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Buyers of units at the YotelPad condominium in Downtown have been stunned by the news that they may not be able to rent their units for the season. YotelPad is the pioneering development in Downtown that allows its owners to rent without restrictions, within the new wave of investments aimed at Airbnb. A change in the city code prohibits rentals for periods of less than 30 days. The developer is already in contact with the local authorities to resolve the problem which, apparently, is a temporary bureaucratic detail.
YotelPad was a milestone in Florida real estate by allowing unrestricted renting and guaranteeing, in the first two years, an expected return of at least 8% per year. In practice, the return can reach close to 10% considering that the Downtown area in Miami offers high occupancy rates. Daily rates in the region are between US$ 250 and US$ 400 dollars. The occupancy history is still unknown in Downtown, since the developments with this format are new and most have not yet been delivered (YotelPad is the first). However, based on Orlando’s occupancy rate, we can comfortably simulate the return using occupancy rates in the 75% range.
After the launch of YotelPad, several other construction companies started in Downtown Miami, also with the appeal of unrestricted rental, attracting investors from all over the world.
The YotelPad was a bestseller. Its more than 230 apartments were sold in less than a year after groundbreaking. Many of the buyers are investors. Some bought several units.
Why does the condo face restrictions now?
For technical reasons, the condominium is registered as a “residential and use” occupation, which does not allow rentals for less than 30 days. The correct certificate would be condo/hotel. The developer, in a letter sent to the owners, said that it is a “technical matter that unfortunately takes time, but is not controversial”.
YotelPad initially had its delivery date for 2020, however, with the pandemic, it was only able to finish construction and hand over the keys for about three weeks and it opened to the public on June 1st (2022). During this construction period, the City of Miami changed the rules for condo-hotel developments.
In a statement provided to The Real Deal, the developer said it is working with its attorney in Greenberg Traurig and the City of Miami to resolve the issue as quickly as possible.
According to The Real Deal and based on information from the YotelPad website, the condo is now accepting 30-day stays starting June 17, with rates starting at $214 per night, according to its website. Rates increase from later dates: for the month of July, for example, nightly rates start at $409 for a studio and go up to about $1,300 for a two-bedroom triple queen-size suite .
Market expects the certificate to be delivered quickly
It is expected that the condominium will be able to reverse the registration and allow unrestricted rent as per the initial proposal. There are several developments within this format in downtown Miami, which could be negatively impacted if this understanding is consolidated, which does not seem reasonable.
About AMG International Realty
AMG International Realty is a global real estate company specialized in Florida. If you want to know more about condominiums that allow unrestricted rentals in Miami, contact me right now and chat with me on WhatsApp: +1 305 318 6968 (Heloisa Arazi).