How to Overcome Fear in Miami Real Estate Investing
How to Invest in Miami Real Estate with Confidence?
This is not one of these blogs where someone tells you “Have no fear, you can’t go wrong with real estate“. I think that is nonsense and I certainly do not agree with that. Below I’ll discuss why some people are scared for real estate investing and how to measure whether these fears are realistic. I also provide you with tips on how to safely invest in Miami real estate and to grow your capital. As a Miami real estate agent I focus this article on the Miami real estate market, but this information can be used for real estate investing all around the globe.
1. The Media say the market is bad right now
You might have read an article that provides you with ‘market information’, which makes you think a market is either really negative or really positive. When you see a market with high inventory you might fear to invest in this market and postpone the plans you had.
When reading an article, always check the source. Is the article coming from a top producing realtor or a true market analyst or is the article coming from a local newspaper that doesn’t even focus on real estate and whose reporter just called some random sources. Also, do not forget that a headline like “Brickell’s market is doing ok-ish”, will not attract any readers. Newspapers are there to sell the paper, which might lead to exaggerated information to get you intrigued.
Secondly, when reading an article always check what they are measuring and how they are measuring the market. Our experience is that many newspapers or even realtors measure the entire market and provide for general conclusions. When you analyze the market without distinguishing between properties of $500K and $30M…..well, data are going to be contaminated. We actually have written many reports that showed completely different results than reports of other agents cause we look at sub-segments of the market. The $750K- $1M segment performs completely different than the $5M+ Market and should not be taken in the same data set.
What Makes Someone a Really Good Miami Real Estate Agent?
2. Fear of not Knowing the Local Market that Well
Always work with a professional who knows the area very well and analyses the area. “Are you working with a realtor”? “Yes, my aunt’s neighbor I met two weeks ago at a party just got her license”. NO NO NO just because someone went to school with your sister, doesn’t make them an expert nor means that he/she has your best interest in mind. Well, if your friend, family member or neighbor is a very well established agent, who has a steady record of past sales, who can tell you about the market and the market’s predictions, then by all means: go for it. But before you work with a realtor test their knowledge, test what they know about the market and how they see the market in the future. Take a realtor who also tells you NO. You don’t want someone to push you into an investment just to get a quick commission check. You want someone who is passionate about the business and who wants you to refer him/her to your friends. Work with a market specialist who has done deals in the area before, who is respected by peers and who can show you the numbers and explain why something is a good or a bad investment.
When it comes to real estate everyone knows best. “You should buy there, my friend bought there and she loved it”. Do not listen to people who don’t know anything about property investing or the local market. Even when someone lives in the area, this doesn’t make him or her an expert.
And last point…buyers agents are FREE (Yes thats right, it still exists these days) so why would you say no to free advice…
3. To buy with your heart
Don’t walk into a property solely using your heart. Yes maybe you like the lush garden and beautiful pool, or you like the sleek kitchen or you see yourself laying in front of the chimney with your kids. But also think with your head: is this a good investment? will this property keep its value? how did this neighborhood and these type of properties perform over time and is will there still be demand in a couple of years? Even though you might have fallen in love with a home, please be critical on the price. Just because you love it for that price, it doesn’t mean that the price is right. Always think of reselling it in the near future.
4. The Fear of Making a Mistake or Changing Future Situations?
You cannot predict the future, but you can cover yourself for many future changes. Therefore you should always buy real estate with a safety buffer. The market might go down or your situation might change, but if you plan well there is no reason to stress out about this. Some of the things that many buyers do when buying real estate is*
- Fixing the interest on a portion of their loans to minimize the risk of rising interest rates.
- Protecting themselves with life and income protection insurance.
- Taking out landlord insurance to cover for damage to their property or unpaid rent.
- Don’t take out the maximum mortgage or use all your savings without having savings left
Whatever the state of the market, there are always good investments to be made as long as you look for the right property at the right price. We have written many articles on this topic for the Miami real estate market. (See some of the links above or call me at 305.508.0899 for more information on what investments to avoid or to focus on!)
*Source: Michael Yardney, PropertyUpdate.Com.AU