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MIAMI—There is a wave of investors who are currently sellingtheir New York-based properties to invest in the South Floridaarea. Why? Mainly because of the recent rent control law and itsnegative impact on returns on investments. It has been estimated,for example, apartment property values dropped 20%-30% as soon asthe laws went into effect. Some investors are now mainly focused ongetting their money out of New York and are looking to invest inproperties that will produce better yields—specifically innon-regulated rent control markets, such as South Florida.

Why South Florida

"There is zero incentive for New York multifamily investors topurchase a building and spend money on renovations if they can'traise rents in these rent-controlled environments. Florida hasalways been a market with attractive yields. This is why most NYinvestors are choosing South Florida," says Rafael Fermoselle,managing partner of Eleventrust Real Estate. "They either havetheir New York properties under contract to be sold, have alreadysold them, are in 1031 exchanges, or in some cases looking fordiversification."

Investors are selling their assets in New York and reinvestingin deals that yield more and ideally, are located under one roof.However, since Miami's inventory is compressed with a lot ofsmaller multifamily properties and it's difficult to find buildingswith high unit counts under one roof, investors are turning tomultifamily portfolios that are comprised of 4 – 8 buildingstotaling 50-120 units. Although not all under one roof, investorsare finding the 100+ units they are seeking with room to addvalue.

"Investors are working closely with Eleventrust because we havethe inventory other brokerages don't, plus, many of the deals theyare transacting are happening off market, which many investorsprefer," explains Fermoselle.

Opportunity Zones

Opportunity Zones are another big reason why this new wave ofinvestors are looking to South Florida. Miami, Fort Lauderdale andWest Palm Beach are among the best places to invest in OpportunityZones. There are about 123 Opportunity Zones in South Florida,including 67 in Miami-Dade, 30 in Broward and 26 in Palm Beachcounties. Almost 16% of South Florida's commercial assets arelocated in Opportunity Zones, one of the highest rates in thenation, Fermoselle tells GlobeSt.com.

Tax Savings

New York investors looking to move to Florida also benefits fromthe state not having an income tax for Florida residents. NY statetax rates range from 4% to 8.82%. Additionally, the effective realestate property tax rate for Florida residents is approximately0.98%, compared to 1.68% in New York.

New York investors will also save on capital gains tax inFlorida where the top marginal tax rate on capital gains in Floridais 25% and top marginal tax rates on capital gains in NY is33.82%.

"We currently have 4 successful deals with New York investorsincluding multifamily properties with 9-18 units," says Fermoselle."We also have properties located in emerging neighborhoods that aregarnering interest from east coast investors."