South Florida Help?

3 Replies

Has anyone had success investing in South Florida? 

I found it funny ready "The Book on Rental Property Investing," hearing @Brandon Turner use $100,000 as an example price of a Multifamily property. LOL. I live in a 2/2 Condo that I paid $107,000 for in 2014. 

Prices down here are extraordinarily high, has anyone found how to make money down here?

Thanks! 

@Ray Rhoads , current prices have definitely made it harder for rental properties. It's not just South Florida. You can no longer buy decent cash flow. So, most large investors are doing what's called value-add, where you improve the property to raise rents. This increase is rents is now your cash flow. You have to create the cash flow instead of buy the cash flow. 

@Sam Grooms is on point. You would need to find a value-add multifamily and on that deal, identify more opportunities to add value than the competition. Find a way to improve the physical property AND the operations to increase the revenue and decrease the expenses. 

What's great about buying multifamily (5 or more units) in low cap rate markets is that increases in rent have a great impact on the property value. Just need to adjust the way you perceive the market.

For example, a $10,000 increase in NOI equates to a ~$140,000 increase in value in a 7% cap rate market but a $200,000 increase in a 5% cap rate market. That's how people make millions in NYC at a 2% cap rate. It's difficult but possible.