Is Miami too expensive to buy for renting?

26 Replies

Hey Tania,

I think it greatly depends on what you are looking for. I’ll admit I am envious sometimes of how easy many members make it seem to pickup deals with a 2% gross rent to purchase price. That’s honestly unheard of down here, usually my goal is to see 1% of the gross rent in purchase price in an area that shows signs of expansion. I’ve met investors down here who take on other strategies such Airbnb, ALF, corporate housing, etc just to find avenues for increased income. I’m sure other members will pitch in and give their experiences. Feel free to reach out if you have any questions!

Hi @Tania Gonzalez Casal . I am new to REI and live down in South Fla. I recently went to my first local REI meetup and the majority of the experienced investors there are currently investing out of state. Might be smart to look into other markets if you are looking for long distance investing. Curious as to what intrigued you about Miami vs. other markets, being from Michigan? Best of luck!

Thank you all for your reply! I'm actually from Miami. I don't know why I came out Michigan, I guess I tried to input Miami and it came out MI. I live here that's why I know how crazy the prices are down here but I also know how fast the market grows. The disadvantage I see in investing away from your town is that you have to be travelling and you kind of loose control over your property. Any experience on that?

Thank you!!!! :-)

@Tania Gonzalez Casal Price in South FL might be expensive but areas in other parts of the country can only dream of the capital appreciation that you folks get. 

@Gabe Amedee In most big markets, it is practically impossible to hit the 2% rule. The combination of income and capital appreciation gain you will get will far exceed investments in most other parts of the country. 

Miami, South Florida in general, is going to get even more popular and more expensive once they build the nation's largest mall! Caching!!! https://www.miamiherald.com/news/local/community/miami-dade/article211306649.html

@Tania Gonzalez Casal ahhh that makes more sense now!! I know what you mean... I moved back to South Fla a few months ago and am looking for a place in Broward, preferably a duplex that I can occupy one side. It's been a bit of a struggle finding a deal so far! Best of luck.

P.S. I saw a new meetup pop up in Miami once a month.  The next one is on 7/31. May want to check that out!

Originally posted by @Frank Boet :

Miami, South Florida in general, is going to get even more popular and more expensive once they build the nation's largest mall! Caching!!! https://www.miamiherald.com/news/local/community/miami-dade/article211306649.html

 I don't think as many people go to malls anymore. One things for sure, they are getting less popular year by year.

@Andrey Y
I would have to agree with you about the malls. I think the one exception is if the mall is a tourist attraction; then it is a busy as the airport. This is the case in my town.

This is not going to be just another mall. The American Dream Mall is going to be a retail theme park, including 2,000 hotel rooms. The developers say that the retail theme park will attract 40 million visitors per year( they are going to have to sleep somewhere - can you say short term rentals bonanza!), with attraction such as an indoor ski slope, water park, skating rink, aquarium and a submarine ride. It is going to be a destination, not just a place to shop. Master communities are going to be build around it. A rapid transit system will be needed. This is going to create over 10,000 jobs. Florida is know for its theme parks and this is going to be a big one in South Florida, especially when the Brightline train connecting Miami to Orlando is completed.

Hello and welcome to this site or location Tania!  Some cities it will be harder to invest than others, but if you invest for the long term and look hard enough you will find something that has been discounted and probably has a motivated seller.  When you are starting out you should invest in your "back yard" until you have some experience.  You might have to change what you are looking for.  Do not assume anything will happen that you are counting for to happen.  Figure the worst case scenario when evaluating the property you are considering.  Usually, the more units the better.make several follow up calls and have a good reason to talk to a prospect and try to be a problem solver.  Ask questions so you find out what you are looking for like the reason for selling and if they have date in their mind, what's their price and why, and if their any repairs that need to be done 

Yikes, I don't know man.  Projects like the American Dream Mall get dreamed up during economic boom cycles but I just can't help but think what its going to look like when things settle back down to Earth.  Well, I'm sure the developers are much smarter than me, so hope its a smashing success.

Hello again Tania! for some reason my computer sent you my message early. I meant to say at the end of that last remark was going to say now or later to help sell it. You did not mention anything about financing but it will help to get you approved before you make any offers and will keep you more legitimate to the current Owner. If you are not a cash buyer it probably shorten that time if the Owner will finance, especially if they are in a hurry to sell. When first starting out do not do anything that would make you uncomfortable. Just play it safe and do the average rehab for that area. Communicating with Real Estate Agents and letting them know what you are looking for might help you finding a property you are looking for and may contact you before it gets on the MLS to help your odds.

Do not cut any corners or take any chances when you are first starting out.  When you are just starting, the only way to invest out of your city is to invest with a Turnkey company with experience and a good track record.  When making an evaluation use something that will help you to not forget anything in your expenses.

Good luck to you!

Originally posted by @Andrey Y. :
Originally posted by @Frank Boet:

Miami, South Florida in general, is going to get even more popular and more expensive once they build the nation's largest mall! Caching!!! https://www.miamiherald.com/news/local/community/m...

 I don't think as many people go to malls anymore. One things for sure, they are getting less popular year by year.

This is true in most of the United States, but Miami is not your typical U.S. city.  I have so many friends from Argentina and Brazil and the rest of Latin America that have been to the U.S. but have only been to Miami.  They go to Miami to shop for cheap clothes and buy a few iPhones for cheaper then they can in their home country, maybe buy a condo in Brickell to stash their money because they don't trust banks in their home country, and then fly home, never seeing any part of the U.S. outside of Dade County. 

I think this massive mall/tourist destination in Miami is a brilliant idea. If you search the web for "things to do in Miami" there's not much. After you tick "going to South Beach" (which isn't even Miami proper, it's the City of Miami Beach) off the list there's really nothing more to do other than shop.  

Miami here as well : ) What I have found is there is are still ways to get good buy and hold properties here in Miami. We as investors are just needing to get more creative to make that happen. Your standard MLS deal has too much of an owners markup and the Court House steps has too many "want to be investors" who are not properly doing their numbers to secure a healthy return be it fix and flip or fix and hold thus making it more difficult for everyone. Driving for dollars and door knocking is still king.

I have over the years down here fostered a few relationships with REO asset managers for the banks as well as directs at major auction houses that supply me with off market inventory, as well as access to purchase properties that are (REO) listed on market that are headed to auction without having to join auction. They let me know reserve price and if there is some negotiation room. ( many times much less than the starting auction price) This is how I have been shopping for my next deals, as have the buyers I work with. The only thing with these is you need to pay a 6-7% buyer premium.


They are out there just need to spend a good amount of time & effort networking and letting people know what you are looking for : )


Best of luck!! @Tania Gonzalez Casal


Kind regards,


Lucas

Originally posted by @Lucas Rowell :

Miami here as well : ) What I have found is there is are still ways to get good buy and hold properties here in Miami. We as investors are just needing to get more creative to make that happen. Your standard MLS deal has too much of an owners markup and the Court House steps has too many "want to be investors" who are not properly doing their numbers to secure a healthy return be it fix and flip or fix and hold thus making it more difficult for everyone. Driving for dollars and door knocking is still king.

I have over the years down here fostered a few relationships with REO asset managers for the banks as well as directs at major auction houses that supply me with off market inventory, as well as access to purchase properties that are (REO) listed on market that are headed to auction without having to join auction. They let me know reserve price and if there is some negotiation room. ( many times much less than the starting auction price) This is how I have been shopping for my next deals, as have the buyers I work with. The only thing with these is you need to pay a 6-7% buyer premium.


They are out there just need to spend a good amount of time & effort networking and letting people know what you are looking for : )


Best of luck!! @Tania Gonzalez Casal


Kind regards,


Lucas

Hi Lucas, how long have you been investing in Miami?  

Thank you @Lucas Rowel and everybody who has provided support with your answers. I'm just starting on this journey. I have been scared sometimes and wanting to leave but if anything I've learned is that there is no black and white on this business. You always have a choice if your original plan does not work. 

Thank you everyone!

Hi Tania, my girlfriend and I are just starting out as well here in Miami. We are on the hunt, and with her as a realtor she's consistently scoping the MLS for a good deal. It definitely is hard as newbies here, because properties are so expensive. However, we are noticing that prices are beginning to plateau and sellers are having to sell for less than asking price. Rents, however, on the increase, and that's not going to change. We've started to narrow down to specific areas by looking at taxes, flood zone areas, and associations. Through our research we are determining what is and isn't worth it. especially in regards to potential market value increase. Unfortunately, as a newbie, here in Miami, we have come to the conclusion that multi-family is a far stretch unless you have deep pockets and can take the risk. Condos are out of the question because of association fees, assessments, and lack of reserves. This leaves SF and townhomes. We are definitely looking into attending one of the REI meetups to get feedback from other like minded people.

Originally p noosted by @Karl Hinkel :
Originally posted by @Lucas Rowell:

Miami here as well : ) What I have found is there is are still ways to get good buy and hold properties here in Miami. We as investors are just needing to get more creative to make that happen. Your standard MLS deal has too much of an owners markup and the Court House steps has too many "want to be investors" who are not properly doing their numbers to secure a healthy return be it fix and flip or fix and hold thus making it more difficult for everyone. Driving for dollars and door knocking is still king.

I have over the years down here fostered a few relationships with REO asset managers for the banks as well as directs at major auction houses that supply me with off market inventory, as well as access to purchase properties that are (REO) listed on market that are headed to auction without having to join auction. They let me know reserve price and if there is some negotiation room. ( many times much less than the starting auction price) This is how I have been shopping for my next deals, as have the buyers I work with. The only thing with these is you need to pay a 6-7% buyer premium.


They are out there just need to spend a good amount of time & effort networking and letting people know what you are looking for : )


Best of luck!! @Tania Gonzalez Casal


Kind regards,


Lucas

Hi Lucas, how long have you been investing in Miami?  

@Karl I bought my first home when I got out of the military in North Charleston SC in 2008 (buy and hold)  and relocated to Miami 5 years ago from the Keys and have been helping investors and investing myself since then. What I have found is there seems to be enough people moving in and out of the area as well as those who are constantly trying to keep up with the Jones's where you can find motivated sellers it is just a matter of finding the right ones.  Great to meet you Karl! How about yourself?

Originally posted by @Ashley W. :

@Lucas Rowell Could you please share what you actually say to the home owners when they open the door? I've done driving for dollars, but not door knocking. Thanks!

 @Ashley, Thanks for reaching out and great to meet you.  When you drive for dollars and see a property that looks of interest how do you let the owner know you are a buyer? 

When I am driving and see one of interest I knock on the door, and if not home leave them a hand written note.  (Carefully photocopied)  If you don't mind sharing when you drive for dollars how do you get a hold of the interested property's owner now if you are not knocking? 

Kind regards Lucas