Miami Real Estate Investing

Silicon Valley and Hollywood are no longer the cultural and technical hubs of America and real estate investments are following suit. The south is becoming known as a center of commerce, not just great weather. Miami is one of the cities at the center of this shift. 

Why Invest in Miami?

So, why invest in Miami instead of some other international tourism hub? Let’s take a look at some of the unique advantages the city has for investors.

Population 

The Miami metro area is home to a population of 2,757,700 and a goods and services market of over $140 billion. Although Miami is known as a tourist and vacation town, properties spend 175 days on the market when sold. Landlords can expect an average rent of $2,317 per month ($3,590 per month for Airbnbs).

Miami is the second-largest city in Florida and is growing its population at an annual rate of 1.62%. Its population is growing older because there is less room for new people to move in. The immigration that initially built the city in the 1980s has slowed. The population density rose 2,069% in 10 years in downtown Miami and much of the development includes high-rise construction and multifamily units.

Jobs 

Although Miami is becoming denser by the year, its high-paying jobs keep people looking to base themselves in the city. Anesthesiology, the airline industry, tech and healthcare are growing industries that pay in proportion to the price of real estate in the area. As a result, the people who move to Miami tend to stay there.

The tourism industry services entry-level millennials with jobs that can provide a living for short-term residents. However, Miami is generally unforgiving to the 1099 lifestyle, leaving many of the contract workers in the entertainment, hospitality and media industries unable to form a stable lifestyle in the city. As a result, landlords may experience high turnover.

Prices

Miami is a premium market with an upwardly mobile core of residents. The city boasts some of the highest median home values in the country. The median property price in the city is $532,647, which translates to a price of $318 per square foot. The midmarket and millionaire market plays a central role in year-over-year increases in total home sales (a 15.6% rise).

If you can get in, there is a good chance for your investment to pay off quickly. Single-family home prices in Miami have gone up for 98 straight months. You have the benefit of relatively low conventional loan interest rates, which went down from 4.46% to 3.72% year over year. Miami remains a bargain if you compare it to international cities around the world. The city also lags in distressed sales — only around 6% of closings are distressed each month.

Miami Real Estate Market Forecast

Popular neighborhoods like Brickell are leading the charge in rental development. Brickell is expected to build another 4,062 units in 2022. The downtown area has added 6,300 new units since 2014. Places like Kendall and North Miami have surged in popularity because of their low entry-level rent and mortgage costs. Both areas are set to give back great returns for investors who move now. Many experts consider North Miami especially undervalued — it has enjoyed increases in average home value of 7.4% in recent years.

Despite growth in some areas, the overall forecast for Miami is pointing to a 2020 cooling-off period. The COVID crisis will likely exacerbate this trend, but maxed out home prices are curbing demand in some of the higher-end neighborhoods. The condo market suffers from a lack of access to funding in the entry-level market.

By 2040, the metro population of Miami will be above 7.5 million. Experts predict the population will have an older average age than most global cities.

Investing Passively in Miami

Investing in Miami real estate could involve real estate stocks or learning how to invest in REITs. You also relieve yourself of the fixed costs of active real estate investing: bank fees, property maintenance, comparison pricing and landlording.

Traditional investing in a crowded market can mean overpaying to get into the right neighborhood. Miami’s high learning curve and premium pricing make it a perfect market for group investing. Through a platform like DiversyFund, you can connect with other investors to pool your resources for bigger buys while automatically diversifying your portfolio. 

Best Passive Real Estate Investing Platforms

Check out our Diversyfund review and compare it with the passive real estate investing platforms below. Your investing style should match your personality and your platform should match your style.

Getting in on a Closed Market

The traditional investor may see no opportunity in a high-end town like Miami. Buy-ins are expensive. There’s massive competition for the best properties. You may need to know someone to get the best deals — or risk falling behind. 

Modern real estate investing is a different animal. Savvy investors understand there is no need to limit yourself by proximity or budget. Work with other educated investors through the right platform to access large commercial properties or rents in exclusive neighborhoods. In previous business generations, passive investing might have been considered bad property management. Today, it’s a smart way to invest.