom said …” and I had never seen you use the third person before.
Anyway, I agree with you that more filmmaking is good for Miami. I just don’t see how LeBron will cause a big spike, aside from his own projects. It’s not like Miami was unknown to Hollywood; Miami has been in a lot of blockbuster films in recent years.
——
Gixxer 1000 post #51 — I agree with some of your comments. Frankly, as I’ve been hinting above, LeBron’s “I’m going to South Beach” comment actually should have been seen as an insult by non-South Beach residents. It seems LeBron himself views the actual city of Miami just as most So. Fla. visitors do: As flyover country en route to the Beach.
That said, I don’t know that a satellite business school much proves your point. That school is obviously targeting well-heeled people from Latin America, so Miami is the only obvious U.S. choice.
——
From the Herald article above:
“LeBron isn’t just a basketball player, he’s a brand, and that brand is sold worldwide,” said accountant Tony Argiz, a partner with Morrison, Brown, Argiz and Farra.”
Argiz threw out an economic impact estimate of $500 to $600 million, factoring in the increased value of the Miami Heat franchise, the multimillion-dollar homes Bosh and James are expected to buy, and the potential bonus of multiple Miami playoff series over the next five years.
— This guy seems to have dubious accounting skills. The increased value of the Heat franchise means nothing unless the team is sold, and it would benefit only one person/family. The “multimillion-dollar homes Bosh and James are expected to buy” most likely already exist and have owners, so those transactions are a wash. Some NBA playoff series could add money to the economy, but the Marlins’ two world championships didn’t do much for So. Fla., so I don’t see a changing face of Miami because of a basketball team’s player signing. Most of these comments just seem like they’re from a bunch of butt-kissers who are trying to get noticed by Team LeBron.
Here is a story from bloggingstocks.com about 6 companies that will benefit from Lebron’s arrival:
http://www.bloggingstocks.com/2010/07/09/6-miami-companies-heating-up-with-lebron-james/
Joe,
I don’t think its an insult considering all you have to do is cross a bridge to get to the beach. Let’s be honest when people say NY 99% of the time they really mean Manhattan, and only lower Manhattan at that.
As far as the business school the Miami campus was chosen to service students from both South America and North America. In the past if the rest of the world wanted to do business with America or Canada they simply set up shop in NY as South America was an afterthought. But now many South American countries are becoming hot emerging markets. So if you’re only going to have one location and you want to service both North and South America Miami makes a lot of sense. It also doesn’t hurt that office space is much cheaper than the insane NY prices.
Miami DDA realizes this which is why one of their MAIN goals is to position Miami as “the Epicenter of the Americas”. It has the perfect location as well as a combination of both cultures. They are doing many things to try and promote this such as getting a conference center downtown with more of a business focus than the one in Miami Beach. They are trying to get the FTAA and foreign consulates to have a major presence or possibly place their headquarters here. And they are even looking into the possibility of having some type of international event.
RT,
I’m stating my opinion. Although I can tell you that I usually at least READ about everything I comment on while I doubt many here don’t.
As far as the promotion of Miami as a tropical paradise I don’t think you understand what I’m saying. I clearly stated that South Beach would continue to sell itself. As you pointed out shows based in Miami are free promotion. As a matter of fact the show Burn Notice actually pays to film here. No one no longer needs to be convinced that Miami has pretty beaches and beautiful people walking around because that is already the perception. If you think people think “old people” when you say the word Miami then you must be kind of old yourself. The media is fascinated with making Miami into a glamorized version of South Beach. Heck I don’t even think they show reruns of the Golden Girls anymore.
So while the promotion of Miami as a tropical paradise is good, its going to continue to happen as you pointed out, for FREE. But most people, even people currently living in Miami know next to nothing about the growing downtown. So why spend you’re time telling people there is a beach in Miami which they already know and not tell them about the new downtown that they’ve never heard of???
And besides telling people that Miami is a tropical paradise is only going to attract tourist and people who can afford second homes (i.e. old people). Again young professionals head to metropolitan places like NY, CHI, Bos, DC, etc. Miami needs to be promoting itself as a Manhattan that happens to be beside South Beach.
If you want to live in a metropolitan area, why do it in a place where you can only take a vacation to a place like South Beach once a year when you can live in a metropolitan Miami and take a vacation every weekend.
Miami grew in the 70s because of the success of the dolphins and in the 80s because of the influx of drug money and Miami Vice (arguably one of the most culturally transforming shows)…the city has dramatically declined since the mid 90s to having now becomming a shell of what it was…prior to this it was the playground for the elite during the art deco era and soonafter imploded until 88-89 when 5 blocks of ocean drive was developed
This is not hate speaking, it’s sadness out of love for a once upon a time great city
Now just a city fullbof low class ignorant wannabe someones who realize they can’t make a living by partying like an imbecile: identity lost
LeBron will bring some crowds but it will not organically help … He certaily won’t make banks lend again to over indebted clowns
Joe – No problem….I didn’t take anything in a negative way. Just wanted to point out that one thing might get filmed here….but that is just one thing.
TV shows and films that portray the Miami area as highly desirable have a far reaching effect around the world. It is amazing what people watch in other countries and form their opinions. Just as some think the west is full of cowboys, Idaho is only potatoes, and everyone from the midwest is a farmer without indoor plumbing, we’d want others to perceive Miami as a great, exciting place to live…a tropical paradise.
Sly – The effects of Miami Vice are still felt today…. “indebted clowns”, hilarious!
Gixxer, agree with you on most of #59. We are not an old persons city-the world views Miami as glamorous. Again, most of the worldview is on South Beach, so work needs to be done to draw attention to Downtown-agreed. The problem that exists, as you say, is young professionals move to Chicago, New York, DC etc to get started on a valuable career. We just dont have the business infrastructure in place here to make that happen. Many young professionals who move here take less money and less prestige positions-so they can be in hip Miami. But it can easily become a dead end position because of the business limits of Miami-we are not New York or Chicago on the business map. Hopefully someday that can be overcome, but its a work in progress. When more Fortune 500 companies begin to headquarter here, you know the progress is happening.
Hmmm – Neisen Kasdin, who is Vice-Chairman of the Miami Downtown Development Authority, former Mayor of City of Miami Beach, Chairman of the Urban Land Institute and a prominent attorney who was instrumental in the creation and expansion of Miami Beach’s Historic Art deco District and the revitalization of South Beach in the 90’s just closed on an apartment at Everglades On The Bay – which is 5 blocks south of American Airlines Arena in Downtown Miami – according to CondoReports.Com.
Kramer, Lot of prominent people from Miami beach are moving to Downtown. This is not the only example.
Kasdin bought a $220K unit for his son…. meh. Btw, I like the building, I just have no idea why this is newsworthy. Every year, you get parents buying places where their kids might be staying 4-5 years for school/work.
Neisen Kasdin, who is Vice-Chairman of the Miami Downtown Development Authority, former Mayor of City of Miami Beach, Chairman of the Urban Land Institute and a prominent attorney who was instrumental in the creation
—————
For his son for under $200K. …………………………. with 3% down???
So much for Rich and Famous of Miami!
Cmon Lucas. LeBron will have little effect on downtown Miami. He will enrich himself, the arena owners, and the team owners. Sports do nothing for a city.
LeBron’s Limited Economic Impact – Business – The Atlantic
http://www.theatlantic.com/business/archive/2010/07/lebrons-limited-economic-impact/59485/
SouthBeacher,
I addressed the concerns of this article in post #33. In fact the article you posted echos the same sentiment:
“At least two studies have shown that there’s little to no net positive economic impact from sports teams on metropolitan areas. The main reason is simple: people who travel to the city to eat, drink, and be entertained would have spent much of that money on the same activities in the same region.”
Most people aren’t even arguing against this. So basically you have money coming from the suburbs and other counties funneling into downtown Miami. A stronger downtown in the short term will help to attract better business, workers, etc. which can then lead to the suburbs and surrounding areas to grow in the long term.
I’d like to add that I’d guess the people arguing that Lebron coming to Miami is a benefit don’t really think it has anything to do with Lebron himself. I don’t see where people are putting all their hopes in one guy. Were just saying that the media attention that comes along with it is the benefiting factor. If the Heat were able to win 3 championships in the next few years without Lebron the majority of the results would be the same. His arrival just puts the expectation here now and brings the media even before it happens.
Take it from someone living in downtown Miami Lebron coming to the Heat will only create more traffic problems. There are no places to eat at night in downtown Miami besides Bayside and most people know that very few locals go there. People simply leave the area once the games and concerts are over, they do not hang around downtown. Those who are saying that the local economy will benefit from this are sadly mistaken. There are simply no places to go after the games are over besides the surrounding clubs, and even then the people attending the games will more than likely not get in since most of them are wearing shorts and jerseys. Many of the comments above are making it sound like people that go to the arena will hang around downtown, ultimately increasing local revenue. This is simply not the case.The increase of people attending the Heat games will do nothing for downtown or its local economy. The only people who will benefit from this are the Heat owners and the owners of the few parking lots that surround the arena, (oh and the homeless will probably make a few more bucks as a result of the increased foot traffic from the arena to the parking lots). For the locals living in the area all this will do is make an already existing traffic nightmare during games much much worse.
Seriously, who the hell is Lebaron James??
And since when did America start caring about IQ challenged athletes moving cities…
Oh wait, America did vote Bush to power!! guess we love people who resemble themselves… brain dead.
Favorable Bloomberg piece re downtown occupancy
Yeah, but who want to pay all that money for a luxury condo just to live in what is essentially becoming a college dorm. I think his is a big negative for the Miami condo market. How do these buildings make the transition back from college dorm party rental to luxury housing for the more established couple once the economy recovers?
While most men may not mind living amongst hot young college coeds, their wife won’t go for that BS.
“How do these buildings make the transition back from college dorm party rental to luxury housing for the more established couple once the economy recovers?” – – Makes Me Think
Brilliant!
scriv
MMT & scriv,
These are hardly college dorm party rentals. At the end of the day you have college students and young professionals paying $900 to share a two bedroom at the low end. These aren’t the college kids paying $350 to rent a room while going to FIU. I’m a prime example. I’ll be downtown in one of these buildings sharing a 2/2 with my fiance. I guess while in school I’ll be able to party more and be up at all hours of the night. But soon as I graduate I transition back into a respectable 9 to 5 well paying job.
Then add to that the fact that rents are rising. So as the rents slowly rise that will help to slowly transition the college students who can’t afford it out. I’ll also add that they are generalizing about the entire area. The article talks about the mass influx of college students to the area but they are clearly heading towards the lower priced units. It not like college students are flooding 900, and instead are more prominent at places like the Vue. So the luxury units stay luxurious but still benefit from the younger people renting in the area at the less luxurious buildings.
“While most men may not mind living amongst hot young college coeds, their wife won’t go for that BS.”
This is Miami. Does it really make a difference its a hot college student or a hot young women in general. If the wife is opposed to living around hot women then most of these buildings are going to off limits regardless.
Do not be afraid of college students or young professionals. They are the the ones that change areas and make them grow. So called new blood.
Why do you think that very established Upper East Side in New York has much slower growth than Upper West side or Chelcey or East Village where prices now supercede those in UES? Young, artistic, professional, college people.
So do not worry about Downtown area. It will be there
Gixxer #74— College kids and recent grads are not invading 900 because they cannot afford it. A one bed room is $2000.00, the cheapest 2 bed room goes for $2700.00. Many college kids or recent grads cannot afford $1350.00 a month. Cut to 50 Biscayne, Marina Blue, One Miami and Met where 2 bedrooms can be had for under $2000.00 and it becomes easily affordbale at $900.00 per party. And yes these are rowdy college kids and recent grads. One of the reasons i stayed away from the buildings listed above was because of the rowdiness of its tenants. Take a look at the 50 Biscayne or Marina Blue pool deck on the weekends and you will see what i mean. Look at the 900 pool deck at the same time of day and it is a completely different demographic.
Chelcey just made my day..LMAO
UES is the best..the others are just wannabe’s.
This comes from a Manhattan man!
This goes for Miami as well..it will NEVER be SoBe
And to compare college students in Miami who will be jobless unless they move with young professionals in the financial industry in NYC making over 150k to start is laughable
Laura, I don’t think so.
I haven’t work in NYC for some time now but a young professional in NYC is not the same as a young professional in Miami. Around 2000 a 29 year old administrative Assistant could make 70K/yr before bonus, a 26 year old MBA grad was easily in the 6 figures. The artsy crowd and college students were mainly relegated to the outer boroughs or Jersey, they would hang out in the village after work or catch the train in.
Many of my colleagues would commute from outside Manhattan sometimes as far as Pennsylvania or connecticut because Manhattan prices were too high, I’m talking about VP’s at big investment banks, people whose annual bonus was in the 6 figures. This was during the boom years of earlier this past decade. Prices in Manhattan are high because there are a lot of high paying jobs and very few housing choices to support them, not because young broke college kids are living there.
Gixxer, #74 brilliant analysis. Angel #76, you just agreed with what Gixxer said above. Lara #75, I can’t agree with you more. WTF re #77, WTF are you talking about??
Why bother
Lara’s post is ridiculous! I live in NYC as well and comparing people who live in Miami to New Yorkers is not intelligent at all.
Salary-wise, career-wise or anything-wise.
Miami college students will turn around the Miami Re market with thei 40k/ year… Really made my day!!! LMAO
Why Bother #79 Take a few minutes to actually read these posts and try to understand their meanings.
MMT Writes – These are hardly college dorm party rentals. At the end of the day you have college students and young professionals paying $900 to share a two bedroom at the low end.
I wrote- And yes these are rowdy college kids and recent grads. One of the reasons i stayed away from the buildings listed above was because of the rowdiness of its tenants.
I was saying that even rowdy college kids and recent grads CAN afford $900-$1000 a month to live at 50 Bisc, MB, Met etc. They simply cannot afford the 1350-1400 a month they need for a 900 Biscayne 2BR.
Reading is fundamental. Try it some time.
Grixx, no offense but If I am buying into one of these luxury condos and spending all that money on HOA fees I don’t want you and your fiance renting in my building. I am sure you are both smart and responsible young adults but I don’t want to see you in my building unless you can afford to buy a unit and pay the fees like the rest of the owners.
I think we can all agree it is good in the short term there are people occupying these condos and creating a vibrant down town. My issue is that the article sounds like it is a bunch of college students and low paying workers getting together to rent out luxury condos essentially turning them into boarding houses. I don’t know if that is a fair assessment of the situation but the Management of these buildings don’t want that to be the impression that is given to prospective buyers. It only takes a few rotten apples to spoil the whole bunch. It is a lot easier for a few bad tenants to bring down a good building, You never hear about all the great quiet neighbors in a building but we always hear about the 1 bad neighbor that makes everyone angry. Having lots of young professionals downtown is not a bad thing. Having just a few rowdy tenants in luxury building could be bad for owners and the building.
Angel,
First off, from what I can tell when we talk about college students the overwhelming majority of them are graduate students like myself so were talking about people who are in the range of 22 – 32 in age. Secondly the majority of people I have spoke with at UM seem to be concentrated at buildings like Vue, Ivy, Axis, Loft, etc. And even that’s changing as buildings like Axis and Ivy with better finishes are already moving their prices higher. For example I know a guy that was renting a 2/2 at Ivy for $1600 a year ago (so his leases started 2 years ago) and now the developer is saying that all those units are rented and is now pricing 2/2 around $1800.
I have visited 50 Biscayne but its currently a little pricey for me personally while I’m in school at $2200 for a 2/2. I have to disagree with you that 50 Biscayne, Met 1 and One Miami are filled with college students. I don’t know if you are old or what but the atmosphere at 50 Biscayne seemed attractive to me. Different people want different things and what pushed you away from 50 Biscayne might be the exact same thing that pulls someone else toward it, especially with Mia downstairs. The article even pointed out that Met 1 was called the Deloitte Dorm because so many consultants from Deloitte work there.
Like any other urban area if you want to live in a building where a there are no 25 – 35 year old working professional who like to party then you’re going to have to pay for it. Especially in a city like Miami with its party culture.
Also if you think your typical rowdy college students can afford $1000 a month for rent then you should be pretty bullish on Miami’s economy.
MMT,
Wow you seem to have the same elitist attitude as Angel. You call people who can afford $1000 a month per person “low paying workers”. Again the article pointed out most of the people at Met 1 were Deloitte employees. How is a 27 year old consultant in Miami different from one in NY? The other example was a 39 year old biomedical engineer. Heaven forbid you have to live near any of these people.
You guys also do realize this is downtown don’t you. Your seriously talking about the 1 bad noisy neighbor when you want to live in a downtown condo???? If that’s what you really want you either going to have to pay at a place like 900 or get a condo somewhere else like Aventura. You sound like the people who bought condos in South Beach and then complain about the noise at night???
You guys make is sound as though every single condo downtown has to be a luxury condo. If you don’t want someone like me in you’re building then move to a place that I can’t afford, renting or owning.
“College students” are not a big problem for buildings – – ok, some are, but my experience is that usually the first time the police show up at their door to tell them to turn down the music and generally “knock it off,” they get the hint. Believe me, I have had more than my share of run-ins with noisy residents – – be they students or otherwise. (smile)
I agree with Gixx that the majority of the students in the “luxury” buildings (what ever that means)- – or those that I run into at least – – are graduate students, not clueless, wet-behind-the-ears undergrads. Undergrads typically reside on campus or near it and lets face it, the rents in the majority of the “luxury” buildings probably exceeds most college students’ budgets.
The typical student tenants that I encounter are pursuing an MBA or law degree of some sort (J.D., LL.M, etc.). They generally are not “trouble makers.” Rather, they live at school and use their apartment/condo as a place to crash at the end of the day/week or to study. There are a few exceptions – – as is always the case.
When I was studying at the U of M’s law school I chose to live in downtown Miami – – on Brickell Key. When I started at the U of M, for example, I lived in Courvoisier Courts – – this was before it “converted” to condo. (Sensing that conditions in the building would deteriorate, I moved out after the “conversion”) A classmate of mine lived in The Island Club – – again, this was before it too went condo, becoming “Isola,” and, because the developer packed the building with dogs, became “affectionately” known as Brickell Key’s “dog pound.”
Living downtown was the smart thing to do because when I was driving to class in the morning, traffic on US 1 (or “useless 1” as a tax professor of mine often referred to as) was not a problem as I was driving “against traffic” – – the majority of people on the road were commuting north-bound into downtown. Similarly, in the evenings when I headed home, the majority of the traffic was in the south-bound lane because people were bailing out of downtown for home. Plus, Brickell Key gave me the conveniences of living downtown without the noise, traffic, etc. Above all, quiet is a luxury I will not surrender.
But I don’t think it is fair to assume that behind every noisy unit is a student. (Not that anyone was, necessarily) I have encountered a lot of noisy parties hosted by dumb-ass non-student tenants. And I agree with Gixx that the easiest way to get rid of student tenants or, in the alternative, “thin out the herd” is to raise rents. High rent and high maintenance fees generally, though not always, keep the “riff raff” out.
scriv
PS: Gixx: best of luck in your academic pursuits.
Gixxer- #83 You make a very good point. I am only 32 and many of my friends live in these buildings I mentioned. I like to take part in the rowdiness but i like to go home to a quiet building. I have been to MIA tons of times and was even there the night of the shooting. I guess I want my cake and eat it too in the sense that I want to party but then go home to a quiet retreat. I see your point and it makes sense. Building attributes which might be seen as a negative by ones person could be a huge positive for another. Also, the typical college student working full time can afford $1000.00 a month. Hell I even have a few buddies renting a 3 bedroom where their cost is $700.00 a month. That statement right there categorizes most of my friends still in grad school. They all have rommies and all live in 2 & 3 bedroom condos in Brickell and DT Miami. They work full-time and go to school but are rowdy as hell.
Gixxer 84- I am far from an elitist. I would actually want someone like you in my building. You dont strike me as being rowdy or a pain in the ass neighbor. What i dont want is to live next to the 2 frat boys that play beer pong all night, blast their music and wrestle on the pool deck (see Marina Blue).
college kids renting in downtown mean hari kari in and around coral gables rental communities…it is blood bath out there….
some of these condos will be viable as rentals and not condos leaving deveopers/banks bleeding for a long time…
@1600 avg rent for 2/2
but maintenance~600
tax~500
other maintenace~60
mortagage on 300k ~1800
totals ~$3000…
deficit~$1400/month
condos are still slated to dip by 20-25% by 2011-2012//
w/ govt support of $8000 gone //at 5:1 leverage (20% down) it means $40,ooo can come off from the price…
Realtors get off that govt welfare and come to the real economy…
20%+ un/under employment//and citi/county slated to slough off workforce next fiscal..
Grixx, it is not elitist. As an owner in a luxury building you don’t want any rentals units. Renters just don’t take care of a place like an invested owner. Rental units also tend to have high turnover and while you may be an ideal tenant, next year there will likely be a new renter in that unit and he or she may not be so ideal. Like I said it was nothing personal or elitist.
Grixx, I have nothing against 27 year old but I wouldn’t want to live amongst too many of them. I was a 27 year old young professional not too long ago but I am past that stage of my life, I’ve moved on, I’m not trying to re-live it. When you have settled down with your wife for a few years and past your mid thirties maybe then you will understand.
I guess we are just coming from different perspectives. You don’t see living in a building with a bunch of twenty somethings sharing a rental condo as a problem and i see that as a big problem for me and people in my demographics who may be interested in purchasing in said building. It is not a big problem if there a some young professionals/college students renting in a building but that story came across as that being the rule rather than an exception. I believe downtown needs the young professional because they will be the future buyer but my concern was how does that transition back to luxury building with majority owner occupy takes place.
lara said “Do not be afraid of college students or young professionals. They are the the ones that change areas and make them grow. So called new blood.”
— Well, did you see this article today (see below)? The revitalization by pioneering young people works best in an area that is completely developed, surrounded by other developed areas that are nicer, and essentially landlocked…that is, no readily available suburban areas nearby. Young people without a lot of money is not a panacea by itself….there are more critical ingredients to the success.
http://www.sun-sentinel.com/news/local/breakingnews/fl-riverfront-empty-lauderdale-20100713,0,6752405.story
Fort Lauderdale’s Riverfront now a ghost town
By Scott Wyman, Sun Sentinel
“FORT LAUDERDALE — Dan Marino’s — gone. Ugly Tuna Saloona — gone. Ditto for Max’s Grille, Johnny Rockets, Argenti Designer Jewelers and Vogue Italia.
Planned 12 years ago as a major entertainment destination for tourists and locals, the Las Olas Riverfront complex sits today as a ghost town along the city’s New River. The movie theater remains, but most retail stores have closed and the dining options have dwindled.
Riverfront’s business directory lists it as less than half full. And while water still flows from its signature courtyard fountain, its escalators don’t move and are blocked off. …
Downtown leaders believe the complex developed too young of a following as a result of its movie theater and bars and lost the higher-end customers that could sustain major restaurants and retail operations. …
The downfall of Riverfront has come despite the explosion of downtown residents as a result of the construction of thousands of nearby condos. …”
I just said: “— Well, did you see this article today (see below)? The revitalization by pioneering young people works best in an area that is completely developed, surrounded by other developed areas that are nicer, and essentially landlocked…that is, no readily available suburban areas nearby. Young people without a lot of money is not a panacea by itself….there are more critical ingredients to the success.’
– That would make for a great dissertation topic for someone who is going to grad school in urban development….hint, hint Gixxer 1000. What mix of factors leads to urban redevelopment success.
WTF, if misspelled Chelsea makes your day, then I am glad that I delivered a bit of joy here. Sorry I did not read the second time what I wrote. My fault.
Also we are not discussing here the level of salaries in NYC and Miami. I agree that may be young professionals are bit different in both cities but so is amount of money being paid for rent and prices for condos.
I personally like UES and have a lot of friends living there but the real price growth happened in Soho, Chelsea, Downtown, UWS, East Village: influx of younger people. I am also talking over the years. It did not happen yesterday or today. Probably within the last 12 years.
Also, who said that we want Downtown Miami to become SOBE? It is differnt but it is going to be energetic and vibrant with a lot of young people living there and infrastructure developing in order to accommodate the needs of people.
to give an example. I came to Miami with my 16y.o son. At the time we stayed in my apartment in Sunny Isles. We traveled to NMB, SOBE, Hollywood, Brickell, Coral Gables, and Edgewater near Quantum. I asked him where did he like best. He told me that he would have prefered to live near Edgewater.
He felt a different atmosphere there. BTW I did not influence his opinion at all. Just wanted to hear.
Angel,
I see you positions and can definitely understand where you are coming from. But I think you summed it up best when you said you want your cake and eat it to. What I hear you guys saying is that you want a nice quite condo and I can understand that. But at the same time you have to understand the neighborhood that your buying into. I think in the beginning people thought of these downtown condos as some private personal getaway because downtown wasn’t busy when they were built and developers marketed them as such. I think its fairly obvious its not going to unfold that way anymore. This is a downtown after all. It’s only going to get more noisy, more congested, etc. The privileged few will be able to avoid it by buying into buildings like 900 that most cant afford. But if you cant afford these luxurious buildings you cant really be mad that “rowdy” 27 year old working professionals can afford to buy units in One Miami with you. If that turns you off then simply don’t buy there, which is the conclusion that it sounds like you made.
If we all agree that 900 is to expensive for the type of people you don’t want to move into your building then why not simply move into a building like 900 and let them moving into One Miami, everyone’s happy.
As far as the rowdiness to me a large portion of that comes down to the quality of the building. I will tell you that in the condo I’m moving out of in Bethesda its mainly old boring people who NEVER party. But because of the construction I can hear EVERY SINGLE STEP the lady above me takes when she has on high heels. Heck I can even hear her cell phone vibrating if its on a table. And they get up at 5 am every day (even weekends) and it bugs the hell out of me. So to me the quality of the unit is the most important. If I don’t hear the majority of my neighbors while I’m in my unit I could care less if they were doing keg stands all day at the pool. It’s a freaking pool for Christ sake. This was ones of the quotes that caught my attention:
“The building has received complaints from residents about crowds by the pool, loud music and women taking their tops off, according to Piazza, the project manager.”
The day I complain about women taking off their top at a pool is the day I decide to kill myself.
MMT,
I think the difference here is that you are looking at the article as talking about every single building and I’m looking at the article talking about downtown in general. I understand what you’re saying which is why I rent my property out to an older more established renter. This is what I read:
“The influx of college students, young professionals and empty nesters from the Coral Gables section of the city and the suburbs intensified about 18 months ago”
Now I’m going to assume that the college students are attracted to certain properties while the empty nesters are attracted to other properties. So why not simply buy at the buildings where the empty nesters are buying and avoid the places were college students are buying? Its not like you don’t have dozens of buildings to choose from.
Again you keep saying how does the building transition back to a luxury building. I think you need to come to the realization that every building downtown isn’t a luxury building.
And while I understand what you’re saying about age I doubt me and my fiance will change much past our mid thirties. Not everyone is set out to be on the same path. And that’s actually what attracted me towards Miami. Take South beach for example. South Beach is obviously a lot more noisy with more going on than most places. As people get older the ones that shy away from that lifestyle move away. But it would seem real ridiculous for a mid 40 year old couple with kids to move into South Beach and complain about the rowdy people (even though they do). It’s like moving next to the train tracks and then complaining about the noise from the train.
Miami is world renowned for its night life. Heck there is a 24 hour nightclub district downtown. If that really isn’t what you’re looking for then why buy here?
“Downtown leaders believe the complex developed too young of a following as a result of its movie theater and bars and lost the higher-end customers that could sustain major restaurants and retail operations. ”
That statement exemplifies my concern about the young renters downtown. You don’t want too much of a good thing because it might scare away some of the more established crowd that so many of these buildings were designed to attract.
Makes Me Think — Did you bump your head or something? You’re starting to sound like me, RT, and a few others. I agree 100% with your post #89. As for the questions you raised in post #90, I’ve been saying the same thing for a year here, and the simple fact is this: Once a condo building goes rental, it almost NEVER becomes (or returns to being) a truly “luxury,” majority-owner-occupied building. This is one reason I’m far less bullish on downtown than most others here.
Welcome back lara !
Hi, guys,
Have you been hunting lately? I flew to Downtown Miami 5 days ago based on what I read and see on this website. You argued about the market reaching the bottom a year ago or so based on the numbers and data and that the numbers don’t lie and all that. Well, there are so many great deals to be had right now in downtown Miami and oh, why, I was so confused and wanted to go home and cry. There are realtors and scalpers (?) throwing great properties at you with a great price. If you remember me from my post in February, I took my deposit and ran after signing the contract. So, here I am again but this time I am going to plunge into the abyss because I am not getting any younger and want to put the end to my condo search started two yrs. ago. I have read the blogs on this site day-in and day-out for 2 yrs. I want to thank you and Lucas. I’ll post some comments in the future. But hey, please read this: they are talking about a double dip recession hitting the end of the year and a lost decade (job loss) , which don’t to make me feel good about closing my deal. I am a recent retiree / NYC teacher
http://money.cnn.com/2010/07/15/news/economy/lost_decade/index.htm
http://money.cnn.com/2010/07/15/news/economy/lost_decade/index.htm
andi #88 – Can’t disagree with you. With the expected 1,000,000 (!!!) foreclosures this year as banks address the backlog of seriously delinquent mortgages:
“Mass Foreclosures This Year Expected to Eclipse ’09 Levels”
“Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service.”
http://www.foxnews.com/us/2010/07/15/homes-lost-foreclosure-track-eclipse-levels-banks-work-backlog
Also, can a now mid-level rental condo building EVER make it back to a high-end owner-occupied building??? What do they do, go floor by floor? Dunno. Probably won’t work or is so costly as to not really be a money maker unless there is another housing boom (surely much more subdued then the last one). Apartment to condo conversions are the WORST investment EVER….usually waaaaaay over priced. In the same league as condo-hotels and worse than timeshares.
Lastly, I always hear, from the ostriches (head buried in the sand, parroting nonsense), that over the long run real estate is a good investment. Well, true IF you buy it at the right price….the purchase price is THE single biggest determining factor in return on real estate investment. If you overpaid by say 20% or 30%+, in REAL dollar terms, it is a BAD investment and will NEVER increase your wealth….which is what an investment is supposed to do. Duh. Don’t confuse temporary cash flow tax games with increase your wealth.
I can deal with a loud and rowdy neighbor, as long as its not Mel Gibson.
RT, don’t forget there is such a thing as leverage. You are missing the leverage factor in your calculations about housing investments. Where else can you put down 3.5% on an investment that cost several hundred thousand dollars and get the government to give you above 3% depreciation each year on the money you borrowed? When you invest in the stock market you have to come out with cash and maybe your broker will allow you to margin 50% of your account to buy a security. The government allows you to borrow about 97%. I don’t know why you keep making these ridiculous statements. If I buy a house for 250K and I put 50k down lets say the property appreciates at 3% next year my return on that investment is not 3% it is 30%. Most people use leverage and housing is a highly leveraged vehicle. That is why things got so out of kilter during the boom because you could buy a property at almost any price(price didn’t matter), use 100% leverage and sit for a year for a nice double digit appreciation on that asset. If you were lucky you could cash out in time and post a nice profit without much risk. Where is all this nonsense you are talking about? It doesn’t matter where you buy as long as you can buy risk free and you have the greater fool theory at work then people will make money. Just look at the stock market.
What Do You Think -they are talking about a double dip recession hitting the end of the year and a lost decade (job loss) , which don’t to make me feel good about closing my deal.
The lost decade was the last decade. You can count on the pundits to get it right when the dust is just about to settle and the history books has been printed. IF you don’t believe me check the price of the financial markets from a decade ago, check the standards of living from a decade ago and in many places check RE prices from a decade ago. We still have some pain to go through but these guys are clowns
My calculations on that was wrong.
30% is a bit rich, to say the least.
15% is more accurage on that.
Hi, Makes Me Think
I don’t know what you just did but you made me feel better because I’m gonna go ahead and go through it and because I am not getting any younger by waiting, that’s for sure. I’ll report to you from the so-called ” Crown Jewel of Downtown Miami”. Hope I spelled it right.
Makes Me Think #103 — What kind of crazy Kool-Aid are you drinking my friend??? OK, let’s take YOUR numbers….the house appreciates 3% per year and your return on investment is then 30% (wrong, your number) because you put 20% down ($50K of price of $250K)….well, that would be 15%, not 30%…… 0.03 x $250,000 = 7,500 now divide back by $50K make it a 15% return on your investment…..BUT BUT BUT…. you borrowed $200,000 at 5% costing you about $10,000 in interest….SO that is a negative $2,500. Just using YOUR numbers.
By the way, I do know what I am talking about. Using crazy leverage to buy real estate is what got us into this mess in the first place. And if you are banking on a greater fool theory then you don’t know jack about business and economics….ponzi schemes maybe, but not business and economics.
I will reiterate, vast majority of residential properties act as a store of wealth, not a creator of wealth. Fact. For most Americans, it is a means of a forced savings.
Makes Me Think — Just when you started speaking intelligently, you’re back to spouting nonsense. The U.S. federal government and most state governments are drowning in debt and red ink, while unemployment is at 10%, underemployment is at something like 24%, and long-term unemployment is the WORST in recorded history.
Moreover, first Bush and then Obama have been pumping cash into the economy in every way imaginable, yet there’s still no inflation. Does that sound like a healthy economy to you?
Florida ranks second behind California with 277,073 properties receiving a foreclosure filing.
United States citizens should start looking a real estate like a losing proposition. National Association of REALTORS® feels real estate is a losing proposition. NAR lobbys for things that are to benefit them. Real estate is a huge failure in the United States. People should only invest in foreign real estate.
“BUT BUT BUT…. you borrowed $200,000 at 5% costing you about $10,000 in interest….SO that is a negative $2,500. Just using YOUR numbers.”
What in the world are you talking about???? You make is sound as though the real estate is going to be sitting empty. IF you live in the unit then $10k in interest is a sunk cost because it will simply be covered by you monthly payment. Unless of course you’re living somewhere rent free. Not to mention the fact that the interest is tax deductible which also helps to reduce to tax liability saving even further money.
If you put 20% down on a $250k home your return would be as follows (provided you don’t sell and incur realtor fees)
Initial investment = $50k
$200k loan @ 5% = $1070 monthly payment. Approximately $830 is interest and $240 is principal.
Probably around $400 in taxes and HOA fees if its a condo.
If you are living in the unit the $1070 (plus Taxes and HOA) is a sunk cost becuse you would be paying a similar amount wherever you live. If you’re renting the unit you should be recovering close to this amount in rent.
So after a year the new value of the house should be $257,500. But the amount owed on the loan should be $197,120.
Most people are in the 25% tax bracket so becuase the $10k is tax deductible that should reduce your tax burden saving an additional $2500. The taxes are also tax deductible which should reduce your tax burden another $1200
$257,500 – $197,120 = $60,380
Then add the $3700 savings in taxes which brings it to $64,080.
$64,080 – $50,000 = $14,080
$14,080/$50,000 = 28%
You would also need to subtract out whatever cost you put into maintaining the property because these are additional cost that you wouldn’t occur if renting reducing your ROI. I usually estimate about 1% of the purchase price for maintenance which would be about $2,500.
$14,080 – $2500 = $11,580
$11,580/$50,000 = 23%
Gixxer 1000 – So much knowledge but little experience. I was using his numbers which did not indicate being rented.
First, “Probably around $400 in taxes and HOA fees if its a condo.” Ummm, that seems pretty low.
Second, you know little about taxes. You have to look at the marginal difference – the deductibility of interest and taxes in excess of the standard deduction which is $11,400 for 2010 for married coupes filing jointly (note, no Florida state income taxes to deduct for Florida residents). Oh, and don’t forget about the dreaded AMT that can put a huge dent on deductions….ouch. So if the standard deduction is larger than your itemized deductions, then your deductions have in reality zero deductibility or if your itemized deductions are say $2,500 above the standard deduction then you only really gain the $2,500 to your deductions. Note, for a rental property it is different such as an LLC filing, etc.
Third, if you rent the unit, don’t forget about 10% realtor fees (upfront…add that to your investment amount) and account for repainting, maintenance calls, and vacancies. And realistically, potentially unexpected trips to the condo.
Fourth, you said “$200k loan @ 5% = $1070 monthly payment. Approximately $830 is interest and $240 is principal.” So, your amount of investment goes up each month and your rate of return goes down each month.
Also, please learn what a “sunk cost” is.
Lastly, the biggie, what if prices go down? Using leverage or any debt is a fools game unless done carefully. I am not opposed to using debt financing if the interest rates are low compared to other costs of capital….BUT you need to be very prudent since it can not only magnify your returns but can wipe you out in a heartbeat, esp. if the sh***t hits the fan.
Personally, I would never want to be a landlord of a residential unit….what a pain. Unless I lived nearby, I would probably sell the place and simply put my capital to work elsewhere. But that is just me, others may relish the fun of being a landlord.
I need to also point out, higher interest rates are coming….exactly when is not clear…we are in an anomaly situation right now and the “it’s different this time” won’t last. When interest rates go up, affordability on financed purchases goes down resulting in price declines to sell the stuff. It will happen.
The only people I am seeing jumping in the buy to rent market are for the lower end, usually SFH, market and a lot of cheap homes are being bought up for Section 8 rentals. Mid to high end condo buy to rent seems foolish…but go for it if you want, what the heck do I care…just don’t go onto public assistance since I am tired of paying taxes to support stupid people.
Renter Tom Said – Lastly, I always hear, from the ostriches (head buried in the sand, parroting nonsense), that over the long run real estate is a good investment. Well, true IF you buy it at the right price….the purchase price is THE single biggest determining factor in return on real estate investment. If you overpaid by say 20% or 30%+, in REAL dollar terms, it is a BAD investment and will NEVER increase your wealth….which is what an investment is supposed to do. Duh. Don’t confuse temporary cash flow tax games with increase your wealth.
– Don’t confuse temporary cash flow tax games with increase your wealth.
1. As Grixxer said while you are holding on to that property waiting you are gaining
Cash Flow so the cost of interest is accounted for with the cash flow you may or may not be making.
2. This was an example to show you just because houses appreciate at the pace of inflation does not mean that is your return. Really, how many people do you know of during the real estate boom of the past decade actually put down 20% to purchase Real Estate? Most people I know used 3% or 5% down very few even bothered to put down 10%. I made my calculations using 10% down which gave me a 30% return on a 3% appreciation in price. I then changed it to 20% because I said you would ask where can I get a loan with 10% down. I forgot to change my return to 30% to 15%. The point of the post is to rebut all the know alls who claim that real estate has only appreciated at 3-5% since the beginning of record keeping. The fact is even with a 3 or 4% price appreciation in RE once you consider leverage and the tax incentive the actual return on investment is much, much higher so long as the property is able to generate some cash while the buyer waits on appreciation. Now, I realize my 30% Return on 20% down error clouds the discussion but if you put that aside for a moment and realize the less you put down the greater your return will be, maybe you can debate that instead of my calculating error.
RT- Third, if you rent the unit, don’t forget about 10% realtor fees
Bull shit, I have never had to pay a realtor for renting on of my units, never
and I have rented many, many units. If you have a good product at good price and put some nice pictures in an ad, trust me they will be ringing your phone off the hook. You may have to pay someone to handle the calls but never ever anything near 10%. You just don’t know what you are talking about.
-standard deduction which is $11,400.
That is a fing joke. That is for college students and single professionals with no assets filing 1040 EZ.
-Note, for a rental property it is different such as an LLC filing
LLC is a pass through. No filing is necessary unless it is multi-member and even then income and losses are passed through to owner.
-Lastly, the biggie, what if prices go down? Using leverage or any debt is a fools game unless done carefully
Wrong again, if prices goes down you are stopped out at your down payment 50K at 20% down or in most people’s case who bought in the last decade $0. Plus you can collect rent or live rent free while you wait 2 years for the bank to foreclose in Florida, so at 1000/month at 18 months that is a nice 18K in the savings account. Compare that to people who paid cash for their condo and are now under by $200,000 or more and still don’t want to walk away because they are too invested.
-Personally, I would never want to be a landlord of a residential unit
That’s you but i love being a landlord, I love logging into the bank account at the beginning of the month and seeing money just magically appear in my account. What a miracle, I fool around on the blog with you guys, Make a couple calls to remind them to cut the fu*king grass, the rest of the time I’m at the gym, watching CNBC and HGTV or looking for more houses to buy cheap then at the beginning of the month thousands of dollar just start to fill up the bank account. The pay is not as great as working on my previous job but i don’t have to put in those 14 hour days either. I can think of a lot of things that’s worst than having your money work for you. I have to admit, hate showing the homes and taking the calls when it is time to rent them out but I’m not paying 9% commission for that.
-I need to also point out, higher interest rates are coming.
Even more of a reason to buy now at lower interest rates this way when rates goes up to 10% you can offer potential buyers a very attractive 8.99% wrap on your 5.7% and bank the 3.3% without breaking a sweat, oh don’t forget to hit them with a few points for origination. People were buying houses at 18% in the early 80’s are they going to stop buying when rates hit 10%
No one is advocating buying expensive condos with negative cash flow for the next 5 years and think prices will go up in the next 5 years. I don’t even think you should buy a property even if it cash flows a few hundred dollars a month. To me that is too much of a risk and not enough margin, that cash flow can easily be swallowed up by an foreseen event.
I was just trying to point out that people who tell you that real estate is a bad investment because it has only appreciated by 3% historically are wrong because they fail to factor in the leverage factor, leverage is the biggest reason people invest in Real Estate, Real Estate is a highly leveraged Investment and therefore you can make a lot of money with a small investment given low appreciation rates of 3-5%. I should know, I bought my first house putting down 10% on a house costing several hundred thousand dollars, spent some additional money to fix up the house and 5-6 years later the house had doubled to tripled. That 10% down + money invested in repairs turned into a very nice profit tax free. In the mean time I was taking 20k down to my brokerage account every few months and initially it was going up like gangbusters but after a few years it was worth shit. You are wrong when you say people don’t make wealth in RE, maybe the people you know don’t make wealth in RE.
Makes Me Think said: “The point of the post is to rebut all the know alls who claim that real estate has only appreciated at 3-5% since the beginning of record keeping.”
– You have to remember INFLATION in the equation. What is the REAL rate of appreciation (not the nominal rate), not much especially when you factor in additional money invested into the property. It is like the couple that bought a home for $40K 40 years ago and are amazed it is worth $221,000 today. They all say “Wow, I’m so smart. Look at what a great investment I made. Thank goodness I wasn’t a stupid renter and threw my money away by paying rent!” Well folks, $40,000 in 1970 is worth $221,000 today when you take into account inflation. It is all about wealth accumulation people…not financing or tax games.
http://www.miamitodaynews.com/news/100729/story2.shtml