I'm new to the Miami area. I'm looking to invest in a Duplex/Triplex/Fourplex. I've been analyzing several deals (50+) using the 2% test and the 50% test and most deals look pretty awful. My sense is that the price to rent ratio is out of whack. I think the price in these places is too high for the kinds of rents that you can charge. I've been looking in Coral Way, Little Havana and Coral gables the outside areas. Are there any other areas where the numbers look better?
I'm new to the Miami area. I'm looking to invest in a Duplex/Triplex/Fourplex. I've been analyzing several deals (50+) using the 2% test and the 50% test and most deals look pretty awful. My sense is that the price to rent ratio is out of whack. I think the price in these places is too high for the kinds of rents that you can charge. I've been looking in Coral Way, Little Havana and Coral gables the outside areas. Are there any other areas where the numbers look better?
I'm sorry to break it to you but you will never find a property which meets any of theses 'tests' in Miami, except for MAYBE in less desirable areas West of I95. The areas you have mentioned are very pricey and the cap rates there plummeted years ago.
Investor · Miami, FL · Member since 2015 · 329 posts · 124 votes
5y
@Angela Romero Miami Dade has gotten very saturated. Not to say you won’t find a deal, you’ll just have better luck going further north into Broward or Palm Beach counties. Good luck with your search!
I'm new to the Miami area. I'm looking to invest in a Duplex/Triplex/Fourplex. I've been analyzing several deals (50+) using the 2% test and the 50% test and most deals look pretty awful. My sense is that the price to rent ratio is out of whack. I think the price in these places is too high for the kinds of rents that you can charge. I've been looking in Coral Way, Little Havana and Coral gables the outside areas. Are there any other areas where the numbers look better?
I'm sorry to break it to you but you will never find a property which meets any of theses 'tests' in Miami, except for MAYBE in less desirable areas West of I95. The areas you have mentioned are very pricey and the cap rates there plummeted years ago.
Rental Property Investor · Miami · Member since 2020 · 34 posts · 15 votes
5y
@Angela Romero the best you can do in those markets right now is a 6% cap (forget about the 2% rule here - you won't even find 1%!). There are some opportunities in C class neighborhoods and through wholesalers if you have cash/hard money.
Investor · San Francisco, CA · Member since 2020 · 31 posts · 22 votes
5y
Miami is a short term rental district. I would suggest look into Miami beach, the Design district, and Brickell for apartment units that you can Airbnb and make good returns on them. I currently own a studio in Brickell and is producing 1000k cash flow every month on airbnb. Miami is currenlty booming with seasonal rentals (1/3/6 months) My sister is a realtor in Miami if you are looking and knows the market. I'll be happy to connect you with her if you are interested. Best of luck!
Rental Property Investor · Miami · Member since 2020 · 34 posts · 15 votes
5y
I don't have any Airbnb properties but I know there are some areas here where neighborhoods have imposed many regulations. Miami Beach has some of the most restrictive short-term rental rules in the country. I'm glad that it's working for you @Hernando Quintero, but I would caution @Angela Romero to look into regulations for each area before investing. Good Luck!
Investor · San Francisco, CA · Member since 2020 · 31 posts · 22 votes
5y
To be clear, there are selected condo buildings in the Miami area that have Short Term Rental permits that allow for Airbnb, mine is one of them. Like all investments, there are risks involved, and regulations to follow, but Miami will ALWAYS have tourists come and go. Especially when there isn't much international travel happening. Is not cheap, but definitely worth it.
Thank you so much for all your advice! This is very helpful in terms of aligning my expectations. I will continue my search and see if I can find something!
Real Estate Broker | Investor | Property Manager · Plantation, FL · Member since 2015 · 228 posts · 68 votes
5y
@Angela Romero what many others have said rings true. In Miami you have to account for appreciation for your investment getting a good return. Analyzing soley on numbers will make it look bad as you mentioned. Broward and Palm Beach counties offer different opportunities than Miami for sure. STR is a strong move as well in many areas and have had clients take duplexes and move them to STR units.
You can still find good deals you just have to go straight to sellers, nothing on the market makes sense. And if it does there's 10 cash offers above asking price.
Real Estate Agent · Miami, FL · Member since 2017 · 506 posts · 205 votes
5y
You can find properties that have been on the market for a while; have depressed rents & defer maintenance. As long as you have a fierce negotiator on your team; you can bring the price down (some more after inspections!); do a bit of work (or not!); raise rents & then your numbers look much better. Have done that with a few clients. Happy to elaborate:) Happy hunting! Buying at 2% rule in SoFla unfortunately is close to impossible & folks, who have bought with appreciation / forced or market have achieved it (with time, creativity & effort). Best of luck & happy to discuss further.
Investor · Miami, FL · Member since 2017 · 229 posts · 271 votes
5y
I agree. As others have mentioned, in more desirables areas such as Coral Gables, South Miami and Coral way the price to rent ratios will be almost impossible to put together anything decent. However if we're being honest that really doesn't differ from any other typical comps were you to try and do the same in New York or the Bay area. While I have yet to ever come across a deal meeting the "mythical" 2% rule I believe you should be more than able to achieve exceed 1% in Miami Beach, Little Havana, Allapattah, Liberty City (I just sold a house here and I agree with the others that the 1% rule will probably be negated by the increased management/tenant challenges), Miami Gardens & North Miami. Now you will have to do your own direct marketing and go direct to sellers which is where most investors here seem to stumble but apart from something coming down the pipeline of a solid wholesaler (rare) and being presented to you its really difficult otherwise. The best deals will probably be complete wrecks that need full rehabs and maybe a few fine/liens mitigations but if you're willing to put in the work and not just go for the easy ones you can hit the 1% rule every day all day. That's been my strategy and its been working. Best of luck out there.