Many new investors are aware that real estate investing is a viable means of achieving financial freedom. Nonetheless, not a myriad of them has adequate information about the various types of real estate investments there are whether in Miami or other parts of the world.
“As basic as it may sound, some new investors have no idea that they can invest in real estate even when they don’t own properties, thanks to REITs. Thus, they prioritize buying fractional stocks rather than investing in properties,” says Tom Tom owner of Tom Realtor.
To help you fully grasp what real estate is about and how to invest in it, our experts will explain to you in depth the various type of real estate investments in Miami. That way you can diversify your portfolio and transition from one property investment type to another until you hit your goal just like Jorge Pérez.
Excited to find out what these real estate investments in Miami are?
See them below;
1. Residential Real Estate
Asides that residential real estate is a type of property investment that focuses on properties for residential purposes, it’s also one that has potential for strong returns in Miami.
“Even during the covid-19 pandemic, many residents in Miami began transitioning from smaller homes to bigger apartments with spacious playgrounds,” says Floyd Lawn, a luxury real estate agent.
Certainly, more people will continue to migrate to Miami for a stay as its population has been predicted to rise because of the quality of life it offers residents and tourists alike.
“Moreover, with the existing low supply vs high demand for residential homes in Miami, investors are looking to a promising future,” adds Floyd.
From Wynwood, Kendall, South Beach to Key Biscayne, there are various dissimilar areas to buy a home in Miami. Nonetheless, keep in mind to find one suitable for your investment strategy.
Also, in Miami, the appreciation potential for condominiums is less reliable than single-family homes. So if you’re wondering why you should opt for a Miami home rather than a condominium, be informed that the Miami condos have such stringent rental limitations that only allow rentals annually or biannually.
Single-family homes aside, other residential rental properties in Miami include vacation homes suitable for tourists attractions, duplexes, and multi-family homes.
Furthermore, accessory dwelling units are attractive for investors who desire to make passive income from their existing property without spending hugely. This means you’ll be transforming your basement into tiny homes.
Real estate agent, Floyd advises investors to perform in-depth market analysis before buying a property in any area as this will help decide the best exit strategy to utilize.
A common strategy you can utilize to invest in residential real estate in Miami include;
House Flipping
This real estate investment strategy entails acquiring a property at a discounted rate, given its condition, to trade it usually after renovation for profit. However, it’s not always the case, investors may purchase a property and retain it momentarily until they’re ready to sell it at a higher rate. In this case, you must know when to enter the market and when to sell during high demand.
“Some investors make ample profits from house flipping however it requires expertise, budget, and appropriate property type to derive much benefit,” says Floyd.
2. Commercial Real Estate
Of course, in real estate, properties with the strongest potential returns are those with the highest volume of tenants, think about multifamily projects, storage facilities, hotels, and student housing. These properties are strictly for business purposes.
Moreover, you might want to consider commercial real estate because it’s relatively less competitive.
“The real estate investment is a highly competitive one, especially in Miami. Nonetheless, commercial property investors face lesser competition because many investors don’t have the wherewithal to invest and effectively manage this property type until it starts to yield dividends,” says Joy Royal of Royal Realtor.
Besides, since no renter would last long in low-traffic areas, as they’ll suffer losses, it’s crucial to take location seriously when investing in commercial real estate.
As a new investor with a lower risk appetite, triple net properties would be your best bet when investing in commercial real estate. It’d save you costs such as real estate taxes, building insurance, and maintenance fees since they’re the responsibilities of your renters.
“Gas stations, medical facilities, and grocery stores are some of the profitable NNN properties you can invest in to protect yourself from the effect of economic fall,” adds Joy.
3. Industrial Real Estate
Here land and property are designed for industrial needs ranging from warehousing, production, development, manufacturing, storage, and distribution. Datacenter, showrooms, truck terminal, and light assembly are various types of industrial properties.
To profit from this property investment type, hire a real estate agency in Miami to help you find the most suitable and profitable industrial property in the city.
4. Real Estate Investment Trusts (REITs)
Real estate investment trusts are corporations that acquire and oversee income-generating properties, say hospitals or medical centers, hotels, office space, malls, eateries, multifamily housing buildings, and warehouses.
Interested investors can invest in the equities of these corporations to derive dividends from the income made by the company. REITs offer a great chance to diversify your portfolio thereby curtailing your risk.
Moreover, REITs can be a source of stable income given that some companies operate long-term rental deals with their tenants. Investing in this type of real estate investment doesn’t require proficiency or huge funds since you can find one on a major stock exchange and your investment is operated by skilled real estate managers in the REIT.
There’s also security for this type of real estate investment as the US Security and Exchange Commission mandates all REITs under their supervision to be transparent via their periodic disclosure.
5. Property Crowdfunding
This real estate investment type entails the pooling of funds together by a group of investors to raise capital for huge real estate investments. By partaking in this peer-to-peer lending, you’ll be getting a share of the income derived from the real estate investment.
In property crowdfunding, investors dub as lenders via crowdfunding platforms to engage in real estate investment. Besides, it’s beneficial to perform your due diligence to examine the safety of the platform you’re about to invest in.
Many investors get into this type of investment because while it only requires low funds for entry, they stand to gain a chunk of income from the huge real estate projects.
Other advantages attached to this real estate investment type include easy entry, special deals, and liquidity. Also, investments don’t have to be on a long-term basis, as they could tarry for two months or two years. Property crowdfunding is also an effective means to diversify your portfolio.
6. Land
The land is a scarce commodity and as such remains in demand. Despite its desirability by buyers, investors must familiarize themselves with the expertise required to operate a land as a business. There are many land investments classes you can deploy your capital into including;
- Recreational land
- Residential development land
- Vineyards
- Commercial development land
- Timberland, etc
Investors must inform themselves of the legal, tax, and development issues surrounding raw land before investing in this property to enable them effectively utilize and manage this asset.
Obviously, with the various types of real estate investment, there’s room for anyone to become an investor. However, before you jump into it, it’s important to conduct your market analysis of Miami real estate. You can find more information about real estate investing at Your Trusted Home Buyer blog.
