In recent years, Millennials have been ditching the streets of New York City for the sandy beaches of Miami, Florida. This sudden increase in migration of people moving to Miami may have something to do with the weather, or it may be the lower real estate costs in the Sunshine State, but either way, this influx of Millennials has caused a higher rental demand than in recent years. For Millennials looking to invest in real estate, heading to the South of Florida might just give you the best of both worlds—a sound financial investment and a happening culture spot.
When it comes to real estate, Miami is rising high on the list of best American cities for investment. Currently, in comparison to a nationwide average, Miami shows more affordable real estate prices than other major cities in the US and a statistically high rental demand.
With its photo-worthy beaches, active nightlife, and waterfront properties, Miami has been drawing Millennials to its shores in every aspect—residential and investment. The city ranks in the top ten in the US when it comes to finance, commerce, culture, entertainment, fashion, and education. It appears in a multitude of television shows, movies, and music videos, and hosts one of the hottest events in the fashion industry—Miami’s Fashion Week. The city boasts some of the finest retail offerings available, exquisite restaurants, and year-round warm weather.
Where to Invest in Miami
Location is the key to a successful investment in the rental property world. Selecting a property in an area of high demand will give you a better ROI rate, as well as a higher caliber tenant pool to select from. It is important to do your research and find the best areas to begin your property shopping.
One of the more artsy-bohemian areas of the city, Coconut Grove is a relaxed community that seems to be in high demand. There are multiple private schools in the area, museums, and gardens.
Coral Gables has remained one of the more popular area codes in the city. It is considered a well-manicured, European-inspired neighborhood with everything from art galleries and theatres and bars, coffee shops, and upscale shopping.
This neighborhood boasts top ranking schools, large property lots, and new construction.
Perhaps one of the wealthier sections in Miami, this area is actually a barrier island connected to the mainland of Miami by a causeway. Its incredible views make the higher rental rates worthwhile for those looking to live a certain lifestyle.
One of the most recognizable neighborhoods in Miami, South Beach features an active night life, elegant fine dining, hotels, white, sandy beaches, and plenty of condos.
How to Buy in Miami
There is a big debate between using your own cash or leveraging a property—using a conventional mortgage—when it comes to purchasing for investment purposes. Some in the industry prefer to purchase a property outright, avoiding any monthly payments in the case of a lull in tenants. However, others prefer to leverage the property. In this case, only putting out the down payment up front allows them to keep a cushion for any unexpected costs, such as repairs or renovations required.
Using a loan to purchase property also minimizes some of the financial risk. When you purchase a property in full using your own cash, should something go horribly wrong and you end up losing money or having to sell at a lower price, you are the one that will incur the loss. On the other side, if you purchase a home using a mortgage, the bank essentially assumes the risk. If you wind up having to sell the house in a short sale or end up in a foreclosure, you’ll lose the down payment and your credit score may take a hit, but otherwise, the bank loses the most.
Whether you’re a Millennial yourself, or you’re just looking to target the Millennial crowd in your tenant search, Miami is definitely one of the top contenders in the real estate investment market. With a high return on investment rate, slightly lower than national average real estate prices, and a high rental demand, Miami is drawing in the crowds by the bustle.