Rules To Follow When Buying Investment Property in Florida

Buying an investment property in Miami can be a great way to earn some additional income for your family.

But, before you decide to go ahead with any large investment, there are a few rules and guidelines you should know.

Don’t Ignore These Investment Rules In Miami.

Location, Location, Location

The one thing you simply can’t change about a house no matter how much you might want to – it’s location. A great property in a lousy area will sell for less than it would in a great neighborhood. So what defines a good location?

  • Convenience. No one wants to drive an hour to find the nearest shop.
  • Low crime. No one wants to deal with vandalism, theft, or bad tenants. Common occurrences you might come across in a high-crime area.
  • No main roads. Imagine hearing traffic all day long or living next to a railway line.
  • Proximity to schools. Find the sweet spot because close to school but not next to is the key. Families want a quick commute for their kids. However, homes adjacent to a school building will often have lower property values. This is due to increased traffic and kids loitering in the area.
  • Things to do. A good neighborhood will have parks, shops, and restaurants nearby.
Know Your Numbers

Different investors use different equations to determine if a property is a good investment. One method is to use your “Cap Rate.” The Cap Rate is your net income divided by the asset cost.

Let’s say you buy a house for $150,000.

  • Rent = $1000 per/month
  • Expenses = $200 per/month
  • NET = $800 per/month
  • $9600 per/year

You then need to divide $9600 (net income) by $150,000.

In this scenario, you would end up with a 6.4% return on investment.

You should have a clear goal in mind, and if the property isn’t meeting them, then it might be an idea to consider a different house!

Another method used by investors in the 1% rule:

This rule states any property you rent out should bring in 1% of your purchase price each month. This can change market to market, but it’s a great guideline to use if you need to determine the investment value of a house.

Some investors prefer to follow a 50/50 rule. The 50/50 rule states that 50% of any profit will cover other expenses, such as repairs, rental costs, and taxes – not the mortgage.

Don’t Get In Over Your Head

Nowadays, there’s a glamourous, superficial TV show for everything. If you decided to get into property investment because you saw a fun and exciting TV show, you might want to rethink your plan.

There is a lot more to owning a successful investment property than what day time television teaches us.

For instance, if you are not familiar with rehabbing a home, don’t purchase one that requires extensive repairs. It’s best to pay for a professional inspection to ensure there isn’t any damage lurking behind the walls. The last thing you want is to discover damage you didn’t know about that is now your responsibility to fix.

If you’re a novice investor, working and partnering with a like-minded team will help your investments thrive.

Are you interested in buying an investment property in Miami? We can help you find what you’re looking for!
Check out our website >>> We Buy Houses Fast Florida!
Alternatively, you can send a message or give us a call today! (305) 916-3328

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David Veras

David Veras was born in Hialeah, Florida and has been involved in Real Estate since February 2019.

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