Miami is a true cosmopolitan city and one of the best places to invest in real estate in the US.
With a population of more than 470,000 residents, Miami is the 6th most densely populated major city in the US housing market (after New York City, San Francisco, Boston, Chicago, and Philadelphia). The Miami metro area’s population reaches 6.1 million people, which makes it the 2nd largest metropolitan area in Southeastern US and the 7th most populous one nationwide. The city is the economic, financial, and cultural center of South Florida.
Miami has a very diverse population and is the largest city with a Cuban-American plurality. It comes as no surprise that the city is named the Capital of Latin America.
The Miami metropolitan area economy is the most sizeable one in the entire State of Florida and the 12th largest in all of the US. Miami is a regional, national, and international leader in trade, commerce, finance, media, entertainment, arts, and culture. These are also the most important industries in the city together with tourism. Miami is home to numerous major national and international companies and corporations. As a result, the ATKearney 2019 Global Cities Report ranked Miami as the 7th US city and the 31st global city in terms of business activity, culture, human capital, political engagement, and information exchange. Moreover, in 2018 the Globalization and World Cities (GaWC) Research Network ranked Miami as an Alpha level global city together with Chicago and Los Angeles in the US housing market.
Banking and finance is a major economic sector in Miami. The city has one of the highest concentrations of international banks in the US. Another important industry is health. Miami is a hub for hospitals, clinics, and biotechnology and medical research institutions of national importance. The diverse economy with numerous prospering sectors is a positive indicator for real estate investors considering buying traditional rental properties. A well-diversified economy means that a slowdown in any sector would not cause a major hit on rental demand and tenants’ ability to pay rent in full and on time.
According to data from UBS Group AG, Miami is the 3rd richest city globally in terms of purchasing power (after Los Angeles in the US) and the 8th in terms of earning levels (after Los Angeles and New York in the US). This means that out of state and foreign real estate investors need to have access to solid financing options in order to compete with local homebuyers and property investors.
Miami is one of the most popular tourist destinations in all of the US, second only to New York City. In 2018 a total of 23 million visitors came to Miami, including both leisure tourists and business travelers. This included over 16.5 million overnight stays. Miami is among the top 20 cities globally for international visitor spending. Some of the most important tourist destinations in the Miami real estate market include South Beach, Downtown Miami, Lincoln Road, Bayside Marketplace, the Miami Seaquarium, the Miami Zoo, and others. Miami is one of the most famous cities worldwide for beaches, night clubs, and shopping opportunities. PortMiami is the busiest cruise port globally in terms of both passenger traffic and cruise lines. This status gave Miami the nickname the Cruise Capital of the World. All this means that Airbnb Miami is one of the most prosperous short term rental businesses around the globe.
The Miami real estate market is characterized by the 3rd tallest skyline in the US with over 300 skyscrapers, following only New York and Chicago. The city is home to the seven tallest high-rises in the Florida real estate market, with the highest one being Panorama Tower.
Another important feature of the Miami housing market which those who are interested in investing in traditional rental properties should consider is the very high proportion of renters vs. homeowners in the city. As many as 71% of the population rents rather than owns a home, which is one of the highest rates in the entire US real estate market. The 334,000 renters in Miami secure a high rental demand for long term investment properties.
Miami Real Estate Market 2019 Overview
- Median Property Price: $543,600
- Average Price per Square Foot: $328
- Real Estate Appreciation: 177% since 2000 (significantly above the Florida real estate appreciation rate and the US average)
- Days on Market: 171
- Listings for Sale: 4,697
- Price to Rent Ratio: 20 (high)
- Buyer’s Market or Seller’s Market: A buyer’s market
- Renters’ Percent of Population: 71%
The Miami housing market has been and continues to be one of the best places to invest in real estate, not only in the US but also around the globe. The prestigious PwC’s Emerging Trends in Real Estate: United States and Canada 2020 report ranks Miami as #21 among 79 featured US markets for overall real estate perspectives. According to the publication, the most important characteristics of the local real estate market in 2020 will be the strong investor demand and the major opportunities for real estate development and redevelopment projects.
One of the most important drivers of growth in the Miami commercial and residential real estate market is the above-average population growth. Another defining factor is Miami’s status as the de facto Capital of Latin America. However, tighter immigration policies are expected to affect the population, the labor market, and the real estate market of Miami. A key positive indicator for foreign and domestic real estate investors is Miami’s global connection through the airport and the seaport. Moreover, the city has already established its name and reputation among international investors as a top brand.
Importantly for residential real estate investors, Miami is a buyer’s market, unlike the vast majority of the US housing market but similar to the Los Angeles real estate market. The main indicators of this status of the Miami housing market in 2019 are the relatively stable Miami house prices over the past few months and the substantial inventory of Miami, Florida homes for sale. Another indicative measure is the high number of days on market for Miami real estate listings. The fact that the city is a not a hot seller’s market at the moment is good news for beginner real estate investors who should avoid engaging in bidding wars with homebuyers and other more experienced property investors. With 4,697 houses for sale in Miami, real estate investors have many options to choose from in order to find a rental property with high return on investment which matches all their search criteria. As long as they use the must-have real estate investment tools for 2020, even newbies will be able to make profitable real estate investments in the Miami housing market in the coming year.
The Miami, Florida real estate prices is an important factor which investors need to consider before deciding whether to invest in rental properties in Miami or not. According to Miami real estate market analysis, based on big data and predictive analytics, the median property value here exceeds the national level of $231,000 by 235%. This makes Miami significantly less affordable for out of state real estate investors than other top locations for buying investment properties such as Dallas, Philadelphia, and even Chicago. However, Miami homes for sale are still listed for a fraction of the median home values of hot markets like New York, San Diego, Boston, Los Angeles, and San Diego. With a Property Finder, investors can locate profitable Miami investment properties within their budget.
Despite some slowdown in recent months, the Miami real estate market has enjoyed outstanding natural appreciation. Miami home values have increased by 177% since the beginning of 2000, which is one of the highest levels of real estate appreciation in the entire US housing market. This makes Miami one of the best locations for investing in buy and hold real estate due to the high long term rate of return. In 2020, nevertheless, Miami, Florida real estate price trends are expected to continue their downward path. From the point of view of investors, this means that affordability will improve as property prices continue going up in other markets.
All in all, investing in Miami rental properties was, is, and will continue to be one of the best real estate investment strategies.
Best Property Types for Investing in the Miami Residential Real Estate Market
- Single Family Homes for Sale in Miami, FL: 1,532
- Median Property Price: $520,600
- Average Price per Square Foot: $234
- Average Monthly Traditional Rental Income: $2,200
- Average Traditional Cap Rate: 2.0%
- Average Monthly Airbnb Rental Income: $4,690
- Average Airbnb Cap Rate: 6.6%
- Condos for Sale in Miami, FL: 2,751
- Median Property Price: $560,000
- Average Price per Square Foot: $392
- Average Monthly Traditional Rental Income: $2,380
- Average Traditional Cap Rate: 0.4%
- Average Monthly Airbnb Rental Income: $3,170
- Average Airbnb Cap Rate: 1.7%
- Townhouses for Sale in Miami, FL: 182
- Median Property Price: $380,100
- Average Price per Square Foot: $207
- Average Monthly Traditional Rental Income: $2,010
- Average Traditional Cap Rate: 1.7%
- Average Monthly Airbnb Rental Income: $4,350
- Average Airbnb Cap Rate: 7.2%
- Multi Family Homes for Sale in Miami, FL: 160
- Median Property Price: $483,700
- Average Price per Square Foot: $315
- Average Monthly Traditional Rental Income: $2,150
- Average Traditional Cap Rate: 1.9%
- Average Monthly Airbnb Rental Income: N/A
- Average Airbnb Cap Rate: N/A
- Foreclosure Homes for Sale in Miami, FL: 165
- Median Property Price: $315,900
- Average Price per Square Foot: $192
- Average Monthly Traditional Rental Income: $2,020
- Average Traditional Cap Rate: 3.0%
- Average Monthly Airbnb Rental Income: $3,800
- Average Airbnb Cap Rate: 8.7%
Condos are the dominant property type among Miami houses for sale with a market share of 59%. This sets the Miami real estate market apart from the other best places to invest in real estate in the US, in the majority of which single family homes constitute the most popular type of properties. In Miami this is the 2nd most numerous type of real estate listings currently on the market, with 33% of the inventory. Townhouses and multi family homes for sale in Miami comprise 4% and 3% of listings, respectively.
Why Investing in Single Family Homes in Miami
Single family homes for sale in Miami are potentially the best investment properties in the local housing market. To begin with, they sell for about 4% below the city level median property price. Meanwhile, the Miami Airbnb income which they generate exceeds significantly the city average, and the rental income for long term investment properties is comparable. The return on investment which this property type offers is much higher than the city average for both rental strategies. Actually, single family homes generate the best traditional cap rate among all property types, while the Airbnb cap rate is second after this for townhouses. What real estate investors should keep in mind is that the Miami real estate market for single family homes is currently a seller’s market. In such a large housing market as Miami, it is expected that the markets for different property types face different conditions. Nevertheless, with 1,532 single family homes for sale in Miami, Florida, property investors have numerous listings to choose from.
Why Investing in Condos in Miami
Condos for sale in Miami are another rental property type which many investors will consider optimal. Miami real estate market analysis shows that one of the most important benefits of investing in a condo is the large number of available Miami homes for sale. There are as many as 2,751 condo listings in the Miami housing market which allow even beginner investors to find a profitable investment property which meets their criteria and expectations for rate of return on a rental property. Actually the condo market in Miami is a buyer’s market. However, real estate investors on a tight budget should know that condos sell for 3% more than an average Miami investment property for sale. They are also the most expensive property type per square foot. This is a usual trend among condos in the majority of real estate markets as they come with more amenities and extras than other property types. If you are considering buying a condo in Miami or any other market, you should check out the HOA rules and regulations as many condo complexes limit the number and type of rentals which can be operated there.
Why Investing in Townhouses in Miami
Townhouses for sale in Miami offer a profitable real estate investing opportunity for property buyers with little money. Townhouses in Miami, Florida sell for 30% less than the median home value. The cap rate which they generate as traditional rentals exceeds the city level. As Airbnb Miami rentals, townhouses are the most money-making property type as they offer the highest rate of return. This is the combined effect of a low property price and high Airbnb income. Currently Miami real estate investors have 182 properties for sale to find the one that matches their budget and other search criteria.
Why Investing in Multi Family Homes in Miami
Multi family homes for sale in Miami offer investors the opportunity to diversify their real estate investment portfolio with the purchase of a single property. Managing multiple rental units within a multi family home is much easier and more efficient than managing several rental properties in different housing markets. Moreover, hiring a professional property manager makes more financial sense with multi family investing than when investing in a single rental unit. This makes this property type a lucrative passive real estate investment strategy which can be practiced even out of state. Furthermore, financing the purchase of a multi family home to rent out is easier than the purchase of a single family home or a townhouse as having 100% vacancy and zero rental income is less of a risk. Overall, as traditional rentals, multi family homes in Miami are the second most profitable property type after single family homes. While there isn’t enough Airbnb data to calculate the Airbnb cash on cash return and cap rate for this rental property type alone, individual Airbnb Miami multi family properties provide good income and return on investment. Investors in the Miami, FL real estate market have 160 multi family listings to choose from.
Why Investing in Foreclosures in Miami
Savvy real estate investors should consider buying foreclosed homes for sale in Miami. This is the best source of cheap houses for sale in Miami as Miami foreclosures get listed for 42% less than the rest of homes for sale in the Miami housing market. This low sale price gives investors the opportunity to push up their return on investment from scratch as the traditional and Airbnb rental income which foreclosures generate is comparable to the average city level. Moreover, after some minimum fixes and repairs, most foreclosed homes provide high forced appreciation. At the moment investors can buy one of the 160 Miami, Florida real estate foreclosures for sale to enjoy profitable and affordable rental properties in the Capital of Latin America.
Important Stats for Miami Real Estate Investors
Safety in the Miami Real Estate Market
- Crime Rate Index: 6 (100 is highest)
Miami is safer than 6% of US cities only, with a high overall crime rate of 48 crimes per 1,000 residents.
Access in the Miami Real Estate Market
- Walk Score: 79
- Transit Score: 57
- Bike Score: 63
Miami is the 4th most walkable large city in the US housing market. It has good public transportation and is somewhat bikeable. Generally, Miami is a very walkable city as most errands can be run on foot.
Affordability in the Miami Real Estate Market
- Cost of Living Index (Excluding Rent): 80
- Rent Index: 56
- Cost of Living Plus Rent Index: 69
The Miami cost of living index excluding rent is 20% below the New York City level. Rent is 44% cheaper than in NYC. Overall, the average cost of living plus rent index is 31% below the New York City index.
Miami Property Taxes
- Florida Average Effective Property Tax Rate: 0.98% (below the national average of 1.08%)
- Miami-Dade County Average Effective Property Tax Rate: 1.04% (below the national average of 1.08%)
Florida real estate taxes are paid on the assessed value of the property, not the appraised value. The difference between the two is that the assessed value takes into account exemptions such as the Save Our Homes assessment limitation. Nevertheless, a Miami investment property still needs to get an official real estate appraisal which is usually done by the county property appraiser through a mass appraisal. Importantly, the Miami-Dade County offers discounts on Miami, Florida real estate tax payments made early. This gives real estate investors an opportunity to cut down on their recurring expenses and push up the rate of return on a rental property.
If you are interested in exploring opportunities for investing in rental properties with high profitability in states with no property tax, check out Texas, Hawaii, Alabama, Louisiana, West Virginia, and Wyoming.
Miami Real Estate Market: Traditional Rentals
- Average Monthly Traditional Rental Income: $2,310
- Average Traditional Cap Rate: 1.0%
- Price to Rent Ratio: 20
- Renters’ Percent of Population: 71%
- Optimal Property Type: Single family home or multi family home
- Optimal Number of Bedrooms: 4 and 3
- Traditional Rental Listings: 14,617
- 3 Best Neighborhoods in Miami for Investing in Traditional Rental Properties: Overtown, Liberty City, and North Bayfront
- 3 Worst Neighborhoods in Miami for Traditional Rental Properties: San Marco Island, Miami Islands, and Biscayne Island
Investing in a traditional rental property in the Miami housing market is one of the best ways to make money in real estate in 2019. The Miami rental market for long term investment properties is driven by the high demand. The Capital of Latin America enjoys one of the highest rates of renters (71%) vs. homeowners (29%) nationwide, which means that there are over 334,000 potential tenants here. Moreover, Miami benefits from a strong population growth, which means that the number of renters is set to increase in the coming years. Combined with the landlord friendly Florida real estate environment, this is a key positive indicator for local and out of state real estate investors in search of lucrative long term rental properties in the US housing market.
Another factor which future Miami landlords should consider is the price to rent ratio as an alternative measure of traditional rental demand. The high price to rent ratio in the Miami real estate market (20) means that residents are better off renting than buying a home, from a purely financial point of view. This is proven by the high proportion of renters.
Real estate investors, especially beginners, should always consider the median property prices before deciding whether they should invest in a rental property in a certain location or not. First of all, the sale price of an investment property determines the optimal financing method and whether the buyer can actually afford this property. Second, the current market value – or the purchase price – is one of the main factors in calculating return on investment in real estate. The cheaper the rental property, the higher the rate of return in terms of both cap rate and cash on cash return, all else equal. While a median Miami real estate property costs more than double a median US property, the Miami housing market is still significantly cheaper than other best places to invest in real estate. With 4,697 Miami, Florida real estate listings, investors can find a lucrative rental property which fits their budget and other criteria.
Most importantly, the average traditional capitalization rate in the Miami real estate market amounts to 1.0%. As experienced real estate investors know, this is much below the recommended good cap rate level of 8-12%. However, when deciding whether buying rental properties in Miami is the right choice for you, you should keep in mind that this is only the city-level average cap rate. The best Miami neighborhoods for real estate investing as well as individual Miami real estate properties for sale offer significantly higher return on investment. A heatmap analysis of the Miami housing market can point investors to the most affordable areas for investing in rental properties in Miami.
According to Miami real estate data, the most profitable property type for traditional rentals here is single family homes. This is good news for all those considering buying an investment property in Miami as single family homes sell for less than the median Miami property price while generating above-average rate of return in terms of both cap rate and cash on cash return. Moreover, generally speaking, single family home rentals attract young professionals and small families who are good tenants. They usually pay rent on time, stay for long, and cause only minimal wear and tear. The optimal number of bedrooms for investing in a long term rental in Miami is 4. Those investors who’d like to boost their return right away should have a look at the Miami, Florida foreclosures for sale as buying cheap real estate is one of the best ways to generate additional profit.
Landlord-Tenant Law and Regulations in the Miami Rental Market
One of the best Miami real estate news for investors favoring traditional rentals is the fact that the Florida real estate market is landlord friendly. Landlord-tenant relations in Miami are regulated by the Florida Landlord-Tenant Laws.
Most importantly, in the Florida housing market there are no laws on rent control. Moreover, there are no limitations on security deposits which have to be returned within 15 days after a tenant moves out of the rental property. Landlords can deduct the required amount from the security deposit to fix and repair any damage to their investment property which goes beyond normal wear and tear.
Miami, Florida landlords are also protected against tenants not paying rent as the Florida real estate law does not impose restrictions on late fees. If things go really bad with your renter and you need to resort to an eviction, your rights are well protected as a landlord and a real estate investor. Once your tenant has been late in paying rent, you can hand him/her a notice to pay within 3 days or leave the property. If, on the other hand, tenants have caused intentional damage to your rental or have repeatedly violated the lease agreement, you can give them an Unconditional Quit Notice to leave the rental property within 7 days.
These Florida real estate laws and rules, combined with the below-average real estate taxes in Florida, make both the Sunshine State in general and Miami in particular one of the best places to invest in long term rentals in 2019 and beyond.
Meanwhile, if you’d like to explore profitable real estate investment opportunities in other landlord friendly states, make sure to search through the investment properties for sale in Texas, Indiana, Colorado, Georgia, Kentucky, and Alabama.
Best Miami Neighborhoods for Investing in Traditional Rentals
- Median Property Price: $616,900
- Average Price per Square Foot: $318
- Average Monthly Traditional Rental Income: $2,530
- Average Traditional Cap Rate: 3.5%
- Walk Score: 77
This Miami real estate market report 2019 ranks the Overtown neighborhood as the best area for investing in traditional rentals in the Capital of Latin America. While property prices here are significantly above the median city level, the rental income generated by long term rental properties also exceeds the city average. The combined result is a good cap rate and cash on cash return. That’s why buying an investment property in Overtown to rent out on long term basis is one of the best ways to make money in the Miami housing market in 2019, 2020, and beyond.
2. Liberty City
- Median Property Price: $257,700
- Average Price per Square Foot: $179
- Average Monthly Traditional Rental Income: $1,620
- Average Traditional Cap Rate: 3.1%
- Walk Score: 60
The Liberty City neighborhood ranks as the second best neighborhood in Miami to buy a rental property for the traditional rental strategy. This area offers its residents a mix of urban and suburban lifestyle. Most of the population rents rather than owns a home, and this high rental demand is one of the reasons for the high profitability of traditional rental properties in Liberty City. another driver of the high return on investment is the low property prices, which amount to only about half the average Miami real estate prices. That’s why investing in a traditional rental property in Liberty City is a good strategy for investors facing a limited budget.
3. North Bayfront
- Median Property Price: $435,100
- Average Price per Square Foot: $234
- Average Monthly Traditional Rental Income: $2,040
- Average Traditional Cap Rate: 2.2%
- Walk Score: 76
Miami real estate market analysis reveals that North Bayfront neighborhood is the 3rd most profitable location for traditional rentals here. North Bayfront is definitely one of the up and coming neighborhoods in Miami, where property prices are still below the city-wide average. Beginner real estate investors in search of strong appreciation should consider this area before home values rise too much. Investing in rental properties in North Bayfront is one of the best real estate strategies in the Florida housing market this year.
- Median Property Price: $376,600
- Average Price per Square Foot: $201
- Average Monthly Traditional Rental Income: $2,000
- Average Traditional Cap Rate: 1.9%
- Walk Score: 86
Number 4 among the top Miami neighborhoods to invest in real estate is Flagami. The Flagami neighborhood offers an urban lifestyle with numerous opportunities for excellent nightlife including restaurants and coffee shops. Moreover, the area benefits from proximity to parks. Most residents are renters, which translates into high rental demand from the point of view of real estate investors in long term rental properties. Another important reason for the above-average return on investment in the area is the low property prices. All in all, buying rental properties in Flagami is a profitable move for investors in the Miami real estate market 2019.
5. Little Haiti
- Median Property Price: $440,000
- Average Price per Square Foot: $251
- Average Monthly Traditional Rental Income: $1,670
- Average Traditional Cap Rate: 1.8%
- Walk Score: 64
A look at the map of Miami neighborhoods shows that Little Haiti ranks as #5 among the top places for investing in a long term rental in the local housing market. The Little Haiti neighborhood offers its residents a unique lifestyle characterized by a flourishing art scene, colorful street murals, and Caribbean-style restaurants. Real estate investors are attracted to this area by the relatively low home values, which allow for good return on investment in terms of both cap rate and CoC return. Buying a traditional rental in Little Haiti is one of the best ways to make money in real estate in Miami in 2019 and beyond.
6. Upper Eastside
- Median Property Price: $673,600
- Average Price per Square Foot: $318
- Average Monthly Traditional Rental Income: $2,630
- Average Traditional Cap Rate: 1.4%
- Walk Score: 29
Neighborhood analysis of the Miami real estate market shows that Upper Eastside is the last of the six best areas to invest in a traditional rental. The Upper Eastside neighborhood features a mix of urban and suburban opportunities which makes it one of the best places to live in Miami. The area is home to a diverse community comprised of many young professionals. It is good for families and has above-average public schools. However, real estate investors should keep in mind that property prices here exceed the average Miami house prices, so they should figure out financing options before starting searching for Miami homes for sale in Upper Eastside. Nevertheless, if you have the right real estate investment tools to look for affordable investment properties for sale with high expected return, investing in an Upper Eastside rental property can help you make lots of money in the Miami housing market.
Miami Real Estate Market: Airbnb Rentals
- Average Monthly Airbnb Rental Income: $3,720
- Average Airbnb Cap Rate: 3.5%
- Average Airbnb Occupancy Rate: 56.9%
- Optimal Property Type: Townhouse or single family home
- Optimal Number of Bedrooms: 4 and 3
- Airbnb Rental Listings: 2,323
- 3 Best Neighborhoods in Miami for for Airbnb Rental Properties: Allapattah, Overtown, and Grapeland
- 3 Worst Neighborhoods in Miami for Airbnb Rental Properties: Fair Isle, Wynwood-Edgewater, and Downtown Miami
- Miami Airbnb Legal Status: Miami short term rentals are legal for primary residences in Estate and Low Density Residential zones and for all property types in Low-Medium, Medium, Medium-High, or High Density Residential areas. Operating Miami vacation rentals requires obtaining licenses and certificates as well as paying various taxes to the State of Florida, the Miami-Dade County, and the City of Miami.
- Annual Events in Miami with the Highest Airbnb Occupancy Rate:
- Miami International Boat Show: early February
This annual show displays more than 3,000 boats including yachts, power boats, sailboats, racing boats, catamarans, and other sea vessels and 2,000 exhibitors. The event has been named the greatest boat show in the world and is definitely one of the major annual festivals and shows in Miami in specific and Southeast Florida in general.
- Coconut Grove Arts Festival: President’s Day weekend
This is one of the most significant arts events which take place annually and attract thousands of visitors. The family-friendly festival features painting, photography, sculpture, jewelry, mixed media, and other art forms, transforming a mile of Biscayne Bay’s coastline into an arts village.
- Miami International Film Festival: early March
Founded in 1984, this annual film festival runs for 10 consecutive days across a number of movie theaters in the greater Miami area. The festival hosts more than 400 professionals from the film industry and over 70,000 visitors each and every year.
- Carnaval Miami: mid March
Started as Calle Ocho Music Festival, Carnaval Miami has turned into the largest and most important annual celebration in South Florida. This party spreads over 23 blocks in Little Havana and attracts more than a million visitors. Carnaval Miami has over 30 stages with Cuban music and other art forms and features the best Cuban food.
- Miami Open: March-April
Miami Open is one of the premier tennis events with global importance, and each year it features the best tennis players from around the world. This two-week-long event which has been running for 35 years attracts over 350,000 attendees.
- Miami Carnival: early October
Unlike the traditional Carnival celebrated in Brazil and Trinidad immediately before Lent, Miami Broward Carnival begins the week before Columbus Day. This family event celebrates Caribbean culture and features costumes, concerts, art displays, cooking competitions, and more.
- Art Basel: early December
Art Basel at Miami Beach is the largest contemporary art event in the US, featuring galleries and artists from around the globe. The event has been running for over 120 years and features exhibitions, parties, and fairs. Similar Art Basel events happen also in Basel and Hong Kong.
As could be expected, the Airbnb Miami rental business is one of the most successful short term rentals businesses not only in the US but also worldwide. In 2018, the Miami-Dade County hosted a total of 954,000 Airbnb guests, generating a revenue of $204 million. This marked a growth in the Airbnb income of 52% from the previous year. With Miami being the second most popular tourist destination in the US after New York City, this comes as no surprise.
As a result of the demand for Miami vacation rentals, the city enjoys a high Airbnb occupancy rate. Moreover, the Airbnb rental income is enough to compensate for the relatively high property prices in the Miami real estate market. The combined effect is a good cap rate at the city level, while the best neighborhoods in Miami for Airbnb rentals enjoy significantly higher return on investment.
An important difference between the Miami housing market and other top tourist locations in the US is the fact that both owner-occupied and non-owner occupied short term rentals are legal in Miami. Nevertheless, real estate investors and Airbnb hosts have to consider the zoning regulations carefully as different rules apply to different residential areas.
If you are thinking of investing in rental properties to list on Airbnb or another short term rental platform, you should know what the most profitable property type is townhouses. According to the data analysis for this Miami real estate market report, townhouses and single family homes provide the highest rate of return on Miami vacation rentals. Moreover, short term rentals with 4 and 3 bedrooms are the most profitable ones.
Miami Airbnb Laws and Regulations
The rapid expansion of the short term rentals industry in the past decade has caused a surge of restrictive and even prohibitive Airbnb rules and laws in many major US cities as well as globally. The State of Florida, the Miami-Dade County, and the City of Miami have also imposed strict regulations on vacation rentals in the area. While Miami vacation rentals are legal, they are subject to numerous requirements and regulations in order to be legal. Following is a list of the main rules which an Airbnb Miami host should know:
- Miami short term rentals are those dwelling units or residence buildings which are rented in whole or in part to a transient occupant for a period of less than 30 days or one calendar month.
- Vacation rentals in Miami need to be licensed by the Department of Business and Professional Regulation (DBPR) of the State of Florida. There are two types of licenses depending on the property type. Miami vacation condo rentals and Miami vacation cooperative rentals must obtain a vacation rental condo license, while Miami, FL vacation rentals at single family homes, townhouses, duplexes, triplexes, or quadreplexes require a vacation rental dwelling license. The price of the Florida DBPR license is $170 for a full year and $90 for half a year in addition to a $50 application fee and expires on 1 October of each year.
- A Miami Airbnb host must also register with the Florida Department of Revenue in order to collect, report, and pay sales tax and surtax.
- If your vacation rentals in Miami, FL are a part of a condominium or another HOA, you need to obtain a written authorization from the relevant homeowners association to operate a short term rental property.
- Prior to listing your Airbnb Miami rental, you have to obtain a Certificate of Use from the Department of Regulatory and Economic Resources of the Miami-Dade County. An inspection will be scheduled when you apply for the Certificate of Use. The associated costs are $36.70 for the Certificate, $89.97 for the inspection, and a $9.50 subcharge, for a total of $136.17. The Certificate has to be renewed annually.
- Only primary residences can be operated as Miami vacation house rentals in Estate and Low Density Residential zones as designated by Comprehensive Development Master Plan (CDMP) Land Use Plan Map of the City of Miami. This means that the Miami Airbnb host, or the responsible party, must reside in the Miami short term rental property for a minimum of six months per calendar year.
- The above restriction does not apply to Miami vacation rentals located in Low-Medium, Medium, Medium-High, or High Density Residential areas according to the CDMP. This means that buying an investment property for the sole purpose of renting it out on Airbnb or another homesharing platform is possible in these zones. As a result, full-time and out of state real estate investors can buy an Airbnb investment property in these areas.
- Miami short term rentals are allowed in structures approved by the Building Department of the City of Miami for the use of lodging in certain transact zones.
- An Airbnb host in the Miami real estate market also needs to obtain a Business Tax Receipt from the City of Miami.
- You must comply with certain Airbnb Miami regulations concerning the number of Airbnb hosts per night per bedroom and per rental property as well as swimming pool safety rules.
In conclusion, owning and operating a Miami short term rental property requires obtaining a number of licenses and certificates in addition to paying various taxes to the State of Florida, the Miami-Dade County, and the City of Miami. However, the high Airbnb occupancy rate (due to the constant influx of tourists and business travelers) and the excellent nightly rates make Airbnb Miami one of the best real estate investment strategies in 2019 and beyond.
Despite these Miami Airbnb laws and requirements, the Miami real estate market remains much more conducive to both owner-occupied and non-owner occupied short term rentals than many other major US cities. Airbnb Miami hosts face much less restrictions and prohibitions than those in Airbnb New York, Airbnb Los Angeles, Airbnb Chicago,Airbnb San Francisco, Airbnb Las Vegas, and Airbnb Santa Monica, where buying investment properties to operate as vacation homes has become illegal.
Best Miami Neighborhoods for Investing in Airbnb Rentals
- Median Property Price: $358,300
- Average Price per Square Foot: $196
- Average Monthly Airbnb Rental Income: $3,110
- Average Airbnb Cap Rate: 6.3%
- Average Airbnb Occupancy Rate: 53.3%
- Walk Score: 77
The Allapattah neighborhood tops the list of the best neighborhoods in Miami for investing in short term rental properties, as ranked by this Miami real estate market report. This is one of the oldest neighborhoods in the Capital of Latin America. Its proximity to the trendy Design District and Wynwood is inspiring growth in both commercial and residential real estate activities. Allapattah offers relatively affordable prices of Miami homes for sale, while the Airbnb income is high, bringing a good cap rate at the neighborhood level. Investing in vacation rentals in Allapattah is an option which real estate investors should consider in 2019.
- Median Property Price: $616,900
- Average Price per Square Foot: $318
- Average Monthly Airbnb Rental Income: $3,520
- Average Airbnb Cap Rate: 5.1%
- Average Airbnb Occupancy Rate: 47.2%
- Walk Score: 77
Miami real estate market analysis ranks the Overtown neighborhood as the second best area for buying an Airbnb Miami investment property at the moment. The best thing about this neighborhood is that it also heads the list of top Miami neighborhoods for traditional rental properties. This means that investors can keep their options open regarding rental strategy if they buy an income property in Overtown. While home values in this area exceed the city average, so does the Airbnb rental income, which means that Airbnb cash on cash return and cap rate are good. Buying an Airbnb property in Overtown is a smart real estate investment strategy in the Miami housing market 2019.
- Median Property Price: $340,700
- Average Price per Square Foot: $240
- Average Monthly Airbnb Rental Income: $3,420
- Average Airbnb Cap Rate: 5.1%
- Average Airbnb Occupancy Rate: 53.7%
- Walk Score: 66
The Grapeland neighborhood is another top location for investing in Miami vacation rentals in 2019 and beyond. The most important benefit of this area is the cheap real estate prices, which is one of the prerequisites for profitable real estate investments. The community has various amenities to offer to both its residents and Miami Airbnb guests. The majority of Miami houses for sale in Grapeland are single family homes which are an optimal property type for short term rentals. Investing in an Airbnb rental property in Grapeland can help investors make money in real estate, as long as they have access to the best real estate investment tools.
4. Coral Gables
- Median Property Price: $410,200
- Average Price per Square Foot: $227
- Average Monthly Airbnb Rental Income: $1,270
- Average Airbnb Cap Rate: 14.0%
- Average Airbnb Occupancy Rate: 49.3%
- Walk Score: 83
Coral Gables ranks as #4 among the most profitable locations for Airbnb rentals based on cap rate and cash on cash return within the Miami real estate market. Coral Gables is a suburb of Miami which is named as one of the best places to live in Florida. The area offers a mix of urban and suburban lifestyle which attracts numerous Airbnb Miami visitors. The Coral Gables neighborhood is also one of the most walkable areas in the entire Miami housing market, which is an important factor for Airbnb guests coming out of state. All in all, buying a short term rental property in Coral Gables can be a smart real estate investing decision even for beginner investors.
- Median Property Price: $385,600
- Average Price per Square Foot: $613
- Average Monthly Airbnb Rental Income: $2,000
- Average Airbnb Cap Rate: 3.0%
- Average Airbnb Occupancy Rate: 55.0%
- Walk Score: 68
Neighborhood analysis of the Miami real estate market points out at Auburndale as yet another top area for investing in Miami vacation rentals. Property prices here are affordable, which attracts the interest of new real estate investors as well as other property investors with limited financial resources. The Auburndale neighborhood benefits from a high Airbnb occupancy rate which is one of the main determinants of the Airbnb income which an investor can generate. Buying an investment property in Auburndale to rent out on short term basis is one of the most profitable real estate strategies in Miami at the moment.
- Median Property Price: $600,000
- Average Price per Square Foot: $309
- Average Monthly Airbnb Rental Income: $3,340
- Average Airbnb Cap Rate: 2.6%
- Average Airbnb Occupancy Rate: 62.7%
- Walk Score: 66
Shenandoah is the last area on this list of the best neighborhoods in Miami for investing in Airbnb rentals. The Shenandoah neighborhood is one of the safest neighborhoods in Miami and is home to many college students. Home values here are above the average Miami house prices. However, the Airbnb occupancy rate is higher than in many other areas, which results in a good monthly rental income for Miami vacation rentals. Investing in an Airbnb rental in Shenandoah could bring investors lots of money if based on thorough investment property analysis.
Investing in Miami Real Estate Properties: Optimal Rental Strategy
Choosing one of the best places to invest in real estate is just a part of the process of making profitable real estate investments. Another crucially important factor is selecting the best rental strategy for the location of your choice. Analysis of the Miami housing market 2019 shows that both long term and short term rentals can help investors make money in real estate.
The success of the traditional rental strategy is supported by the strong population growth, the expanding economy, the high percentage of renters, and the high price to rent ratio. The profitability of the Airbnb Miami business is determined by the fact that Miami is the second top tourist destination in the US housing market which attracts millions of visitors throughout the year.
Nevertheless, Miami real estate data analysis shows that short term rentals are the most profitable investment property type in the Capital of Latin America. The city level return on investment generated by Miami vacation rentals is 3.5 times higher than the rate of return on traditional Miami rental properties.
One of the reasons for this trend is the fact that the State of Florida and the City of Miami have decided to impose moderate regulations on Airbnb Miami properties. In this way, they have managed to protect the safety and security of Miami residents without depriving real estate investors of this lucrative rental strategy.
If, however, you prefer investing in traditional rental properties, you can still find many lucrative opportunities in the Miami real estate market. With the help of the best real estate investment tools such as a Property Finder and a rental property calculator, finding profitable investment properties for sale is achievable even for beginner investors. As long as you conduct thorough rental property analysis, traditional Miami investment properties can bring positive cash flow, good cash on cash return, good cap rate, and even passive rental income.
Why You Should Invest in Real Estate in Miami in 2019: The Pros
There are many reasons why you might want to buy an investment property in the Miami real estate market in 2019, 2020, and beyond. The first and foremost one is the high return on investment on rental properties in the Capital of Latin America. While experienced real estate investors might argue that the traditional and Airbnb cap rate presented in this Miami real estate market are too low, they should have in mind that these are just city average cap rates. Individual neighborhoods and investment properties for sale provide significantly better rate of return.
The high rental demand for both types of investment properties is another positive factor which real estate investors should consider. Traditional rental properties benefit from one of the highest proportions of renters in the Miami housing market nationwide. Meanwhile, Miami vacation rentals experience a high Airbnb occupancy rate due to the status of Miami as a tourist center.
Speaking of Airbnb Miami, it is important to highlight the possibility to buy investment properties in Miami for the sole purpose of renting them out on Airbnb. This is not legal in many used-to-be top locations for short term rentals in the US. Nevertheless, Miami Airbnb hosts have to follow certain requirements and regulations to make sure that they operate their short term rental business legally.
Currently Miami is a buyer’s market which is not the case with many of the other top locations for real estate investing in the US. While finding positive cash flow properties in a seller’s market is feasible, it is much easier to make profitable real estate investments in a buyer’s market. Most importantly, there is no need to engage in bidding wars with other more experienced real estate investors or highly motivated homebuyers, which is a relief for beginner property investors with little or no experience in real estate transactions.
The positive Miami, Florida real estate market outlook for 2020 and beyond should also encourage investors. Things are looking good for Miami real estate investment perspectives. The high rental income for both traditional and Airbnb Miami rental properties will continue providing good short term return on investment. Meanwhile, appreciation will suffice to secure long term rate of return without risking a housing bubble. The Miami, Florida real estate forecast shows that property investors can proceed with confidence, regardless of which rental strategy they favor.
Why You May Not Want to Invest in Real Estate in Miami in 2019: The Cons
Investing in rental properties in the Miami housing market is associated with many benefits, the most important one of which is the numerous profitable opportunities. However, real estate investors should keep a few things in mind before buying an income property in the Capital of Latin America.
First, average Miami real estate prices are more than double the median home value in the US housing market. This means that investors should put efforts into finding good financing options for investing in rental properties. At the same time though, they should remember that the property prices in the Miami real estate market are much lower than those in other top locations for buying income properties.
Another thing which those interested in Miami vacation rentals should consider is the strict regulations in this regard. While Airbnb Miami rentals are legal, the state and city authorities have imposed some rules to secure the best interests of Miami residents. This means that real estate investors should familiarize themselves with the license and certification requirements in the residential area where they want to buy an Airbnb property. Moreover, they need to pay all relevant taxes to avoid problems with the local authorities.
Miami, Florida Real Estate Market Forecast
The positive Miami, Florida real estate market trends are expected to continue in 2020. Miami has been and will remain one of the absolutely best places to invest in real estate. The Capital of Latin America is forecast to stay a buyer’s market with moderate natural appreciation in the coming period, which means that beginner real estate investors will be able to find profitable investments here. In 2020 Airbnb Miami rentals will remain the optimal rental strategy, providing higher return on investment. No further restrictions on Miami vacation rentals are expected. This means that Airbnb hosts will benefit from the ever-growing number of domestic and international tourists who will provide a high Airbnb occupancy rate and rate of return.
Additional Resources for Investors in the Miami, Florida Rental Market
Best Miami Investment Properties
As this Miami real estate market report 2019 shows, property investors can make a lot of money with Miami vacation rentals as well as traditional Miami rental properties. With the help of an investment property calculator, even beginner real estate investors can search through the 4,697 homes for sale in Miami, Florida and filter the ones that meet their criteria such as budget, neighborhood, property type, optimal rental strategy, traditional and Airbnb rental income, cap rate, and cash on cash return in a matter of minutes. A heatmap tool will provide property investors with a color-coded map of Miami neighborhoods to find out the best neighborhoods in Miami for buying rental properties in addition to the worst neighborhoods in Miami for residential real estate investing. A Property Finder will allow new real estate investors investors to find a top-performing income properties in line with their preferred rental strategy and other criteria.
Miami, Florida Real Estate Agents
Part-time real estate investors as well as first-time and out-of-state property investors can make profitable real estate investing decisions passively with the help of a Miami real estate agent. The top real estate agents in Miami specializing in investment properties will help property buyers find a profitable rental property for sale in addition to negotiating a good price, possibly below market value. Following are some of the best real estate agents in Miami:
Miami, Florida Real Estate Auctions
To push up their rate of return on a rental property in the Miami housing market, real estate investors should consider buying foreclosure homes for sale in Miami. To do that, they can check out this calendar for auctions as well as other foreclosed homes related events in the Florida real estate market.
Property Management of Traditional Miami Rental Properties
Buying a long term Miami rental property doesn’t mean becoming a landlord which is an unattractive idea to part-time real estate investors with a full-time job. Instead, investors can hire a professional property manager to handle the rental property management process, turning their Miami rentals into passive real estate investments.
Property Management of Miami Short Term Rentals
If you’d like to make passive income from your Miami vacation rentals, you can hire one of the best property managers in the local market to take care of all responsibilities associated with owning and renting out an Airbnb Miami property.
Our Top Blog Posts for Investors in the Miami Real Estate Market
- Where Should I Buy a Miami Real Estate Investment in 2019?
- Investing in the Miami Real Estate Market in 2018: Yes or No?
- Should I Invest in Airbnb Miami in 2018?
- Airbnb Miami: Invest in These Neighborhoods for High Rental Income in 2018
- Miami Real Estate Market: Top Neighborhoods – Q4 2017
Other Best Places to Invest in Real Estate
- Atlanta Real Estate Market Analysis
- Austin Real Estate Market Analysis
- Baltimore Real Estate Market Analysis
- Boston Real Estate Market Analysis
- Charlotte Real Estate Market Analysis
- Chicago Real Estate Market Analysis
- Columbus Real Estate Market Analysis
- Dallas Real Estate Market Analysis
- Denver Real Estate Market Analysis
- Las Vegas Real Estate Market Analysis
- Los Angeles Real Estate Market Analysis
- Nashville Real Estate Market Analysis
- New York City Real Estate Market Analysis
- Orlando Real Estate Market Analysis
- Philadelphia Real Estate Market Analysis
- Phoenix Real Estate Market Analysis
- Portland Real Estate Market Analysis
- San Francisco Real Estate Market Analysis
- Seattle Real Estate Market Analysis
- Tampa Real Estate Market Analysis
- Washington Real Estate Market Analysis