Real estate investing in Miami real estate is becoming popular again as there are many foreclosures, short sales, bank repos, and government foreclosures. With such an overwhelming inventory of homes available for sale, a real estate investor must be able to determine which one to purchase. Investors must follow six steps to learn, understand, and achieve Miami real estate investment success. Try Know.
These are the six L steps to Miami real estate investing:
1. Location – Location, location, location is still the key to buying Miami real estate. Buying Miami real estate just because the price is low in a declining area is a big mistake that should be avoided. Look for homes in excellent locations like good schools, economically stable and growing neighborhoods, shopping centers and malls, bus stops and metro rails, and hospitals and restaurants. Sometimes, paying a little more for a property in a good location is better than getting a bargain where it is tough to sell or rent the asset. Location is often overlooked in purchasing real estate as many investors think they can overcome a bad location if the price is low enough. Of two homes that are the same, the best location will command a much higher sales price and rental income. Location is the first consideration when purchasing real estate in Miami, South Florida.
2. Long Term – Real estate investing is a long-term proposition. Don’t think you are going to be a millionaire overnight. It takes years of hard work and dedication to succeed. Hold any property for at least one year before selling it. Capital gain taxes will be greatly reduced. Consider renting the property for two or three years. The rental income generated will help you properly repair and renovate the property. Many investors purchased properties during the real estate boom with no money down and no equity. These investors were thinking of flipping the homes fast and making a killing in the process. Many homes now in foreclosure are due to investors caught in the middle and now realize that real estate investing is very hard to time. Long-term Miami real estate investing is the secret to a successful real estate career.
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3. Lease Option – Never rent a property with a lease option to buy. Either sell or rent it straight out. A lease option usually is a disaster for both buyers and sellers. The tenant will demand a large rent discount for the down payment and closing costs. The tenant will not buy the property at the end of the lease, and the landlord/seller will have wasted a lot of money on rebates given to the tenant/buyer. Demand a 20% or 30% deposit from the tenant/buyer and a clause in the contract that they will lose the warranty if they default on the purchase. This technique will force the tenant/buyer to purchase the property or lose the deposit. The risk of losing the deposit will prevent the tenant from taking advantage of the landlord by waiving the contract after receiving a monthly rental discount.
4. Local – Buy real estate close to where you live. Don’t buy real estate in another state or another country. Keep real estate investing locally. Buy in your county and your city. The more you know about the area where you are buying, the better the decision will be. The investor should always be close to the investment property. The Miami real estate investor should inspect the property often to determine any repair, roof, or other problems. The landlord must inspect the property every month when collecting the rent. Check for the number of tenants living in the property, check for damages and destruction of the property, and the overall condition. The investor/landlord cannot inspect and determine the property’s condition if it is far away. Keeping real estate local is an essential step in real estate investing.
5. Leverage – Most real estate books and seminars tell you to use other people’s money when purchasing real estate. This technique is not the best; buyers should try to buy the property in cash if possible. Buying a house in cash will help you get a better deal and negotiate from a strong position. A cash buyer will always have the upper hand in negotiating with banks, property owners, and other sellers. Cash buyers will not suffer and go into foreclosure if the market turns and they cannot sell or rent the house immediately. Dave Ramsey always says, “Cash is king, and debt is dumb.” Buying an investment property in cash is an excellent way to avoid Miami real estate investment mistakes.
6. Learn – Research the property and learn everything about it before you buy. A mistake in Miami real estate investing can be very costly. Usually, you make your money when you buy, not when you sell. Buying the property at the wrong price, place, and time could be detrimental. One mistake could wipe you out and put you out of business before you start. Ask the experts, real estate agents, appraisers, mortgage brokers, and other real estate investors. Learn, research, and educate yourself in all aspects of real estate investing before you purchase the asset.
It is a buyer’s market in Miami-Dade County. Miami real estate investors have more choices than ever regarding real estate investing. Investors must follow the L steps, the six steps real estate investor guide to successful real estate investing, to achieve their investment goals in the Miami real estate market.