Over the past 10 years, home prices in Miami have increased by 139.07%.
With appreciation numbers like that, it's no wonder Miami is such a popular city for those interested in investing in real estate. But it's important that new investors don't jump into a real estate investment without understanding some key things.
In this post, we'll go over 3 things you must know before beginning to build your property portfolio.
Keep reading to learn more.
1. It's a Long-Term Investment
Although there are many TV shows today that might suggest otherwise, real estate investing is typically a long-term investment. You should not enter into it expecting a quick return.
When choosing to invest in real estate, it's critical that you keep in mind the long-term nature of the investment. It could take years to see the kind of return you're hoping for.
And if you're planning on trying to speed up your return by flipping a property, you should be aware of the risks that option presents.
2. It's as Much Work as You Make It
No matter what, there is a lot of work to be done to maintain a real estate investment. Whether you're the one actually doing all of that work is up to you.
You can choose to be a completely hands-on landlord for the property and do all of the work yourself. Or, you can choose to be fully removed from the day-to-day work by hiring a property management company to take care of the property for you.
Rentals require someone to maintain the physical property, handle tenant questions/ concerns, market the property, fix leaks, qualify leads, and handle accounting. Before you choose to invest, you should have a plan for how all of this work will be handled.
3. There's More Than Appreciation
When choosing to invest, many first-time investors consider only the potential for appreciation, or an increase, in the value of the property. But, this is not the only financial benefit of investing.
There are different tax deductions that can save real estate investors money come tax time. You are often able to deduct the costs of owning and operating the property, but be sure to consult with an accountant to fully understand these.
Additionally, over time as the mortgage is paid down, you'll build up equity in the property, which helps boost your net worth and gives you more options to use leverage to continue investing.
But one of the biggest financial benefits is the potential for monthly cash flow. This is when the monthly income you receive from the property from any rent, fees, and coin-operated machines, is greater than the monthly cost of owning it.
Know These Things Before Investing in Real Estate
Investing in real estate is a great option for many people who want to grow their wealth. But, it is not a low-risk or low-effort investment. Be sure to know what you're getting into before you begin investing.
If you're an investor in Miami and you're looking to take some work off of your plate, we can help! Look into our property management services today.