What a difference a few years can make. In 2009, real estate in Miami-Dade County in Florida was shot, done, finished, and kaput. The average price per square foot plummeted, losing over 50% of its value in just a year. There was an over surplus of condominiums, apartments and even single family homes. Builders lost tens of millions of dollars as they over committed and plowed any nickel they could borrow into buying land and building on it.
It became a true buyer’s market and sellers were squirming whenever they were told that there was an offer on their property. They feared the worst, and more often than not, were right.Fast forward a few years, and Miami is back to being a coveted city to live in. Bottoming out in 2011, home prices have been on a steady rise, but haven’t gotten back to the overheated state they were in just a few years ago. You can see the trend in the graph right below.
As a matter of fact, back in 2013 Christies International Real Estate named Miami one of the three hottest cities for real estate investing in the world along with New York and London. Miami offers some key advantages over those other two cities, and we’ll discuss them in this article. Miami real estate is now the place to be once again. It’s hot enough that unless you follow these Miami real estate investing tips, you’ll likely get burned trying to participate in the market. Follow along and save yourself a bunch of headaches and a ton of money.
Why is Miami such a great place to live?
According to statistics from the U.S. Census Bureau, Miami Dade County gained a net total of 21,000 residents between 2013 and 2014. South Florida is the fastest growing metro area in Florida, and one of the fastest in the whole country. Who can blame them?
The weather is gorgeous year round in Miami
Not to mention, there are beautiful beaches that attract beautiful people. Don’t underestimate this in the decision making process of many people. The desire to live and work there is high and that attracts wealthy people. This includes international businesses looking for satellite offices in the United States.
The cost of living is not high compared to other big metropolitan cities.
Of course, it’s not small town living, but you aren’t going to get the amenities that Miami offers in a small town anywhere in the world, never mind the States.
There are tax and liability advantages to living in Miami as well
Florida is one of only seven states that does not have state income tax (http://www.bankrate.com/finance/taxes/states-with-no-income-tax-3.aspx). This is a huge benefit, especially for those coming from a state with a high income tax, such as California, Oregon, New Jersey or New York. Even Hawaii with its pineapples and all has the second highest state tax rate in the Country.
There’s also something known as the homestead protection
This means that a Florida resident’s home is protected from creditors. There are of course some exceptions (based on if the money was obtained via a crime and some other factors) but overall this gives excellent asset protection to those in need of it. It’s no wonder that so many wealthy residents make Florida their home. Now we’ve covered why Miami is a great place to live and in demand, how do you take advantage of the opportunity in the real estate market in Miami?
Study the neighborhoods
Like anywhere else, real estate investing in Miami is all about three things: Location, location and location. The neighborhood you choose to invest in will vary your financial commitment greatly. The popular neighborhoods right now (late 2015) are as follows:
- Coral Way
- Wynwood- Edgewater
- Upper East Side
- Northeast Coconut Grove
- West Little Havana
- East Little Havana
While these rankings can of course change, more than likely they won’t stray too far out of line. Nice neighborhoods don’t always have to be expensive. For example, the Village of Pinecrest is one of the most affordable places to buy a property based on price per square foot. It’s still a gorgeous area, but may not be in the prime market because of its location relative to the water. Do your research, and you may be able to find some diamonds in the rough.
Don’t ignore run down properties
Everyone wants a beautiful, move in condition property when they are looking to make an investment. Of course, it would be great if you could wave your magic wand and come up with only those types of properties, wouldn’t it? In the real world, you have to take what you can get, if the price is right. Sometimes, it’s really right.
Too many real estate investors in Miami ignore crappy, run down properties because they don’t want to spend the time fixing them up. It’s a genuine concern, but the time and expense it will take to either do it yourself or hire a crew to do it for you can be a bargaining tool when you place your bid.
Pro tip: If you get a contractor to give you a bid on fixing up a property, ALWAYS add 20% extra for a “just in case” problem that may come up. Then take that amount and subtract it from the price you are willing to pay if the property just needed some limited work (which is to be expected when buying a pre-owned property).
Buy land, Mark Twain said so
Mark Twain is credited with saying “buy land, because they’re not making any more.” Now of course, not all land is worth buying. You wouldn’t want swamp land for example, unless someone figured out a way to make oil from it. In Miami though, that isn’t a concern. Depending on your budget, you may want to put up a building for condominiums, offices, or just a single family home. You’ll have a good variety of choices in Miami.
Find a good real estate agent
As a Miami based immigration attorney, I know the value of a good professional. It always helps to have an edge. It’s even better when you find someone to give you that edge. The best way to find exactly what you are looking for is to work with a Miami real estate agent. After all, they are the professionals. Yes you could do the research, but eventually you’d hit a wall. Real estate agents have access to properties on and off the multiple listing service, as well as their personal network of contacts. Let them do their job.
Having a real estate agent in your corner to do all the hard research work, keep an eye on new properties when they first hit the market, PLUS negotiate when it comes to price will easily pay for itself in both the short and long term. In addition, if you are not living in Miami, you can get your agent to also list the property for you if you decide to rent it out, or put it back up for sale once you decide to flip it for some profit.
Bonus tip: Don’t jerk your real estate agent around. Remember, these are people with lives and families too. If you aren’t serious about moving forward with purchasing an investment property, don’t waste their time. You wouldn’t like it if someone wasted yours, would you?
To wrap it up
If you do your proper due diligence, you’ll discover that Miami is a great place to invest in real estate. With a variety of condos, single family homes or land to choose from, you’ll eventually find something that’s just what you’re looking for as an investment property.