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Miami’s real estate market is one of the most promising in the world for those who seek to make a solid investment in hard currency and with high expected return. A frequent question, however, especially for the beginner buyer, is to define the ideal size of the property to invest in. Miami offers a variety of options, from studios to large residences with several rooms. After all, how many rooms should a property in Miami have to be a good investment?
In this article we bring a report from the first quarter of 2024, recently published by Brown Harris Stevens, with relevant data on the main neighborhoods of Miami.
The neighborhoods of South of Fifth, Miami Beach, North Beach, Bal Harbour, Sunny Isles, Key Biscayne, Surfside Condos, Bay Harbor Islands, Indian Creek, Brickell, Downtown Miami, Edgewater, Aventura, Coconut Grove, Coral Gables, Pinecrest, Ponce Davis, High Pines and Palmetto Bay were analyzed.
Largest Market Share
In the “condos” (apartments) segment, the 2-bedroom units were the ones that presented the highest volume of sales in dollars (market share) for the first quarter.
Only the Miami Beach neighborhood was an exception, where 1-bedroom apartments obtained a higher market share.
Although the 2-bedroom segment has a higher market share, this does not mean that other apartment formats do not have liquidity or are no longer excellent investments.
In Brickell, for example, while 2-bedroom apartments occupied 43.9% of the market, 1-bedroom units came soon after, with 36% of the market share, which also represents great liquidity.
In Edgewater, a central neighborhood of Miami that is gaining more and more prominence among global investors, there was practically a technical tie. 2-bedroom apartments had 36.4% of the market in the first quarter, while the 1-bedroom apartments occupied 33%, in the second position.
In Pinecrest, there was also a 33% tie for 1 and 2 bedrooms.
Single-family homes (Single Family Homes)
The report also brings statistics from the Single-Family Houses segment, that is, standard and non-semi-detached residential houses.
In this segment it is natural that the statistics change, since, among the neighborhoods analyzed, this type of residence is considerably exclusive and with higher prices, for a differentiated audience.
Miami is a city where the real estate inventory is predominantly integrated by apartment buildings. Residential houses in the neighborhoods analyzed are generally aimed at high-end audiences who, naturally, prefer properties with a greater number of rooms.
For Single Family Homes, the neighborhoods of Miami Beach, Coconut Grove and Coral Gables, had, as a larger Market Share, 5, 4 and 3 bedroom residences, respectively. The other neighborhoods were not analyzed in this segment or brought partial data.
Return on rent
Another aspect that should be considered in the investment is not only liquidity, in isolation.
Real estate in Miami is attractive to investors because of the Expected Return on rent (ROI).
Of course, the trend is that the high return of a type of property is related to its market share, that is, if 2-bedroom apartments offer higher expected return, it is to be assumed that they would also be the most demanded and, consequently, responsible for greater market share.
However, a studio or 1-bedroom apartment in the Brickell region or another region with a high flow of tourists in Miami can bring very interesting returns for investors. There are several factors in consideration, such as: location, infrastructure in the condominium, which floor and also subjective and personal factors, as we will detail in the next topic
Own use
Another very important factor in the decision to invest is the purpose of the purchase.
Most investors, by choosing to buy in Miami, also want to enjoy the property on vacation and enjoy Florida’s exclusive seaside lifestyle.
For this reason, the so-called STR properties, abbreviation for “short term rental” are the most sought after.
STR properties are those that allow the practice of renting for short seasons, without period restriction. In this way, the owner can use the property on vacation, or any other period, and rent it for the rest of the year, obtaining income in dollars.
In this case, the personal factors of each owner should also be taken into account.
See this article: 5 properties in Brickell that allow Airbnb
Initial investment
Another factor to be considered is the initial investment.
It is natural that the beginner investor in the Miami market first wants to understand the market before disbursing a higher amount. In this regard, studios and 1-bedroom apartments can be an excellent option.
Miami is different from other markets in Florida
Finally, it is important to emphasize that the report brings information from Miami, a market with its own characteristics and that differs substantially from other cities in Florida.
In Orlando, for example, larger houses, above 4 bedrooms, bring greater expected return.
The public for the so-called Vacation Homes, which are large houses within condominiums with full infrastructure and close to parks and attractions, is usually made up of large groups, whether an entire family or a group of friends. Groups require larger houses. There are other factors that we detail in the article: Larger houses offer better return in Orlando
Thus, it is essential that, when investing in Florida’s real estate sector, always consult an experienced broker in the region you are looking for.
About AMG International Realty
AMG International Realty is a global real estate agency specialized in Florida and aimed at the foreign public. If you want to know more about real estate opportunities in Miami, Orlando and cities around these two centers, contact me right now and talk to me on WhatsApp: +1 305 761 2655 (Heloisa Arazi).
