Investing in The Miami Real Estate Market in 2018: Yes or No?

The Miami real estate market is heating up.

Location is key when it comes to choosing the right investment property. Whether you’re investing in traditional rentals, Airbnb rentals, short-term rentals, or long-term rentals, location always plays a major role. You’ve probably heard of the buzz surrounding investments in South Florida, specifically in the Miami real estate market. Miami is currently a hot market and you need to take advantage of the opportunities it’s providing. Read on to see how you can start making money in real estate in Miami!

Related: The Miami Real Estate Market: Should You Invest in Short Term Rentals or Long Term Rentals?

The Miami Real Estate Market

Miami may be one of the smallest major cities in the United States, but that isn’t stopping real estate investors. According to Forbes, foreign investors have dropped $7.5 billion on homes in the U.S. costing over $1 million. Why are we telling you this? Because 25% of those investments were in Miami! The Miami real estate market has been attractive to many real estate investors because of its tax advantage.

The federal tax reform signed into law last year has created constraints on real estate investors. The new tax laws have set a cap on deductions for income, sales, and property taxes at $10,000. This new cap has driven the higher demand for property in Florida. Miami real estate investors are facing competition with other investors flowing into Miami from the northern states. This is because Florida has no state income tax, so the new laws don’t apply there. So investors with high property values and income tax would much rather go to Miami. The Miami real estate market is also known for its low price per square foot in comparison to other real estate markets.

Related: The Top 5 States With No Property Tax in 2018

Should You Invest?

From the very beginning of the year, the Miami real estate market has been very strong. The housing market is currently a seller’s market, but that doesn’t mean you shouldn’t invest in Miami. We actually recommend that you do invest. According to data from the Multiple Listing Service, property in the Miami real estate market is selling quickly! Properties listed barely stay on the market which makes sense with what we’ve already told you about higher demand in Florida.

Related: How to Buy an Investment Property in a Seller’s Market

To get a better idea of what you’re looking at when investing in Miami, let’s go over some numbers. Mashvisor’s investment property calculator is providing you with the information you need to make an investment.

Miami’s Numbers:

  • Median Property Price: $479,646
  • Traditional Rental Income: $2,424
  • Airbnb Rental Income: $2,708
  • Traditional Cap Rate: 0.7%
  • Airbnb Cap Rate: 1.62%
  • Traditional Cash on Cash Return: 0.7%
  • Airbnb Cash on Cash Return: 1.62%

The median property price might be a bit higher than you expected, but this shouldn’t be a worry for you. What this price should be reflecting to you is the high market value for this property. You could be finding the best real estate investment in Miami right now. Click here to see the going rates in Miami just two months ago. The median property price has gone up, but so has monthly rental income for both traditional rentals and Airbnb rentals. Even better is that cap rate has gone down which corresponds to less risk in buying an investment property in the Miami real estate market. If you still want more information on the Miami real estate market, let’s take a look at the best neighborhoods to buy an investment property in.

Related: Is Airbnb Miami a Smart Real Estate Investment Choice at The Moment?

TOP NEIGHBORHOODS IN THE MIAMI REAL ESTATE MARKET

Brickell

  • Median Property Price: $527,500
  • Traditional Rental Income: $2,809
  • Airbnb Rental Income: $3,850
  • Traditional Cap Rate: 0.4%
  • Airbnb Cap Rate: 2.36%
  • Traditional Cash on Cash Return: 0.4%
  • Airbnb Cash on Cash Return: 2.36%
  • Airbnb Occupancy rate: 58.09%

Downtown Miami

  • Median Property Price: $330,000
  • Traditional Rental Income: $2,411
  • Airbnb Rental Income: $2,563
  • Traditional Cap Rate: 0.8%
  • Airbnb Cap Rate: 1.56%
  • Traditional Cash on Cash Return: 0.8%
  • Airbnb Cash on Cash Return: 1.56%
  • Airbnb Occupancy rate: 58.72%

Wynwood – Edgewater

  • Median Property Price: $527,500
  • Traditional Rental Income: $2,959
  • Airbnb Rental Income: $2,346
  • Traditional Cap Rate: 0.3%
  • Airbnb Cap Rate: -0.08%
  • Traditional Cash on Cash Return: 0.3%
  • Airbnb Cash on Cash Return: -0.08%
  • Airbnb Occupancy rate: 52.73%

Coral Gables

  • Median Property Price: $625,000
  • Traditional Rental Income: $2,009
  • Airbnb Rental Income: $2,736
  • Traditional Cap Rate: -0.29%
  • Airbnb Cap Rate: 0.71%
  • Traditional Cash on Cash Return: 0.4%
  • Airbnb Cash on Cash Return: 0.71%
  • Airbnb Occupancy rate: 45.86%

Miami Islands

  • Median Property Price: $449,000
  • Traditional Rental Income: $2,606
  • Airbnb Rental Income: N/A
  • Traditional Cap Rate: 0.23%
  • Airbnb Cap Rate: N/A
  • Traditional Cash on Cash Return: 0.23%
  • Airbnb Cash on Cash Return: N/A
  • Airbnb Occupancy rate: N/A

Alameda – West Flagler

  • Median Property Price: $415,000
  • Traditional Rental Income: $1,810
  • Airbnb Rental Income: $1,977
  • Traditional Cap Rate: 0.54%
  • Airbnb Cap Rate: 0.72%
  • Traditional Cash on Cash Return: 0.54%
  • Airbnb Cash on Cash Return: 0.72%
  • Airbnb Occupancy rate: 50.83%

North Bayfront

  • Median Property Price: $592,500
  • Traditional Rental Income: $2,214
  • Airbnb Rental Income: $2,258
  • Traditional Cap Rate: 0.61%
  • Airbnb Cap Rate: 0.72%
  • Traditional Cash on Cash Return: 0.61%
  • Airbnb Cash on Cash Return: 0.72%
  • Airbnb Occupancy rate: 50.03%

Little Haiti

  • Median Property Price: $260,000
  • Traditional Rental Income: $1,587
  • Airbnb Rental Income: $1,554
  • Traditional Cap Rate: 2.4%
  • Airbnb Cap Rate: 2.91%
  • Traditional Cash on Cash Return: 2.3%
  • Airbnb Cash on Cash Return: 2.91%
  • Airbnb Occupancy rate: 45.08%

Douglas Park

  • Median Property Price: $344,900
  • Traditional Rental Income: $2,157
  • Airbnb Rental Income: $2,529
  • Traditional Cap Rate: 0.76%
  • Airbnb Cap Rate: 1.44%
  • Traditional Cash on Cash Return: 0.76%
  • Airbnb Cash on Cash Return: 1.44%
  • Airbnb Occupancy rate: 53.21%

Little Havana

  • Median Property Price: $445,000
  • Traditional Rental Income: $1,505
  • Airbnb Rental Income: $1.257
  • Traditional Cap Rate: 0.47%
  • Airbnb Cap Rate: 1.12%
  • Traditional Cash on Cash Return: 0.47%
  • Airbnb Cash on Cash Return: 1.12%
  • Airbnb Occupancy rate: 55.59%

Summing it all up

So we’ve given you all the information you need, but what does it all mean? One thing you might notice is that the Airbnb rental income exceeds the traditional rental income in most of the neighborhoods in the Miami real estate market. Airbnb rentals have gotten very popular over the recent years and with all the high demand from other investors, it is highly recommended to invest in a short-term Airbnb rental property. Start your search for investment properties on Mashvisor.

Renting out on Airbnb can end up being quite profitable when you do it right and follow the right strategy. To find the optimal rental strategy for your investment properties, use Mashvisor’s heatmap. Our heatmap will directly help you pick the optimal rental strategy in each neighborhood in Miami, or any other city you’re interested in. To start using Mashvisor’s heatmap and many other tools, sign up here.

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