Living off Realty Investment (Miami: real estate, apartments, rental market)

[ggonzaga]

I have the money to invest in the each building in the luxury areas of Miami. My question is if I can live off investment. I quit my job, and just invest. I'd focus on renting apartments for people, and buying pre-construction condos, as well as renting commercial rooms.

[FlyMIA]

Of course it's possible if you have enough money to buy enough properties and of course assuming the rental market stays strong. With th amount of buildings going up in Brickell I wouldn't bank of it being as high as it is today for rental prices.

But honestly if you need to ask on a forum like this you probably shouldn't do it.

[bale002]

Originally Posted by ggonzaga

I have the money to invest in the each building in the luxury areas of Miami. My question is if I can live off investment. I quit my job, and just invest. I'd focus on renting apartments for people, and buying pre-construction condos, as well as renting commercial rooms.

It depends on how much capital you invest and your own living expenses.

For properties in prime areas, you have to buy cash to generate a 2.5%-4% yield, sort of like investment grade bonds, except for greater chance of long-term capital appreciation.

For properties in sub-prime areas, yields of 8%-10%, possibly even higher, are possible, less whatever interest expense on mortgage debt.

Capital appreciation, if any, would not come for quite a while, so you would have to live off the yield.

Since you mentioned prime areas, assume a yield of 3%, for example, and $100,000 per year in living expenses, then you would have to invest $3.33M. Or perhaps you could live on $50,000 per year, so a capital investment of $1.66M, etc.

So adjust the math for your situation. If you are mortgaging any of these properties in prime areas, then your yield could be well below 3%, and it may not even have positive cash flow, unless you are talking about large commercial properties like warehouses or big-box retail where construction costs per square foot are a lot less than residential.

Originally Posted by FlyMIA

But honestly if you need to ask on a forum like this you probably shouldn't do it.

Good point. Assuming the OP is a foreigner, the only thing relevant to the Miami forum that he may not know is that yields on prime (coastal) area real estate in the US, including Miami, are typically around 3%, maybe 4% if the investor can eliminate agency and other fees. But, indeed, he should be consulting a specialty forum or commercial real estate investment advisor.

Good Luck!

[boxus]

If you have to ask, probably not.

[midnightfapper]

this will not end well (tm).

i think in the areas with insane price jumps in the past year (miami beach, ft. lauderdale, etc.), the music's going to stop fairly quickly and the market will start to flatten out. will probably remain there for a while.

other areas based more on reality will continue to appreciate at a more realistic pace, based more on fundamentals.

[miami_zed]

buy houses or a whole apartment building in a non-luxury area

[straight shooter]

It can be done but don't think that it will be worry free, problem free and require little of your time.

[FlyMIA]

Originally Posted by miami_zed

buy houses or a whole apartment building in a non-luxury area

Yep. Better yields, not as crazy prices, rent doesn't fluctuate as much and rental demand is strong.