Real Estate Boom Has People Flipping for Miami

The lines of people typical in Miami are usually those wrapping around the countless bars and nightclubs on a Saturday night. However, some people have been lining up in Miami for quite a different reasons these days: real estate. Investors have been known to wait on daylong lines to spend hundreds of thousands of dollars just to get in on the real estate boom that has hit Miami and South Florida during the past three years.

This summer, one such location that has generated buzz was a condo-conversion development called Pineapple Grove Village in Delray Beach, Fla. It was promoted as being "close to the beach," but was really 12 blocks away. Closer than the beach are the railroad tracks right next door.

But apparently, none of that took away from the market value of Pineapple Grove. Buyers are paying upward of $350,000 for a one bedroom and up to $800,000 for three bedrooms. Pineapple Grove is just one example of the booming real estate markets in Florida. Many of the people who showed up for the condo launch seemed more interested in "flipping" the property -- buying and quickly turning over their condo for a profit -- than living there.

Flipping Successes

Peter Celnicker, a real estate agent and investor, arrived in Florida four years ago just as the real estate tide was rising.

He put his entire savings of $15,000 down on a one-bedroom condo with 1 1/2 baths and held it less than a year and made $13,000 when he sold it. Celnicker says he then took the profit from that first condo and, with a little extra money, purchased another house, which he is selling right now for a $150,000 profit.

He told ABC News' "20/20" that he has had many other successes flipping real estate since. In fact, he says he's already made his first million -- at least on paper.

"My goal has been to buy 10 properties a year for the next 10 years. I'm 31 now and at 40 I should be doing very well," Celnicker said.

Ces Lawton is another member of the new millionaires club. He'd spent most of his life running a family printing business until three years ago when he and his wife started flipping properties in Daytona Beach, Fla. He's been specializing in what's been called the pre-construction condo market and says he's been successful buying condo contracts in luxury condo developments like the Marina Grande project in Daytona Beach -- even though it hasn't even been built yet.

"Less than a year ago, we purchased three units in the first tower preconstruction, first pricing and in a year, they've appreciated somewhere close to a million dollars. Once they get close to finished with the construction, we're going to flip them," Lawton said.

According to Lawton, real estate flipping started out as something fun and evolved into a business for him and his wife.

Too Good to Be True?

In the endless maze of condo developments, newcomers to the flipping game may be taking a big gamble. Longtime housing industry consultant Lewis Goodkin says massive speculative buying has artificially raised condo prices in Miami and throughout southern Florida. "The appreciation is abnormal," he said. In some buildings, says Goodkin, units are doubling in price between the time of an initial contract to the closing.

Perhaps no one is more aware of the climbing price tags in south Florida than Mark Zilbert, president of Zilbert Realty Group. "People are seeing 200 [percent], 300 [percent], 400 percent returns on what they invest in a construction condo," Zilbert said. "There's this gold rush mentality."

Zilbert says that condo flipping has helped fuel one of the biggest residential real estate booms in Miami's history and estimates there are now between 60,000 and 70,000 condos in various stages of planning, development and construction in downtown Miami He adds that the waterfront locations are what's making Miami so desirable these days.

Signs of a Slowing Market

Like the 19th-century gold rush, some people say those who got in early on the real estate boom have done very well, but those who came late to the game may find that prices are too inflated for them to enjoy any significant profit on their property.

Darryl Randall bought a three-bedroom unit with views of Biscayne Bay for $1.l million and actually had intentions of living in it. However, the potential payoff was too tempting and he listed it on the market for $1.8 million.

I "planned on staying here forever, but $700,000 is $700,000. And in a market like this, it's time to move up and move out," Randall said.

Randall put his condo on the market 10 weeks ago, but so far there's been no buyer.

Signs the condo market may be cooling are no surprise to housing industry expert Goodkin. He suggests that real estate speculators could wind up like those who invested in the dot-com industry. "They are going to find out that some of the stuff they put their money in is worth a whole lot less than they paid for it," Goodkin said.

Supply and demand dictates that if you have too much supply, the value of the product goes down. Zilbert says that despite the risks, he believes the Miami area is still a good bet.

"We have a growing population. We have 1,100 people moving to Florida every single day. Then add to that all the vacation and second home buyers from Europe and around the world. The cliché of 'The Field of Dreams' -- 'Build it, they will come.' I'm absolutely convinced if we build 100,000 units in Miami, the buyers will come."

Susan Miller and Richard Gerdau contributed to this report for "20/20."