One of the best state markets in the US is the Florida real estate market. Florida contains many top-notch markets, such as the Orlando and Tampa real estate markets. Today, we’ll be talking about another top market in Florida: the Miami real estate market. The Miami real estate market was ranked as #12 in the US for overall real estate investing prospects by the PwC and is the 3rd Florida market on the list, after Orlando and Tampa/St. Petersburg. If you want to take advantage of this, where should you buy a Miami real estate investment? Also, why should you invest in the Miami housing market? To get answers to these two questions, keep reading!
4 Reasons to Buy a Miami Real Estate Investment in 2019
Let’s start with the reasons to invest in the Miami housing market. To be fair, there are various reasons, but we’ll group them into four major categories.
1. Profitability
The number one goal and arguably the sole purpose of an investment property is to generate profit. Profit primarily comes in two forms: rental income and real estate appreciation. Fortunately for Miami real estate investors, Miami investment properties generate both high rental income and appreciation (which is an increase in property value over time).
A sign of a lucrative rental market is high rental income for both traditional and Airbnb investment properties. This trend is seen with the Miami real estate market. Both Miami short-term rentals and traditional Miami investment properties have high rental income. According to Mashvisor’s investment property calculator (which you can learn about by clicking here!), the average traditional rental income for a Miami real estate investment is $2,331 and the average Airbnb rental income is $3,439.
The average Miami real estate investment also generates plenty of appreciation. Like many cities in Florida, the Miami real estate market is in the top 10 percent for US real estate appreciation. In the last 10 years, Miami properties have appreciated by 52.63%. This translates to an average annual rate of 4.32%.
2. Economy
The profitability of the average Miami investment property impacts, and is impacted by, Miami’s stellar economy. The Magic City has the largest urban economy in all of Florida. It is also the 12th largest in the entire nation, with a GDP of $344.9 billion. The city’s booming economy attracts many residents and investors in search of Miami houses for sale. This is highlighted particularly in the city’s job growth. Miami’s future job growth over the next 10 years is expected to be 42.7%, which is much higher than the US average of 33.5%. A lower sales tax rate than the US average and the lack of an income tax rate in Miami, and in the entire state, also attracts those interested in a Miami real estate investment. Among those attracted are interested in Miami short-term rentals, which leads us to our next point.
3. Airbnb
It should go without saying, but Miami is an Airbnb powerhouse. This is evident when comparing the higher Airbnb rental income to its traditional counterpart, as mentioned earlier. But before we can dive into how successful an Airbnb Miami real estate investment is, we need to answer the question: is Airbnb legal in Miami?
Related: The 10 Best Places to Buy Vacation Homes in Florida in 2019
The answer to the question, thankfully, is yes. Airbnb is fully legal for a Miami investment property. However, keep in mind that in some zones and neighborhoods, non-owner occupied rentals are banned. Other common Airbnb regulations in Miami are a business license requirement and a 6% Tourist Tax and a 6% State Sales Tax. There are plenty of other Airbnb regulations in Miami, which you can learn more about by clicking here.
As usual, Miami is expected to be among the best cities to invest in Airbnb in 2019. In the previous year, it was the best market in the entire state of Florida. Airbnb investors generated a total of over $134 million the year prior. Of course, this is to be expected, given Miami’s status as a world-class tourist destination. This success will persist in 2019. This should encourage real estate investors to invest in Airbnb Miami investment opportunities.
Related: What Is the Best Type of Miami Real Estate Investment Property?
4. Demand
Finally, a Miami real estate investment is a worthwhile one because of the city’s high demand. According to Mashvisor’s investment property calculator, Miami’s price-to-rent ratio is 20, meaning that it is more affordable to rent than to purchase a property, giving real estate investors and landlords an advantage. Also, about 70% of the city’s residents reside in rental properties, further widening the tenant pool. The main issue for tenants, however, is rental property affordability. According to the Miami Herald, more than half of Miami families spend more than 30% of their income on rent. Investors should focus on affordable investment opportunities in Miami to appeal to as many prospective tenants as possible.
Best Neighborhoods in Miami for the Traditional Rental Strategy
If you’re interested in buying an investment property in Miami, then you must be looking for the best neighborhoods to invest in. According to our data, the best neighborhoods for a traditional Miami real estate investment are:
Liberty City
- Median Property Price: $265,402
- Price per Square Foot: $175
- Price-to-Rent Ratio: 14
Traditional
- Rental Income: $1,531
- Cap Rate / Cash on Cash Return: 2.7%
North Bayfront
- Median Property Price: $475,594
- Price per Square Foot: $228
- Price-to-Rent Ratio: 19
Traditional
- Rental Income: $2,036
- Cap Rate / Cash on Cash Return: 2.1%
Little Haiti
- Median Property Price: $372,789
- Price per Square Foot: $208
- Price-to-Rent Ratio: 18
Traditional
- Rental Income: $1,695
- Cap Rate / Cash on Cash Return: 2%
Coral Gables
- Median Property Price: $420,876
- Price per Square Foot: $225
- Price-to-Rent Ratio: 17
Traditional
- Rental Income: $2,023
- Cap Rate / Cash on Cash Return: 1.9%
Best Neighborhoods in Miami for the Airbnb Rental Strategy
Interested in Airbnb Miami houses for sale instead? Here are the best neighborhoods for an Airbnb Miami real estate investment, according to Mashvisor’s investment property calculator. Just be sure to consult with local officials before buying a property for Airbnb in any of these neighborhoods to ensure they fall in the permitted zones.
Allapattah
- Median Property Price: $344,256
- Price per Square Foot: $192
- Price-to-Rent Ratio: 17
Airbnb
- Rental Income: $3,923
- Cap Rate / Cash on Cash Return: 7.5%
- Occupancy Rate: 51%
South-West Coconut Grove
- Median Property Price: $429,771
- Price per Square Foot: $213
- Price-to-Rent Ratio: 19
Airbnb
- Rental Income: $4,096
- Cap Rate / Cash on Cash Return: 6.1%
- Occupancy Rate: 60%
Coral Gables
- Median Property Price: $420,876
- Price per Square Foot: $225
- Price-to-Rent Ratio: 17
Airbnb
- Rental Income: $4,101
- Cap Rate / Cash on Cash Return: 5.3%
- Occupancy Rate: 38%
Grapeland
- Median Property Price: $328,132
- Price per Square Foot: $257
- Price-to-Rent Ratio: 16.3
Airbnb
- Rental Income: $2,968
- Cap Rate / Cash on Cash Return: 4.2%
- Occupancy Rate: 45%
All in all, a Miami real estate investment is an excellent choice for 2019. To start your search with Mashvisor’s investment property calculator, click here to start your 14-day free trial!
Related: Mashvisor’s Rental Property Calculator: A Guide for Beginner Real Estate Investors