Want to Invest a Property in Miami? Here's How
Miami, Florida has been capturing investors' attention for decades now.
12:30 06 August 2019
A combination of several factors such as a strong mix of local and international people, excellent location, hotels, condominiums make it hard for investors to turn away from Miami, where, ironically, home prices are known to fluctuate between ridiculous highs and lows. To give you some context, just before the economic recession in 2008, home prices in some of the leading neighborhoods in Miami more than doubled only to take a tumble and drop sharply thereafter.
But things are looking up now and it’s safe to say that Florida is the place to invest in, with home prices, particularly rocketing up in Miami Dade county over other local markets. Does this mean that potential investors can seize this opportunity to invest in Miami real estate, certain of making good returns on their investments? If only it were that simple? You can invest in Miami for sure, but knowing how to invest and where will make a world of difference to the returns you make few years down the line.
In this article, let us take a good look at two tips on how to go about investing in a Miami property.
Know What You’re Getting Into or Find Someone Who Knows
When it comes to decision-making, being clear and confident about the property you’re considering investing into is important. Take your time to understand the current market situation and take expert advice if required. Hire brokers and real estate agents having solid knowledge and expertise if you want to learn about the current trends in the market or need help appraising the actual value of the property you’ve narrowed down on.
Note, Miami real estate is known to be filled with highly overvalued properties. You don’t want to be paying too much for a property that doesn’t have a lot of potential, do you?
So whether you’re looking at investing in pre-construction or resale properties, hire brokers that can assist all the way through. Do some legwork. Consult with real estate agents from some of the leading real estate companies in Miami with a good track record and solid experience that have strong exposure to specific neighborhoods or specific properties on your list. Working closely with a knowledgeable real estate broker goes a long way towards buying a property in Miami that matches your criteria in terms of style, type, budget and location. ManhattanMiami is a reputed real estate company specializing in investment and support for all kinds of investors. With years of experience and proven track record, their real agents know the key players and developers in the market very well, have inside information on their upcoming projects, and can get you good deals of pre-construction projects at first-cut pricing. And that means they can help you distinguish good ones from the bad ones. Some of them are highly skilled to read floor plans and share their views on quality of materials used, and can even tell you which properties are constructed to good standards. Working with them, you can rest assured that you’ll end up with a high quality property that will continue to give good returns for years.
Goals. Lay them down. As simple as that. Investing goals vary from one investor to another, but they mostly fall into these categories.
- Invest in a property and hold on to it only to generate a profit by selling it off later, when the time and the price is right.
- Invest in a property to secure your wealth. This applies to those investors who always prefer investing their money in a secure asset rather than letting it sit in a bank.
- Invest in a property that can be leveraged well enough to generate huge profits, which can then be used to ensure a safe retirement income.
There are many goals for investing and it is important to pick one that fits your financial goals. If you’re a first time investor looking to buy a property in Miami, it helps to have a detailed conversation with an experienced real estate agent in Miami to get more clarity on how to go about the goal setting process, go through different steps that make up the process of defining goals that suit your investment style and profile, and maybe get some guidance on having a roadmap so you can give yourselves the best chance to reach your goals as soon as possible without having to take on too much risk along the way.
Type of Property
Investing in a high rise condo just by the beach or a small mansion tucked away in the outskirts, each option has its own share of pros and cons. And, as you would expect, each come with a different degree of risk.
Sit down with your real estate agent and talk to him or her about your investment goals and preferences. Based on that, your real estate agent should be able to offer guidance on the kind of properties that you should be looking at to help you get there. Anthony Guerriero from ManhattanMiami explains that as a first time real estate investor, the goals you are looking to accomplish will help you decide what location and property type to invest in.
For example, investors with deep pockets who have a fairly decent risk appetite tend to show more interest in the luxury properties that come up for sale on the market every now and then. The term luxury is the operative word and is highly subjective. What’s luxury for one might not be the same for another. When looking for luxury properties, some investors rate location and amenities of a property highly whereas privacy, exclusivity and high levels of personalized service come first for others.
Seeking expert guidance is helpful when you’re not so sure about how to decide on the type of property. Maybe you have your location down, but are still exploring the types of property you could invest in. Talking to an expert real estate agent who has a pulse of the market lets you improve your chances of investing in the right type of property. Most real estate agents know which type of property in which locations are likely to generate a good amount of income while increasing considerably in value.
It might not be a wise rental property decision to invest in a two studio apartment (even when a lot of factors look to be favorable) at a location where there are lots of single professionals looking to rent out a single bedroom unit. You won’t be able to find any takers. Buying two units might seem to be a good decision for most investors in this case, but only a few of them understand that it comes at a cost as it not only incurs more utility costs but also pushes up property management costs and taxes by a notch or two.
This is where the experience of real estate agents comes in handy. They do their best to keep themselves in the know and well informed about different things, and thereby help you make sound investment decisions without you having to make any sort of compromise on location, budget etc. With all that experience, they can help you distinguish between good and bad investments by giving you clear indications on the ramifications of investing in a particular type of property in a specific market.
In addition to that, they can comb the market thoroughly to look for the ideal property that suits your profile by taking into account all the factors that are important and relevant to you including investors cash flow, and the potential for the value of the property to appreciate among others. They can also tip you on properties not currently up for sale in the market but owned by someone who needs to quickly liquidate that asset and make some money out of it. For those investors looking to generate a high rental income, it is prudent to invest in a good location where there is a huge population of young working professionals. Such professionals will be happy to pay rent to a flat with all amenities located close to their place or work, and never think about vacating their homes unless the situation demands. What that means for an investor is a rental property that keeps producing a constant stream of cash as rent with very virtually no chances of vacancy.
Summing up, identify your goals, establish what would be a good return for the investment you’re about to make and then decide on the type of property investment that would help you achieve just that without you having to assume too much risk.
When it comes to property investing, as cliche as it may sound, location is quite crucial. And this becomes all the more relevant and super important, especially if you’re looking to pin down a luxury condo by the beach.
Bear in mind that those who invest in some of the most luxurious properties that Miami has on offer are basically buying a lifestyle, and that means being in close proximity to the water is very important for them and they wouldn’t mind giving a good price for a suitable property when the right opportunity comes along.
Typically, those properties on the beachfront or those that have proper water views from the shore command a better estimation in terms of value than buildings situated on the creek or canal. Now you know where to lay down your money should you expect a good return on your investment.
But what if the money you’re willing to invest doesn’t get you a good luxury property on the waterfront? Should you compromise?
Well, before you start going through all the options you have other than luxury homes in beachfront, you should at least take the time to see if there is any luxury home that’s not situated on the beach but still has beach access. There are several local companies that help arrange proper beach access and services to luxury homes even if they’re not on the waterfront or beachfront. That way, you can increase its resale value.
Timing the Market
Miami real estate, like any other market, sees a stark change in trends. Quite often. And that means timing the market is very crucial for investors. During periods of high, the Miami market sees a continuous influx of homes and projects across several key neighborhoods, which is in direct contrast to the situation when everything slows down. When the market shrinks, the demand for new homes reach a new low, leaving developers with no option other than to go out of business or focus on projects elsewhere in Florida. This is precisely why investors need to arm themselves with the necessary information on how and when to ride the market wave. Failure to get a pulse on what’s happening in the market in terms of price movements, change in buyer sentiments and preferences may prove to be costly.
Let’s try to put things in perspective by looking at the condo market in Miami. When the market is on the up after a sharp fall, there is a noticeable gap between the pricing on the newly constructed condos recently launched in the market and existing inventory. Due to various economic factors, the prices of newly delivered buildings may come down steeply or resell inventory may see their prices correct to move upwards, or something in between. Given the magnitude of opportunity or challenge facing them, investors need to put themselves in a position of an advantage by studying factors like supply and demand, and keeping tabs on the prices of the properties that they’re likely to invest in etc.
That way they can grasp a buying opportunity as it opens up and reap the rewards of timing the market.
There’s more to property investing than the things mentioned above. But making sure you get these things right will point you in the right direction and set you up for success in your next investment.