Happy Summer Valued Readers!
While the temperature rises it is a perfect time to contemplate your next (or first) investment property purchase. You already know why you want to buy an investment property every time you see Secret Lives of the Super Rich on TV, so now the question is where to buy.
In this series we will start with the basics of general location considerations and whether or not it is better to buy close to home. In the coming articles we will cover a few of the more profitable areas in Miami so you can hone in on which you prefer the most.
So lets start with a basic question: Should your investment property be located close to your home?
In certain parts of Miami it is common for homeowners to rent out their garage or a section of their home to tenants. This is a little too close to home to anyone who is not in desperate need of the money. But many first time investors like to be able to drive by their property and check on it on their way home just to keep an eye on things. If this makes you feel better than you are probably not running your investment like a business and it is taking up so much of your time that you have to wonder if you are making any money at all. This is not to say that you should never do a drive-by check on your property, but once every few months when you are in the neighborhood should be sufficient.
The other reason people like to have rental properties close to home is so they can collect rent in person and fix any repairs that are needed. Once again if you are doing these things you are not running your property like a business and you are probably not making much money as a result. If you have a professional property manager to handle these tasks for you then you can focus on making more money so that you can continue to buy more investment properties.
So if you want to have one property that you rent out and work on as a second job then it is better to buy close to home.
But if you want to build an investment property portfolio that will earn you income into retirement then it doesn’t matter how close to home your property is.
Now lets talk specific areas.
Your ultimate goal as a landlord is to attract high quality, high paying tenants to a property that requires a minimum investment for maximum quality. In short you want to have your cake and it to. And it is entirely possible but you must consider the market and location of your property carefully. Don’t just buy a house because it has a great price in some area you have never heard of, you could be losing money in the long run by having a revolving door of horrible tenants.
In order to get high quality tenants in Miami your property needs to satisfy either one of two requirements:
1. Be located with 30-45 minutes (in rush hour traffic) of the major employment centers.
2. It needs to be new construction that offers amenities the other properties don’t.
Traffic is a major issue in all of South Florida, if you live here you know and if you don’t live here you have probably noticed on a visit. It used to be that Downtown Miami was the only major employment center which resulted in the nightmare morning rush hour on 836 and I-95 but that has changed a bit. It also used to be that nobody wanted to live in Downtown but that has also changed. We will discuss these changes in our next article that will cover the Downtown/Brickell area.
Currently Downtown Miami is by far still the biggest employment center but it is being trailed closely by Brickell, Coral Gables, Downtown Dadeland, Kendall and Doral. Each of these areas has its own specialized work force that can be a source of quality tenants. We will detail each area in the upcoming posts in this series
The downside to most of these areas (besides Kendall and Doral) is that most of the properties are quite old and so they require more constant repairs and are also less attractive to quality tenants. They are also more expensive because of their proximity to the hotspots. Both of these factors can eat into your bottom line although the quality of tenant is going to keep your property rented for top dollar. But if you decide you prefer a newer property for less money you can buy further out west but you need to make sure that the property you are getting has things such as a pool, nice yard, garage and a big kitchen so that tenants can justify the longer drive to work.
So these are the basics, in the coming posts we will detail each of the areas described above and tell you what they offer in terms of pricing and quality.
We hope you enjoyed today’s article and have a wonderful 4th of July eating BBQ and thinking of your next investment!
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