Find the Best Miami Neighborhoods for Single Family Home Investing with these Key Rules

Recognizing the Neighborhoods with the Best Upside in Miami (Mainland)

Essential Reading for Relocating Families Looking for the Best Schools Districts.

Why did certain parts of Coral Gables perform better than others and Why did Ponce Davis perform best? Recognizing the “best Miami Neighborhoods for Single-family Homes’ does not mean buying property and renting it out. It means buying property and seeing it appreciate the most. That’s what will really make you the money. Over the years I have observed how certain areas have done better than others. There have been some underlying patterns that I now have learned to identify as rules that will help buyers make better decisions. In the last 2 years due to Covid we have seen buyer behavior accelerate and it allowed us to experience real estate economics at play in what feels like hyper speed.

So with properties appreciating so quickly we ask ourselves; “Which areas have seen the biggest upside?” and “Why have they experienced the largest value increase?” The answers to these two questions are detailed below with some rules. Can you guess which areas went up the most? Read to the end to see which areas did, some may surprise you.

IT THEN BEGS THE QUESTION; IF YOU ARE GOING TO BUY NOW (EITHER A HOME OR LAND) WHERE TO FIND THE BEST MIAMI NEIGHBORHOODS TO BUY?

What are Best Miami Neighborhoods for Single Family Home Investing ? Zoning Elements and lot sizes are some of the most important factors to consider.

The Rules to Find the Best Miami Neighborhoods for Single Family Home Investing

Don’t buy close to main arterial or on main arterial streets.

Homes on these busier streets have a limited ceiling. Quiet cul-de-sac and dead-end streets have been best. When we look at homes around busy streets they most certainly have a ceiling limit to their values and its unsurprising to see homes sell for 30% less on these busy streets. It may be a great neighborhood, but if your selling to families being on a busy street is a big negative.

I have seen a number of land lots come available much cheaper around these areas, but be aware because the cheap becomes expensive. You will never get the max number you need on one of these homes, so do this simple math and see why it can get you unstuck. Building on the right lot can compound your profits if done right, but it can also work backwards.

Example of How the Street Makes all the Difference

Please look at the example below of three different lots (on three different types of streets) on which you would build your dream home. The cost of construction is the same, but the end result is different. Imagine you will build a 4,000 SF home at $500 per SF, so a home that will cost you $2M to build

• Lots located on a normal street sell for $1M
  • You build your dream home for $2M so your total investment will be$3M
  • The market at this range is achieving $1,000 per SF, which would put a home on the normal street at a sales price of $4M
  • This makes a tidy profit of $1M
• Lots located on a quiet street sell for 20% more so $1.2M
  • You build your dream home for $2M so your total investment will be$3.2M
  • The market at this range is achieving $1,200 per SF, which would put a home on the quiet street at a sales price of $4.8M
  • This makes a profit of $1.6M
• Lots located on a busy street sell for 30% less $700,000
  • You build your dream home for $2M so your total investment will be$2.7M
  • The market at this range is achieving $700 per SF, which would put a home on the buys street at a sales price of $2.8M
  • This makes a profit of $100K, you barely break-even

Buy in parts of the neighborhood that have the biggest lots and Liberal Zoning Laws

There is a reason why they say “land is the one thing they are not building anymore of”. More importantly, big lots allow you to expand and maximize profits and in places like Coral Gables, zoning is quite prohibitive allowing for only 45% of the lot to be used. Liberal zoning allows for bigger homes to be built, which means over time bigger homes in the neighborhood will be built increasing the median average of prices in general. Of course some neighborhoods like Coconut Grove are liberal on zoning, but other elements like trees and importantly lot sizes will restrict you. Parts of the Gables with a significant number of historic homes, also saw more limited appreciation compared to non-historical areas. These homes are also harder to appraise– see my other point below.

The perfect combo is: larger lots and less limiting zoning  restrictions– hence why Ponce Davis does so well. Fewer building barriers to entry make a big difference. Liberal zoning of course attracts developers, which means more new homes.

Buying in land locked locations. Often we see neighborhoods continue to ‘sprawl outwards’ and if there is no defining limits (like freeways or water) and plenty of land with old homes then prices will appreciate slower.

Are you looking for the Best Miami Neighborhoods for Single Family Home Investing? Ponce Davis is one of the neighborhoods with the biggest growth in value due to many factors one of them being the perfect combination between large lots and less zoning restrictions.

The Appraisal Conundrum

Appraisals have become very contentious in the last 2 years as appraisers remain hyper conservative and given the proximity of homes being used as comps that have to be within a very narrow geographical radius, a concentration of new homes or newly remodeled homes helps an area enormously. The saying we have now: ‘It’s the most expensive home on the street until its not’. Cash buyers are aplenty and top dollar is being paid for new homes and thus constantly raising the bar. Once again Ponce Davis saw a significant number of new homes as did Coral Gables East of US1 – less historic limitations, more liberal zoning laws all meant prices went up.

Urban Development – Retail and City Structure.

The development of Cocowalk, walkability and Class A offices has allowed the Grove to explode in value. But the benefits of that neighborhood’s services have also bled benefit into surrounding areas. Never underestimate the fact that once you are in a pocket neighborhood you are less likely to venture out of the area. A cool new coffee place, or a trendy new supermarket (like the new trader Joes in the Gables) can really make people feel like the neighborhood is different more than it is.

Protection of services and quality of life for the high-end demographic

Along with improved shops that keep the high-end demographic well-served comes restaurants, parks and coffee shops. Not to mention gyms and other services or facilities. The development of Brickell directly benefited the Grove and Gables as did the Design District and Wynwood. It took the wind out of the sales of the Beach and allowed the mainland’s dry lot values to far exceed that of the dry lot homes on Miami Beach.

The perceived maneuverability around the neighborhood and easy access to key locations without limitations of busy streets.

East of US1 and West of US1. The conversation about the values on either side and the perceptions. Having lived on both sides the perception is different. East of US1 is home to the best private schools – so getting the kids to school East of Us1 can mean a bike ride, impossible to do if you are on the west side. This effect can be seen in the Gables as well as in South Miami where east of us1 and West of Us1 is very different, as well as in Pinecrest VS Kendall where the values are immeasurably different.