South Florida High Prices vs Low Interest rates

2 Replies

I'm currently looking to purchase a SFH first as a primary residence to later rent out and move on to something else.

With the interest rates being as low as they are now, it almost seems silly not to take advantage of it. 

The issue is that $350k-$500k homes in Miami in a decent area are 1200SF homes 2BR/1BR built in 1950. Even outside of Miami, like Boca Raton or Parkland the home prices are so expensive that it doesn't make sense.

I just wanted to hear thoughts on the following:

Does it matter to overpay (i believe prices right now are too high) and take advantage of the low interest rates if you plan to hold long term?

If not, then the other option is not the buy something and if/when prices go down again to take advantage of low prices but the interest rates might be high again.

Finding a "bargain" as a non cash-buyer is almost impossible in this area.

Any thoughts are greatly appreciated.

Hi @Daniel K.  

First off, let my apologize now if this answer is really long. I have a habit of trying make sure that I try to leave a person armed with as much as I can give them. I could have asked more questions of you to see where your level is at, but anyway if you don't need all of this, maybe someone else reading your thread will.

You're thinking about buying and then looking into renting it later, we just don't know what that later date is for you. Depending on that, the answers could be different. It can help determine other things as well. What type financing to use, loan programs available, etc.

As for what you can get for the dollars you mentioned. $300k - $500k can get you a substantial home in the Boca and Parkland areas. Much more that a 2/1, much larger than 1200sf and built well after 1950. But still it goes back to your plans because it can help answer questions like should you go this high if you intend to get out of it and rent, etc.

You should always be looking for best price no matter what your plans are. If it's a short time, then maybe you don't have to get into such a higher price range for it, thereby 1. Getting into something that you can avoid overpaying for. 2. Reducing the amount of financing you will need and. 3. As a result, a property that may be better suited to rent where those rents can easily cover your investment.

Depending on the house you buy, and how much profit you potentially have in it, it may be one that you sell outright and then be in an even better financial position to get another house to rent?

Bottom line here is, you knowing how long you plan on having the home as your primary, will help to better define your strategy for it.


I haven't done my first investment deal yet, so others here can speak to you from that point of view. But I am also an Agent.

To buy or not to buy now would have to have the same question answered and maybe more. I would say to get with your local AGENT/REALTOR or do your homework based on your plans. Prices and rates are going up and expected to continue. So you have to consider your options there. But to overpay? I can see that in the case of dollars over list price if it's a great deal, but not if list price and or overpayment means more than what the market says the value is, nope. But your comps and knowing the market should guide you there.

Consider that you know where prices are now and while you may not have gotten into the market during the times when they were better, do you get in before they jump any higher? A house today is $250,000 at whatever the interest rate, but next month, next year the same home is now $270,000 and rates are also higher. BUT, that same house can remain the same or conditions make it so that it has to sell for less. This would be your hope. But will it all play out in your favor? If you do wait, then you should set a threshold for what your absolute highest price for a home will be and watch the rates so you can try and pull the trigger should they go up as expected. Again, others active in the financial sectors and your representative may be of benefit to your decisions.

Once again sorry for the length, but hope it helps answer your question or for someone that may come after!



@Daniel K.  I understand your frustration. My wife and I moved from Broward to Miami earlier this year and decided to rent initially until we found an area we wanted to buy in. Miami is tough for single family. You are correct, if you want anything in a decent location they tend to be older, smaller, and pricey. If you head out southwest to Doral or up to Broward then you might have more luck getting something larger and newer for a more reasonable price, but you'll be commuting most likely. 

Oftentimes it's hard to buy a single family home that you will enjoy living in that will also make a solid return as a rental in the future, especially when you get into prices upwards of $300k - the cash flow is typically pretty low. 

Here are three strategies you could consider:

1. Forego buying the home for now, and just look purely at properties for investment. Buy based on the numbers. This opens you up to neighborhoods you may not live in yourself, but where your returns will make much more sense. This way you get to buy now, take advantage of good interest rates, and you can buy your own home later. 

2. Buy yourself a home, build up equity. You can use that equity conservatively in the future to buy other investment property. That might work better than forcing your home into a rental scenario which may not make sense.

3. Buy a small Multifamily (2-4 units) in a decent location that you can live in and also rent the other units. Not everyone's ideal scenario, but perhaps it is an option for you.

Regarding over-paying for a property, i would avoid it, but if you plan to hold it forever you might be okay paying top dollar as the market goes up and down anyway. Just make sure you buy in an excellent location.

You could also look at condos in decent areas.  

No matter how you look at it, a home is an expense every month, so perhaps renting short term and buying some rental property is the best way to go. Good luck!

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