Syndicates are here again. For $106, investors can buy a slice of Brickell Flatiron
Republic Real Estate, a branch of the New York-based investment platform Republic, is selling shares in a unit in Brickell Flatiron. So far, 600 investors have put up a total of $260,000, betting on growth both in the rent and on appreciation. The unit is under contract for $465,000, below the listing price of $489,000. Republic’s goal is to syndicate a total of $300,000.
“You don’t have to sell Miami,” said Janine Yorio, co-head of Republic Real Estate. “Miami sells itself.”
South Florida’s usual attractions — weather, tax benefits, international flights — along with the Ugo Colombo pedigree and Flatiron’s architecture sealed the deal.
Each investor will receive 2% to 3% from the rent paid for unit 3006, a 898-square-foot one bedroom, one-and-a-half bath condo, Yorio said. Investors can spend anywhere from $106.40 to $50,000; the average has been $208. The return per year would be about $2 for someone who spends the minimum.
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But the primary investment draw is appreciation. Republic plans to sell the unit after three-to-five years, Yorio said.
Should the investment sell for $1 million — more than double the purchase price — an investor who put in the minimum could expect to earn $200.
Republic Real Estate is aware of the potential setbacks, Yorio said by email. “We’ve made rather conservative rental assumptions in consideration of the current market. We’ve budgeted both for vacancy as well as operating reserves that may be necessary in the case of a free rent period or extended vacancy.”
The investment platform is a blast from the past, said Peter Zalewski, principal at Condo Vultures. “This type of program has happened before but has ended in litigation.” A lawsuit against the New York-based Infinity Real Estate is one example, he said.
The platforms are all based on optimism, Zalewski said. “It’s all based on prices going up. What typically happens is these New Yorkers parachute in and leave poorer after. The rents are not going to substantiate what these people need.”
And rent is expected to stay steady or drop, Zalewski said. “The unemployment rate doesn’t even have to grow. When the year comes around, these renters won’t be able to manage the rent...The problem is you don’t have the salaries to keep it up. Renters are going to become frugal.”
Still, those itching to invest, should “bet the minimum,” Zalewski said. “Why bet the house?”
Republic Real Estate expects to invest in other condo units in Miami. It has another in Rise Brickell.
