8 Best Neighbourhoods to Invest in Miami? - High Rental Yields
Updated: Aug 6
What are the Best Neighbourhoods to Invest in Miami?
Miami has experienced an increase in property investment with a steady appreciation of rental pricing. If you plan to invest in South Florida in the near future, Miami would be a perfect place to start.
The area has a lot of perks that you, as an investor, will benefit from as a booming real estate market. Let's discuss why investing in the Miami property market is lucrative and the best areas to invest that would guarantee high revenue returns.
Why Invest in Miami?
The Florida State government lifted all investment income tax. Buying property and renting it in Miami, South Florida, means that your returns will be untaxed. It is also free to transfer the property to another party, e.g., your child.
Last year, the property market in the area experienced a 27.4% property prices increase. Miami is considered an important commercial, financial and residential centre. Therefore, there has been a rise in housing demand(residential and commercial property).
The location of the city, with its serene beaches and warm weather during summer, has helped maintain regular visits from local and international tourists. This makes the market conducive for setting up hotels, vacation rentals and waterfront houses.
The median rental returns annually is about 18.6%. This is a decent return to your investment, better than saving your money in the bank.
If you have read to this point, you are definitely interested in this market. Let us look at the important tips to consider before investing in Miami right away.
Tips to consider before investing in Miami
Location: The first aspect every tenant looks at while house hunting. Choosing a strategic location for your investment property will determine success or failure from the start.
Expected cash flow: cash flow from property investment is money coming in as rental revenue. To calculate the expected cash flow from your property, you first need to know the price value of the property. You can also compare the property value among comps in the neighborhood you would like to invest in.
Investment strategy: understand your investment strategy. This aligns with the goal you want to achieve in the real estate market. Flipping houses, renting residential properties, and renting commercial properties are all different investment strategies. Understanding your target audience will help you put together a solid investment strategy.
Budget: look for property that is within your spending budget. Having a budget will help you understand what properties you can afford.
With these four factors behind your mind when about to invest, you will be more likely to end up with a nice property investment in Miami. Now let's look at the best neighborhoods you should consider first.
8 Best areas to invest in Miami
Miami Design District
Northeast Coconut Grove
We carefully selected these eight areas from collecting opinions from market leaders and these 8 were the ones they agreed on. Let's go deeper and see why it's worth investing in these neighbourhoods.
Best neighbourhoods to invest in Miami
Average rental price: $1,800
Average purchase price: $174,000
The area is experiencing rapid growth of the emerging community due to its proximity to Miami's Financial districts. It also has a historic touch with 20th century houses plus serene sandy beaches making the neighbourhoods more desirable.
These neighbourhoods give you a choice of either investing in property that targets tourists or residential properties which are both rewarding.
Average rental price: $1,950
Average purchase price: $340,000
This is an important cultural, financial and commercial centre in Miami. This has resulted in a high demand in housing. Property prices here retain their value regardless of economic condition in the country. The area has luxury restaurants, and entertainment centres such as museums and theatres.
Investing in property in this part of Miami will ensure your property retains its value throughout as you tap into the area's growing population.
Average rental price: $3,200
This part of Miami is a top tourist destination. It is rich in history and diverse cultures. Rental properties have a low buying cost with a stable rental rate that is projected to rise over time.
Since it is cheap to buy property here, you can invest in the flipping business or rental properties for tourists. Residential rental properties too are a worthy investment here.
Average rental price: $2,150
Average purchase price: $315,000
This is a dense residential area with a high population of young established professionals. The professionals prefer the neighbourhoods due to the easy access to commercial spaces (offices). National and international companies put up offices in the area thus attracting the working population. It also has a constant rent rate.
Young professionals are always willing to spend on rent, so long as the location is ideal. Investing in commercial or residential property is a good idea.
Average rent price: $4,200
Average purchase price: $1,237,400
This part has a rich cultural diversity. The name itself originated from the movement of Haiti people into the land from the south. They mixed with different people from different cultures. The area is also a tourist attraction centre due to the art galleries they have. Some galleries were moved from nearby areas like.
There is a steady rise in rent rate here. Investing in a property here will mean that you have a steady revenue flow that increases in value over time.
Average rental price: $2,500
The neighbourhood has a classic touch with luxury condominiums. They have an art gallery attracting art lovers to visit. The housing demand is increasing due to growing activities and population.
Average rental price: $2,400
Purchase price for property is depreciating while rental rates are increasing here. The neighbourhood has luxury shops and art galleries that lure visitors from around the state and country.
NORTHEAST COCONUT GROVE:
Average rental price: $1,750
Average purchase price: $414,000
This is the safest part of Miami with a crime rate 60% lower compared to the rest of Miami. It's beautiful serenity and rich history has people moving there as residents and visitors. It is also in close proximity to the University of Miami therefore, investing in student apartments would be lucrative.
Final thought on areas to invest in Miami
Miami is already a large city but still growing. There is plenty of room for new investors to jump into this fruitful market.
All the areas mentioned above will yield you high returns but that doesn't mean that those that don't appear here won't.
Understanding your target tenants and where you would best reach them is crucial. For instance, investing in student apartments is lucrative in Coconut Grove, while it won't yield much in Miami Beach, which is best for vacation rentals.
After you've understood that, you can now select the right area to invest in.
Investing in Miami FAQs
What are the richest parts of Miami?
What is the best area to live in Miami?
Every part of Miami has its different sets of advantages. Understanding what you are looking for as a tenant would help you choose a neighbourhood that suits you.
What are the safest area to live in Miami?
Is Miami safe at night?
Yes. Despite the city's safety, you should be personally responsible for your safety first. Avoid deserted backstreets and walk in groups late in the night.
What is the cheapest place to live in Miami?