We are running out land to build on in South Florida. Especially in Broward County which is just a 10 mile strip of land between the ocean and the Everglades. We have become almost completely built out. In order to build something new a developer is most likely going to have to tear down an existing building. Currently I have seen older office buildings and churches torn down to make way for new apartment buildings.
It is very common for waterfront property that has a small home built in the 1960s to be torn down and replaced by multi million dollar mansions. The older home may have some charm but the land underneath it far exceeds the structure on top of it. Everyone knows that home values has jumped significantly post Covid. But the rise in values of waterfront property has far exceeded everything else due to its limited supply. I have even seen some examples of homes that were larger and more modern get torn down. Take a drive up A1A in Hillsboro Beach and see all the new construction going on there. It is amazing. Many of those tear down projects are being done by speculators. A developer comes in buys the property, tears down the existing structure and rebuilds a new oceanfront palace to resell.
I have also seen some amateur flippers that didn't understand the that the property they bought to renovate was obsolete and the best use was to tear it down. Four years ago before the market went on fire, one such flipper asked me to list his property in Fort Lauderdale after he "rehabbed" it. The house was just barely 1000 square feet with only two bedrooms. It had 50 feet on a canal and it was walking distance to the beach. He put $50,000 into it thinking he could make close to $200,000. Instead he lost money because nobody wanted to buy a 2 bedroom home for $1,200,000. Taxes and insurance would be over $30,000 for such a property. That property was eventually purchased by someone who knew what they were doing. It was torn down and replaced with a 4000 square foot home that took up most of the lot.
It isn't just waterfront homes that are tear down candidates. Older oceanfront condos are being targeted for redevelopment. They are mostly in Miami, but it could happen here in Broward as well. Developers are attempting to buy out condo owners at a big premium. It is a long and difficult process that usually requires at least 80% of the building owners to agree to a buyout. The new law that goes into effect in 2025 that requires condos to carry adequate reserves for repairs and maintenance will likely accelerate the process because many owners won't be able to afford the assessments that are coming to be in compliance.
Owning a tear down candidate isn't a bad thing. It just means the dirt underneath the house is worth a ton of money in relation to the rest of it. Before you do major renovations to a potential tear down candidate get the opinion of real estate professional like myself. Selling it As-Is many be the best course of action.
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Serving The Greater Fort Lauderdale area since 2006
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