Investing 101

Dated: 03/04/2018

Views: 78

 One of the routine inquiries I get is from beginning real estate investors.  I always start with two questions: 1) are you planning on flipping the property (buying a property that needs work, fixing it up, and reselling it) or renting it out? 2) what sort of return rate are you trying to get?

Flipping is difficult in Miami.  It's very difficult to find a property that can be bought cheaply enough, so that when work is done, a decent profit margin can be realized.  Pro tip: if you're buying a home that does need work, you also need to include the cost of carrying the house while the work is done and resold.  Minimum of 6 months, but frequently much longer.  Overlook the cost of paying for property taxes for a few months, and suddenly that "steal" may become "no deal"


Much more successful in Miami is to buy a property and rent it out.  Return rates on this vary widely though, so it's important to understand your numbers.  I've helped investors calculate return rates as low as 0 percent and as high as 20 percent.  Clearly... a 0 percent return is a horrible investment.  But finding an investment that returns 20% a year isn't easy either.  


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