YotelPad Miami owners cannot rent daily units
YotelPad Miami buyers, who were promised the ability to rent their units without restrictions, are unable to do so due to a change in city code, The real deal has learned. And they may lose rental income as a result, while the developer tries to fix the problem.
A subsidiary of David Arditi’s Aria development group completed the downtown Miami condo and hotel building earlier this year. It is the first new flexible, short-term rental-friendly residential development to be completed in the area, with a number of similar projects planned for the future due to surging demand.
Aria has partnered with Kuwaiti company AQARAT, shareholder of Yotel, to develop YotelPad Miami.
The development, with 231 condos, is sold, with 161 developer sales recorded to date. The closings began in March. Many buyers are foreign investors, and a number of them have purchased multiple units, records show.
OneWorld Properties, led by Peggy Olin, handled sales and marketing.
The projects offered buyers affordable units they could rent for as many nights as they wanted, meaning they could generate more revenue than condos in traditional buildings with restrictions.
But the owners of YotelPad, a 31-story building at 227 Northeast Second Street, can currently only rent their units for periods longer than 30 days because the building has residential occupancy and use certificates, as opposed to an apartment/condo hotel. occupancy and use certificates. In a letter sent to the owners, Arditi said it was a “technical matter which unfortunately takes time, but is not controversial”.
How long is unknown, the owners said TRD. Development completion was delayed by pandemic-related issues. It was originally scheduled to open in late 2020.
“We are facing the challenge of not being able to rent the units short term as originally promised,” said Max Szapiro, who closed his unit in May for $315,000.
In a statement provided to TRDthe developer said it was working with its attorney at Greenberg Traurig and the City of Miami to resolve the issue as quickly as possible.
While YotelPad was under construction, the City of Miami passed a planning ordinance that created requirements under the Apartment/Condominium Hotel designation for short-term rentals in residential units. This means that YotelPad, which was not grandfathered, had to apply for apartment/condominium hotel use and occupancy certificates. And according to the current code, it was necessary to comply with the accessibility requirements for this use.
Arditi said in its letter to residents that the firm is “working with our team of architects and general contractor to meet this requirement as efficiently as possible.”
A unit owner who did not want to be named said he discovered the problem when he applied for a certificate of use and was unable to obtain it because the building was not correctly registered. He said he plans to rent his unit for $250 a day up to $400 a day, depending on demand.
The hotel is accepting 30-day stays starting June 17, with rates starting at $214 per night, according to its website. Rates increase from later dates: For July, for example, per-night rates start at $409 for a studio and go up to around $1,300 for a two-bedroom triple-queen suite.
In his statement to TRD, Arditi pushed back against the claim that landlords would lose money if they couldn’t rent their homes by the night. He wrote that effective rents in Downtown Miami have risen more than 50% in the past two years and buyers have knocked down their units 40-50% above their purchase price.
“YotelPad has been a very successful development and we will overcome this temporary setback,” he wrote in his letter to residents. “Transitional use is permitted as of right, the required modification is a technical and non-controversial matter.”
In an interview with TRD in May, he touted the lack of rental restrictions.
“I can use it 365 days a year if I want. I can also rent it 365 times a year if I want, and everything else,” Arditi said at the time. “The concept of maximum flexibility is what’s appealing.”