In short, an Opportunity Zone is an IRS sponsored area, set by the Tax Cuts and Jobs Act of 2017, for investing in funds that are going to help gentrify developing, or low-income areas. The first set of Opportunity Zones were designated on April 9, 2018, and included portions of only 18 states. While the tax benefits of investing in these predefined zones might seem very attractive, one must be wary to not approach this investment opportunity wearing rose-colored-lenses.

A common theme throughout this article will be assessing whether or not Opportunity Zone investing makes sense for your personal investment goals. There are 5 distinct caveats that come to mind when analyzing Opportunity Zones. These are leverage, 1031 tax-deferred exchanges, absence of disparity pricing, prolonged construction, and fees. Leverage. Investors who deploy their capital to a fund lose access to one of the most important benefits of investing in real estate, which is debt. The benefit of leverage in funds is diluted due to management fees, and additional fees are taken at the time of profit distribution. For those already investing in real estate, getting into an Opportunity Zone might not be the most sensible course of action. 1031 Tax Deferred Exchanges might make more sense than rolling over the capital gains from a previous real estate sale into an Opportunity Zone. If one receives any capital gain from selling stocks, bonds, or any other asset, the Opportunity Zone might be an interesting way to get into real estate when on the search for a place to park earnings. 

Disparity pricing is a huge upside to investing in real estate. This is also known as making money on the buy. Disparity pricing is also missed out on when investing one's capital with a fund. They might be able to find a deal and take advantage of a great price reduction but, the individual with capital in the fund will not see as great of a return from the price reduction on the buy. The combination of disparity pricing and leverage become powerful tools inexperienced investors hands.

Opportunity Zones are based on the premise of construction. Funds are essentially being entrusted to find the right developers, contractors, property managers, and correctly gentrify a neighborhood (that people might not particularly want to invest in at the time). This is a big ask, especially when facing the reality that construction projects frequently take longer than expected, and come in over budget. Fees are the lifeblood of a fund and can catch non-informed investors in less than optimal situations. One must be wary of the rules of the fund, not only to buy in but when you are allowed to sell. When capital is taken off the table in 5-10 years time, it is imperative to be aware of the fees taken after the dust settles. An investor must ask themselves if they are going to end up giving the fund an equivalent of otherwise obligatory taxes. In an effort to find an exemption, one might end up paying more.

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Greisy Montes De Oca, Stephanie Trump, Jules Trump, Melissa Barragan

The 8,000 square-foot oceanfront penthouse features sprawling floor-to-ceiling windows, ocean and city skyline views, a private plunge pool, state-of-the-art appliances and endless residence amenities. Additionally, each penthouse comes with two parking spaces along with a Lamborghini Aventador and the Rolls-Royce Cullinan SUV.

Stephanie Trump, Polina Mikheeva and Stephanie Schweitzer

Guests enjoyed of deliciously crafted hors d'oeuvres catered by Acqualina Resort and Spa including assorted sushi rolls, crisp vegetable spring rolls with sweet chili sauce, mini chicken empanadas and Mahi ceviche. For those who craved something sweeter, an assortment of mini desserts was also available including key lime pie, chocolate flowerless cake pops and strawberry cake.

Jason Belisario and Benjamin Frisbee of ONE Sotheby's International Realty

The Acqualina sales team was also in attendance including President of Sales Michael Goldstein, Marla Cohen, Yansy Checa, Daniela Rendon and Karina Serber Batievsky, who gave one-on-one tours of the jaw-dropping unit to all guests. Encompassing the essence of the Acqualina lifestyle, models were seen wearing the Acqualina Resort and Spa swimwear line during the cocktail soiree.

The industry's top power brokers and agents from Florida's major firms such as ONE Sotheby's International Realty, Miles Goldstein Real Estate, Dezer Platinum Realty, Douglas Elliman and Dora Puig were in attendance including Kayce Driscoll, Michelle Lynn Judd, Melissa Barragan, Jason Belisario, Benjamin Frisbee and more.

Karina Serber Batievsky, Destiny Evans, Marla Cohen and Yansy Checa 

Dora Puig Real Estate Agents

Michelle Lynn Judd of Dezer Platinum Realty, Natalia Neverko and Yuliya Kachko of ONE Sotheby's International Realty.

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What are the current real estate market trends and conditions in Edgewater?

Inventory is high. The completion of the Paraiso District puts the cherry on top in terms of over-saturating the luxury condo market in the area. It's a great time for buyers to get a deal.

At the time of writing this article, there are 939 active listings in the area ranging from $125k - $9.9M. Of the 939 active, 161 of those are priced over $1 million. Only 26 units are priced over $2M.

The problem with having 135 active units between one and two million dollars, especially in Edgewater, is that there is little to no differentiation between product types. In some cases, the products are indistinguishable from each other, which gives buyers the ability to lowball on offers and move on to the next if not accepted. There is no telling when the conditions in Edgewater’s luxury condo market will get better for sellers. If we were a buyers looking in that market, we would capitalize on this opportunity.

Overall, a significant slowdown is already upon us in this market, but will probably get worse as more luxury projects finish up in the coming years. As inventory increases, and prices continue to stay the same or inflate, the market receptiveness will slow.

What are the top 3 things luxury homebuyers look for?

1. A deal. If someone can afford a luxury home, chances are they have been smart with their money thus far and aren’t looking to blow it on an impulse decision. They want something that they can call home, but also feel confident that they got in at a good price. Eventually, the buyer would like to see a proper return. Buyers have options, especially in Miami which is overrun with new luxury developments. If you are a builder or broker, options are your enemy. In today’s Miami lux market, prices are inflated and inventory is increasing. For the homebuyer, go shopping for a deal.
2. A turnkey product. People willing to spend millions on a home expect nothing but the best. Those looking for second, third, or fourth homes don’t want a project or problems after they move in. That might seem obvious, but even in some new developments, there are problems that arise which turn off potential buyers.
3. Location. In any real estate criteria, location is there. People want to be close to the action, especially in a city like Miami, but not too close. That is an important distinction. Traffic here is notoriously bad, and the living experience in the denser parts of Miami take a hefty toll from it. Newer areas like Edgewater see less traffic, but still are close to the best Miami has to offer.

What do you recommend to homebuyers looking to invest in Edgewater as we head into 2019?

Again, we would advise homebuyers to take advantage of slow-moving inventory in new and relatively new developments including: The Paraiso District buildings, Biscayne Beach condo, and Icon Bay condo. It has become increasingly difficult to liquidate assets in Edgewater. Given the circumstances, it is a perfect storm to leverage a great deal with incredibly motivated sellers.

Photos courtesy of Jason Belisario and Ben Frisbee

The post Top 3 Things Luxury Homebuyers Are Looking For In Today’s Market appeared first on Haute Residence by Haute Living.

Gorgeous impeccably maintained 2 story home remodeled in 2007 located in Exclusive Cutler Oaks Estates in sought after South Coral Gables. Double height foyer 6 large bedrooms/6.5 baths, grand formal living room, dining room, Gourmet Snaidero kitchen, with Miele appliances. Very large family room with fine finishes throughout. Butler pantry, ~2,800 bottle temperature controlled wine cellar. Perfect for entertaining. Lovely pool patio.

Address: 621 Destacada Ave., Coral Gables, FL 33156

Price: 2.68M

For more information, please contact Jason Belisario and Ben Frisbee at jbelisario@onesothebysrealty.com

Jason Belisario and Ben Frisbee are the exclusive agent representing the Edgewater real estate market as a member of the Haute Residence Real Estate Network. View all of their listings here.

Photos courtesy of Jason Belisario and Ben Frisbee 

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What makes Edgewater so special?

The sheer amount of planned and in progress developments coming to Edgewater makes this market very exciting for investors and millennial residents alike.

What advice would you give buyers looking to invest in /move to Edgewater?

Talk to an expert in the area and do research on the newer buildings that are selling for below comparable property prices. Also, become acquainted with the developers of the buildings to find out how reputable they are, and whether or not they are known for making buildings that have great resale value. For example, the Related Group has been known to develop high-quality buildings that have stood the test of time. Also, they have given good returns to the people that bought into their buildings during the pre-construction phase. Knowing who the good developers are and where they are building is a good way to make money on the buy. In Edgewater, with so much yet to be built. The area is ripe with opportunity.

What are the best drinking, dining and shopping spots in your market?

Alter is an industrial, new American style restaurant with an incredible tasting menu. Alter is within a mile of Edgewater in the westward direction. Edgewater itself does not have an established food scene yet, but this problem is quickly forgotten when you try the fantastic options that the nearby Wynwood area has to offer. Edgewater’s shopping scene is not established. You have The Shops at Midtown which is a stone throw from the main Edgewater area. For higher end shopping, you have the famous and chic design district close by.

What real estate trends in the market have you seen in the last 5 years and what trends do you predict in the next 5?

In the last 5 years, the Edgewater market has been slowly but surely catching up in price to its established neighbors. This is mostly due to zoning changes that allowed for larger buildings to be built in the area.

Besides the Turkish market, there is less overall demand than previous years for Miami real estate from foreign buyers. Thankfully, this is compensated for by the influx of North Eastern buyers from the US. New Yorkers in particular, look for a second home in Miami or even a first home when they are relocating to the south.

We believe that in the next 5 years, this area will grow as an investment market. Neighborhoods like Edgewater, Midtown, Wynwood, and The Design District all have tremendous value propositions when it comes to location. They each have something the other does not and are so close to one another that they are commonly thought of as one. Big name developers are working on and completing large scale projects in these areas such as Wynwood 25 and Paraiso District.

While still centrally located, these areas have noticeably lower prices per square foot than the more established neighborhoods such as South Beach, Downtown, and Brickell.

We think that informed investors will see this as an opportunity to get in on the emerging markets in this golden pocket, that sits between the Julia Tuttle and McArthur Causeways before they fully evolve.

What do you think is the appeal of Edgewater and why so many people are choosing to move here?

As with everything in real estate: location, location, location. We call this area the golden pocket. If you look on a map, it is perfectly nested in between 3 major highways. I-95, the 112 (which turns into the Julia Tuttle Causeway), and the 836 (which turns into the McArthur Causeway).

With real estate, the lowest priced properties in the inventory are the ones that move first. Simply put, it is cheaper to live in Edgewater than it is to live in Downtown or Brickell. Also, you are more centrally located relative to the Miami art, food, and night life hot spots. Finally, you aren’t sacrificing quality of living if you choose Edgewater.

Edgewater houses great buildings built by reputable developers. This allows Edgewater to truly compete against other neighborhoods.

Describe the quality and style of living to those looking to move to Edgewater?

People looking to move to Edgewater should expect high quality in the newer apartment buildings. It's important to keep in mind that these buildings are all new. All of them are loaded with amenities that are well maintained. As stated numerous times throughout this q&a, an Edgewater resident has incredible proximity to the best Miami has to offer in Design District, Wynwood, Downtown/Brickell and of course, Miami Beach. Also, it is important to note that from the center of Edgewater, these locations are between 1-2 miles away. This makes Edgewater an extremely undervalued and attractive destination for those looking to move to Miami.

What are the top 3 things you would recommend to someone looking to relocate here? 

Don’t be afraid to move to an up-and-coming neighborhood. People usually aren’t attracted to neighborhoods that everyone doesn’t talk about. It is not uncommon for people to ask “where is Edgewater?” We think this is one of the best parts of this neighborhood.

It is quiet and attracts minimal traffic compared to its more busy neighbors. The fact that no one knows about it makes the residents of Edgewater feel like they know something others don’t, which makes any area extremely attractive.

For investors and residents alike, move quickly before its too late. Comparable property prices are creeping up on Downtown and Brickell. The views from Edgewater blow most Brickell views out of the water, while still being around one to two thirds cheaper.

For investors, resale value on the Edgewater units will be high. Like we said earlier, world-class developers are now building in the area. The more of these that come along, the more stable Edgewater prices become. Luxury apartment rental prices for 1 and 2 bedrooms are extremely competitive with Downtown and Brickell. Moreover, in some cases, having better views and finishes in the units.

For those who are more into land assembly deals and holding lots for future sale to developers, Edgewater is a goldmine. Take a drive through Biscayne Boulevard or NE 2nd Ave and observe the sheer number of empty lots, parking lots, and run down commercial spaces along the streets. There are also a good amount of smaller buildings directly on the water that will eventually be bought out and torn down. We urge any investors reading to take advantage and move quickly. The future of development in Edgewater is crystal clear to us, and we want you, as investors, not to waste this opportunity.

How did you get started in Real Estate?

We took a trip to Mexico with close friends of ours. They had a relative that was extremely involved in the development of modern-day Acapulco. As we heard stories of how this area changed over the years, we fell in love with how living and work spaces impact the people of an area. We flew back home and immediately started the process to get licensed.

What sets you apart from the competition?

We simply love what we do. As young partners of Haute Residence, and some of the youngest, if not the youngest agents at ONE Sotheby’s, we take the weight of these brands extremely serious. We have surrounded ourselves with highly skilled and experienced mentors that work with us to make sure every step we take for our clients is in their best interest.

Every deal to us is important. We treat everyone the same whether you’re looking for a $1,500/m rental or a multimillion dollar property. For us, every deal is an opportunity to grow and gain recognition in this community for stellar customer service.

What sets Miami real estate apart from the rest of the world?

Miami sells itself. There is a place for anyone and everyone in this city. For residents, the lifestyle available in this city is unmatched in the US. Take a look at photos of downtown Miami in 2004. A third of the current buildings existed at the time. Miami is a brand new city. Drive through Downtown, Little Haiti, Wynwood and Edgewater and you will see that there are empty lots and huge renovation projects everywhere. Miami real estate is so exciting because we are still at the beginning of the epic narrative that is the story of this great city.

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