Is the real estate market in Miami to high for investing

12 Replies

I buy and hold property and recently did my first flip with my fiancé. We did well with the flip, it was a distressed property that was banked owned and we decided to take a risk with it. It had several violations and we did a lot of work to the house but came out with 60k in profit. We were happy with this but it did take us a year from purchase to finish the house. We actually worked on it for about 3 months, the rest of the time was spent at the county getting permits, approvals and fixing issues with past violations. I did the rehab as an owner because I refuse to hire a GC. Besides the fact that a GC eats up your profits, you can learn a great deal by finding and working with the subcontractors on your own. The knowledge I got from the rehab helps me out with my rental properties and is definitely going to make my next flip easier.

The problem I'm now running into with the buy and hold as well as flip opportunities is that I simply can't find good deals in Miami anymore and I wondering whether this market is just tapped out. Any property worth purchasing is being sold at auction and ends up getting bid up to almost market price. The buy and hold investments available have cap rates below 6%.

I was also just starting to consider the idea of getting into 10 to 30 unit multifamily and I can't find one in Miami.

Last year I purchased two fourplexes in Ft Lauderdale in a low income area and those properties took me 6 months to get together. I'm finally cash flowing approximately $250 per unit in those two properties and I'm wondering to myself whether that was a good investment or not and whether to start looking for property in other areas of Florida like Jupiter, Stuart etc.

Anyone else experiencing this in Miami? Whats your take on the Miami real estate
market? Is it still a workable market for the average investor? Or do I now have to be a Russian billionaire to invest in Miami?

Hang in there Wendy. My realtor/mentor ( a 40 year veteran and investor her self) said to me its not even worth trying until after easter. She said the international money will be back over seas soon as Miami gets hot, humid and sticky and the deals will be easier to find. I am looking at Little Havana, west flagler and hiahleah right now but not rushing in to it until the billionare russian head back for the summer.

good luck

Dear Wendy,

You won't see many Russian billionaires anytime soon, as Russia now is not in good shape and a lot of people lost a ton of money. I know a lot of wealthy Russians and they all are crying. 

Yet, I have to agree, that Miami market is very competitive and there are little or no margins on investment properties. I'm fairly new to this, but I've been looking a lot and wasn't able to find any great buys in Miami - Dade, or its in the areas where I would want to collect rents. I've been looking a lot into Broward county aslo, because prices there are lower; but not much there either. I think, unless you run into direct seller or come across property, that is not on MLS - its hard to find good deals. But lets stay positive, good stuff will come our way.

I'm always looking to network with good people and even take on the project. Feel free to reach out. 

 

I don't think I'm spilling any state secrets when I say that Hialeah is VERY competitive but there are deals to be had. I'm closing on 9 units next Friday which I found just driving to one of my other properties. A great little FSBO.

I'm sure you'll find something if you keep looking. It seems you just need to be ready to pounce on opportunities quickly.

Nice to see some South Florida BPers discussing local real estate.  I'm in Palm Beach County and have started to see the same thing recently.   Getting hard to find good deals.

@Wendy Diaz - I get emails from a wholesale site that has rehab properties in Miami. The site is uspropertyfinders.com - they have a section specific for Dade County, many of the properties are not on MLS. Maybe it can help you in your search.

Also, how are the multis in low income Lauderdale working out for you?  I have been hesitant to invest as that tenant base brings more risk.   Been spoiled with A rates properties so far.

@Bruno Demir  - I had never thought of that dynamic.  Makes sense, everyone leaves then so would make sense demand/competition dies as most people like to buy property in person.  I was looking to grab my third property in the next month or two, may take my time now.

Thanks @Mitchell Jaworski  for the referral. It can't find any deals Miami which is why I jumped into Ft. Lauderdale last year. I've had 8 units (2 Fourplexes) in Ft Lauderdale in a low income area for about a year now. Worked real hard to get decent tenants in them and now I'm running pretty smoothly, but turn over is high. I'm use to dealing with fairly stable tenants who don't trash my properties and I honestly I wouldn't jump into the low income housing again. Tenants will burn you out. 

We've been investing in Broward County since 2009 and were able to pick up quite a few condos as shorts sales/REOs at great prices. The last 2 years have really inflated the property values...good for what we already own, not so good to buy more. 

It's not so much the Russians, it's the Central and South Americans looking for a safe place to park their volatile currency. They don't care about ROI or cash flow or the 2% rule, or even finding tenants. I doubt the heat and humidity will deter them. We looked at numerous properties in Ft. Lauderdale last July, and all were vastly overpriced from an ROI perspective.

I've seen properties advertised by wholesalers, and they are in sketchy neighborhoods that we will not consider. We own 2 of those types of SFRs here in NJ, and have no interest in increasing that type of investment.

Hialeah has really worked out well for me and several investors I have gotten to know @Wendy Diaz  The turnover is not bad once you show your tenants you are going to treat them well. And when someone does leave, 9 times out of 10 one of the other tenants has a friend or relative ready to take the unit.

On @Aly L 's comment, I agree. The majority of the money I see coming in is from Central and South America (just read the news coming from Venezuela today). Particularly Venezuelan's will find any way to turn their Bolivares into USD. But what I am noticing is they stick to the easy stuff. Houses and Apartments that are in at least OK shape they will pick up. They don't seem to want to deal with houses needing more extensive rehab or multifamily. 

My competition in Multifamily is mostly coming from locals who already have a foothold and are looking to expand. Seems almost every investor that already has multifamily is out looking so you need to jump into deals quickly and decisively. 

Actually, we were only looking at multi's and small apartment complexes last July, and they were all owned by Latin investors looking to cash out. The prices were ridiculous, and the tenants seemed like "shills". No one had leases, some units were vacant, the listing agents were fuzzy on who had security deposits, what expenses really were,  the cap rates were wildly optimistic, etc. 

One complex where we were able to get into one unit in the building was a real joke - the couple that supposedly lived there for the last couple of years showed us around with our agent. There were no clothes in the closets, all the kitchen cabinets were empty, there was no shower curtain and no toiletries or toilet paper in the bathroom, and most of the light fixtures didn't work. It was quite entertaining to play along ;)

@Bruno Demir  Thanks for the tip, maybe I should stop wrecking my mind and just a bit, at least until something really makes sense. I sure hope your mentor is right. 

Welcome to the wild wild west of investing in South Florida!  Way more shifty sellers/wholesalers than honest ones.  The only real deals anymore are through county auctions or buying notes.  The risk is higher but if you do your due diligence, can often find that diamond in the rough.  

@Wendy Diaz

 It's definitely getting harder and hard to find deals in Miami because there is a lot of local competition combined with the international demand. However, I was lucky in finding some great off-market deals by introducing myself and being persistent with a respected local broker. Once they know you mean business they will give you the deals to retain you as a loyal customer. 

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