MIAMI—As condo buildings get completed, the last units are always the most difficult to sell. At the same time, investors putting their newly built units on the market are facing competition from the condos coming on line.
As a result, many sellers are choosing to position their units as rentals to generate an income. GlobeSt.com sat down with general contractor SPACiO Design Build’s Alex Wertheim to discuss how to build-out a “decorator ready” condo to attract tenants on a tight budget in part one of this exclusive interview.
GlobeSt.com: With so many luxury condos on the market, how can developers and investors position their condos to generate income?
Wertheim: When a developer nearly sells out a project, there are always a few units in the building that are difficult to sell. Increasingly, developers are calling us to turn those ‘decorator ready’ units into livable spaces. Investors who are unable to sell their newly built units as fast as they had planned are also moving in that direction.
We go into those units and install the flooring, paint the walls, build a closet system, create storage space, enclose dens and—from time to time—upgrade the kitchens and bathrooms to turn the condo into rental units. This strategy works well for units in luxury buildings. These units tend to attract affluent renters who want to experience the luxurious amenities of Miami’s high-end condo towers but don’t want to deal with the burden of owning a condo.
GlobeSt.com: What advice can you give developers and/or end-users who are turning their units into rentals?
Wertheim: There are hundreds of new luxury units nearing completion or under construction and hundreds of new condos hitting the rental market simultaneously. Many of the buyers closing on units in recently completed luxury towers across South Florida are investors.
While some of the investors are domestic and others are foreign, they all share the same plan: renting the units out until the time arrives to execute an exit strategy. If the newly-built unit comes “decorator ready”—which means the floor, walls, closets are finished—you should recruit a general contractor before the closing date to start planning the build-out of the unit. This way, a general contractor can start work as soon as the unit is yours, saving you weeks of ‘waiting time’ and placing a tenant in the unit much faster.
Other advice I would recommend would be to stick to neutral colors if you’re painting the walls and using basic standard materials to build-out the unit. The tenants are not going to treat your investment with the same quality of care, so don’t overspend.
For flooring, we recommend porcelain tiles because they are stylish, durable and low maintenance. If the unit seems small, consider knocking down walls to open up the floor plan, which usually involves combining the kitchen, dining and living areas into one large space. This will increase the natural light and create the perception that there’s more square footage.