With its skyrocketing rental rates, lenient rental laws, and tax advantages, it’s no surprise that real estate inventors across the country are flocking to Miami. Plus, with its rising population (and conversely, rising rental demand), this coastal metropolis provides plenty of opportunities for investors. If you’re considering purchasing an investment property in Miami, that’s a great idea. Here are a few reasons why the city of Miami or “The Magic City” is a must-add to your Florida investment portfolio:
1. Miami’s real estate prices are increasing
Realtor.com data shows that Miami’s medium home list price as of November 2022 was $589,000 with a year-over-year upward trend of 24%. The median home sale price was $490,000. This is significantly greater than Florida’s average sales price of single-family homes of $407,000. However, it’s worth noting that the sales-to-list price ratio is 97.45%, meaning that homes in Miami sell for below the list price. But on the plus side, the median days on the market has gone down slightly.
2. Florida’s population is on the rise
Florida is the fastest-growing state in the U.S. with a population that rose to 22,244,823 between 2021 and 2022. Furthermore, experts believe that by 2032, there will be more than 25 million residents in Florida.
Data from World Population Reviews reveals that Miami’s population in 2022 was around 450,000, a 0.96% increase from 2021. Miami is the second most populated city in the state, and experts expect the population to rise even more post-pandemic. One of the main reasons for the boom is that the city offers the flexible lifestyle that many remote workers want. It provides plenty of opportunities for investors who want to rent for the long term.
3. Miami is a hotspot for tourists
Florida, particularly Miami, has always been one of the top tourist destinations in the United States. With its warm weather, water, and lifestyle, it’s the perfect spot to visit if you want to unwind. Furthermore, Miami has always been one of the busiest spots for spring break. With more and more people feeling comfortable traveling post-pandemic, the city is bound to see a boom in tourism. You can consider investing in vacation rentals to meet the demand for short-term stays.
What’s more, Miami is set to host the 2023 Miami Grand Prix. This event sees thousands of visitors every time it’s held – in 2021, the US Grand Prix welcomed more than 400,000 guests. You can benefit from this by renting out your second home to Grand Prix-goers!
4. Miami has more renters than homeowners
Insurify, an insurance comparison site, says that Miami belongs to the top ten U.S. cities with the most renters, with 68.7% of the populace being renters. Due to the steep demand, investors can be confident to add Miami homes to their investment portfolios.
If Miami is on your radar, you can find great deals on single-family homes and condominiums. Consult a Miami property management company to make sure you buy in the most profitable market. Some of the best Miami neighborhoods are Morningside, Edgewater, and Midtown Miami.
5. Miami’s rental rates are increasing
We know that, as a real estate investor, the rental rates mean a lot to you. That’s why we’ve broken down a few key details about Miami real estate below, compiled from Rent.com data:
- The average rent for studio apartments is $2,525 (a 5% increase from the previous year).
- The average rent for one-bedroom apartments is $2,912 (-a 5% decrease from the previous year).
- The average rent of a two-bedroom apartment is $3,835 (a 10% increase from the previous year).
- Among the many neighborhoods in Miami, the Miami Financial District has the highest rent ($3,860 for a one-bedroom apartment and $5,115 for a two-bedroom apartment).
Do note that this data may no longer be up-to-date when you read this article. It’s a good idea to consult a Miami property management company to get more accurate insights into the local real estate market.
6. Miami has less strict rental laws
Florida’s rental laws aren’t as strict as compared to other states such as, say, California. For instance, Florida does not have rent control laws, which means you can decide how much you want to raise the rent each year. In addition, there are no laws on how much security deposit you can collect (but that doesn’t mean you can be unreasonable – you should always consult a property management company as to the right amount, otherwise, you might deter tenants). Miami investors can also take advantage of the low property tax rate of $7.88 per $1,000 of the property’s appraised value.
7. You don’t need to pay state income tax
Florida is tax-friendly for real estate investors as it’s one of the seven states that does not have a state income tax. This means that if you make money from your real estate investment (i.e. you rent out your Miami property), you’ll have more money in your pocket yearly. However, this does not exempt you from paying federal taxes. Consult a real estate expert such as a Miami property management firm to make sure you comply with all tax laws.
How to Find a Great Investment Property in Miami
Now that you know why Miami is a must, it’s time to purchase a property! If you’re a first-time investor, it pays to partner with a local real estate professional that can help you locate – and close – the perfect deals.
For example, at Luxury Property Care, we have connections to a vast network of VIP clients, which means we can help you find exclusive properties (ones that aren’t on the MLS!). We’ll also help you decide if a particular property aligns with your investment goals, and if does, do the heavy lifting for you. As your Miami property management partner, we won’t just help you buy an investment – we’ll also guarantee you reap long-term rewards in the form of consistent cash flow.