Miami's real estate gamble


Published: Tuesday, January 3, 2006 at 6:01 a.m.
Last Modified: Monday, January 2, 2006 at 10:28 p.m.
Tony Velazquez and his girlfriend grabbed their wine glasses and strolled out the front door of his house to the seawall at the end of their street for a moonlit capper to their dinner date.
As they enjoyed the bay view, two neighborhood crackheads started harassing them and threatened to rob them. Velazquez got in their faces. Cursed them out. Invited them to follow him to his house so he could drop off his girlfriend and get his gun. He dialed the police on his cell phone.
The thugs took off. "It's easy to be an urban pioneer when you have a badge," said Velazquez, 41, a federal law enforcement agent who has seen the market value of his property in the 400 block of Northeast 25th Street nearly triple since he bought it in 2000 for $255,000.
He encountered the thugs a month after he moved in. It didn't make him think twice about his investment. Now he's reaping the benefits. He took the equity out of the house to buy a half-million-dollar home in Morningside, which he rents out, and a condo for his father.
As Miami remakes itself, reclaiming once-stately neighborhoods lost to neglect, poverty and crime during the '70s and '80s, such pioneers as Velazquez - often thirty-something professionals with decent salaries and no kids - are starting to cash in on bets they made when they moved into dicey areas with drug dealers, prostitutes and petty thieves. The payoffs come in rejuvenated neighborhoods and soaring property values.
For many at the lower end of the socioeconomic scale, the trend is simply accelerating a loss of affordable housing. But for others, buying into transitioning areas is the only way they can afford to crack the South Florida housing market, where midpoint prices for a single-family home have doubled in the past few years.
People already priced out of the first wave of such gentrified urban neighborhoods as Morningside, Belle Meade and Buena Vista find urban pioneering is the only way to afford the lifestyle they want. They trade security for the appeal of living near such emerging urban centers as the Upper Eastside and what many hope will be a bustling Performing Arts Center district.
Velazquez, a bachelor who describes himself as "a kid from New York City who wants to be in the middle of everything," settled in Sunrise when he arrived in South Florida in 1992.
"That lasted four months," he said. "Too suburban."
Then it was North Bay Village for six years. He found himself craving the grittier urban streets of his childhood. He discovered Edgewater, a neighborhood in striking distance of South Beach, Brickell and the Design District.
The house on Northeast 25th Street was being transformed from a chopped up, partitioned maze of a rooming house into a charming three-bedroom home with a fireplace, wood floors and a view of Biscayne Bay. And it had two detached apartments out back. One for his dad. One to rent out.
He didn't flinch when he learned two people had been murdered in the house. Or when he saw the drugs and prostitution at either end of the block. The neighborhood has cleaned up nicely. People aren't afraid to go outside anymore. Crime is still a problem. Thieves broke into Velazquez's house last year. Last month, someone broke into one of the apartments while his tenant slept. They stole her car.
It's still worth it, he said. "I think this house was a steal," he said.
A hot market What happened was that South Florida's real estate market went berserk, and values skyrocketed. Developers discovered Velazquez's neighborhood. His house sits in the middle of a high-rise building boom. Owners on either side are selling. Builders have offered him as much as $800,000 for his property. For now, he's staying.
"You don't want to get boxed in by the high-rises, though. If this house is ever sold and knocked down, I will have a shot of tequila and four or five tears."
Then he'll move to Morningside. Robert Holland bought a rundown rooming house in 2001. He wanted a renovation project that would test his skills and keep his mind off the end of a relationship.
His friends thought he was crazy. He already had a home in Miami Lakes. A nice home. Why bother with the broken house, they asked. One friend, a police officer from Hialeah, told him to get a gun and stay inside at night.
"I knew property values would go up," he said. "The area had already started to turn over . . . And the Performing Arts Center was coming."
Holland paid $73,000 for the two-level house. He gutted it and spent about $40,000 on renovations. He converted the second-floor bedroom into a law office. The first floor has dark wood floors, a swanky bar and a striking fireplace.
The house became his "city home," where he stays part of the week. Early on, he had to chase away vagrants who slept in the back yard. His shed got broken into. So did his car. Someone kept stealing the garden hose.
But the neighborhood has turned around. Holland, 41, is planning to put the house on the market soon for $700,000. There's a million-dollar dream home on the Intracoastal not far from his neighborhood that he wants to buy.
The house in Miami Lakes is up for sale, too. If he doesn't get the Intracoastal house, he'll move into the house on Fourth Court full time.
"I got bored out in the suburbs," he said. "The more nights I stayed at the city house, the more I knew this is where I want to be."

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