House flipping in Miami, like in many other cities, involves the purchase of a property with the sole intent to renovate it and sell it for profit.
Miami is known for its diverse real estate market and expensive property values, but house flipping can be lucrative if you take the right steps and tick the right boxes.
- Why Should You Consider Flipping Houses in Miami?
- Is Flipping Houses in Miami Profitable?
- Where To Flip Houses in Miami: Best Neighborhoods
- Flipping Houses in Miami in 6 Steps
- Costs of Flipping Houses in Miami
- Do You Need a License to Flip Houses in Miami?
- Other Cities to Look At for Profitable House Flipping
- Wrapping Up
Why Should You Consider Flipping Houses in Miami?
Miami is an extremely popular city in America, not just in Florida. That in itself is a reason to consider house flipping in the area. The housing market there also has a:
- Short turnover period: It takes houses an average time of 55 days to be sold once they hit the market. That means in under 2 months, you should have your investment money back and hopefully some profit too.
- High listing price: The median home value for houses is $689,000. For an average person, that’s a lot of money. As long as you can purchase and renovate a house below that price (which you can), there’s potential to make money.
- Growing population: The Miami metro population is growing. It may be growing slowly but it is still growing. The more people there are, the more people are looking for houses, and the higher the chance of your flipped home being bought.
Is Flipping Houses in Miami Profitable?
Currently, the Miami real estate market is nearly balanced, but it sways more toward being a buyer’s market. The median listing price stands at $689,000, while the median sold price is $530,000.
This could mean that people are buying houses for cheap and selling them for more, but the houses in the area are selling for nearly 3% less than the asking price.
On average flipping homes in Miami may not be incredibly profitable. However, that doesn’t mean that you can’t make money when house flipping – you just need to know the best neighborhoods to buy your property in as well as make sure you do everything it takes to sell for the right price.
Where To Flip Houses in Miami: Best Neighborhoods
1. Little Havana
Little Havana is a Cuban cultural hotspot that is filled with Latin-style restaurants and cafes. Aside from the culture, it is also an area that has several well-recognized schools, making it the perfect place for those looking to start a family.
Plus, it’s a mere 20-minute drive away from Miami Beach. These aspects all add up to make for an area that people want to live in. Luckily for house flippers, this means there is a demand for homes.
You should be able to buy a house for cheap (relatively speaking) and sell it for more money than you expected.
2. Little Haiti
This may be one of the best-kept secrets of Miami. This growing neighborhood is becoming increasingly trendy. Why’s that? The affordable housing pricing helps as does the allure of living a Caribbean-like lifestyle.
The housing prices in the area range from a median home value of around $140,000 to $10,000,000. This means that there is plenty of opportunity for you to make back the money you spent flipping houses – especially if you do the repair job right.
3. Design District
Before the 2000s you couldn’t pay someone enough money to move into the Design District. It was full of run-down and abandoned buildings. However, a revitalization project has turned it into light-filled lofts that people couldn’t wait to move into.
The Design District is a great example of what a bit of public resources and money from real estate investors can do for a place. And the good news is, it’s not too late to start flipping houses in the area, either!
4. Coconut Grove
Coconut Grow is a stone’s throw away from some of the more upmarket areas of Miami. If you’d like to live that lifestyle, but can’t afford a million-dollar home, then Coconut Grove is a great substitute. Plus, there are restoration plans in the works for soon the place will look brand spanking new.
Aside from these plans, Coconut Grove properties will always be in demand because the area is close to Miami Beach. Therefore, now is a good time for house flipping because, as its popularity grows, so does the median home value.
5. West Kendall
As of September 2023, you can purchase a house in West Kendall for a median home value of $645,000 and resell it at a market value of $790,000. You may need a lot of hard money up front, but your investment will pay you back, and then some – in fact, you’d make 22.48% profit.
What makes West Kendall so a great neighborhood is actually the fact that it is far away from downtown Miami but still within Miami-Dade County. It gives residents a chance to step back from the business, wind down with their families, and live a good, easy life.
Flipping Houses in Miami in 6 Steps
Step 1: Put Some Thought Into The Idea
You shouldn’t just wake up one day and think to yourself, “Hey, I want to start flipping homes”. This is an expensive venture and it requires some thought. Since you’re reading this article, you’re already doing yourself a favor, but you need to do your due diligence and put in the research.
Look into the property market across the entire United States, but specifically in the area where you’re thinking of buying a house. You need to figure out if now is the right time to get into the property game or if you should put the idea on ice and come back to it when there is an increasing demand for flipped homes.
Step 2: Find The Finances
You can’t start flipping houses if you don’t have the finances to back up the idea. It’s unlikely that you’d be able to finance the whole idea by yourself and that’s fine. Luckily, there are lots of different finance options, including:
- A bank loan
- Seller financing
- Partner with other real estate investors
- Hard money lenders
Each option offers different pros and cons. For example, a bank loan may come with steep interest but at least you’d get to do what you wanted with the revamp. However, going with an investor likely means no interest but they’d want a say in the final product, plus, you may have to pay them some of your profits. You need to weigh up the pros and cons of each option and decide which you’d rather deal with.
Step 3: Hire Your Team
You alone may have had the amazing idea to flip a home, but to carry it out successfully, you’ll need some help. For home flipping, it’s suggested that you hire an architect, a contractor, a gardening service, and a real estate agent.
The first three you need on hand to help you turn the fixer-upper homes into a house anyone would want to buy. A real estate agent is to help you get your asking price when you eventually put your property on the market.
Step 4: Choose Your Property
Not every home is a good candidate for home flippers. You’re not looking for the properties that sell themselves, you’re looking for properties that need to be fixed up – the ones new families wouldn’t want to buy because they need money put into them.
Keep your eyes peeled for good deals such as homes in foreclosures, old homes, or cheap homes on the edge of expensive neighborhoods. Follow the 70% rule of house flipping, which states that you should only pay 70% of the property’s after-repair value minus the estimated repair costs. Anything more than that and the property isn’t worth it.
Step 5: Renovate & Revamp
If you’re new to the world of house flipping then you most likely aren’t familiar with the term “sweat equity”. Sweat equity refers to the time, effort, and work you put into the project. Even if you aren’t doing the work yourself, the house is likely to need its walls painted, floors scrubbed, furniture reupholstered, a thorough clean, and a whole lot more.
Get your team of contractors to do the hard work while you do the menial tasks, or while you sit back and relax. Whichever route you choose, we recommend being at the property as much as possible so that you can keep an eye on the progress and make sure everything stays on track.
Step 6: Sell, Sell, Sell
Rome wasn’t built in a day and your home won’t be flipped in a day either. To find the right buyer for the right price you may have to wait a few weeks. As we previously mentioned, hiring a real estate agent can help hurry along the process.
Real estate agents come with buyer connections, an already established network to market your home on, and the industry know-how to give your investment the best chance of success.
Costs of Flipping Houses in Miami
When you flip a home there are many costs including but not limited to the following:
- The money you need to buy the house (this could be all of it upfront, or a down payment and the rest later)
- Any closing costs + lawyer fees needed to close the deal
- Renovation costs (i.e.materials and contractor salaries)
- House insurance (needed until the house is sold)
- Marketing and advertising costs
- Property taxes
- Maintenance costs such as mowing the lawn
- Utility bills such as water and electricity
- Commission for the real estate agent that helped to sell the house
Since the median sold price of a home in Miami is $530,000 if you add all of the above costs to that then you could be looking at $700,000 in total costs, depending on the extent of your renovations. That’s a lot of cash, which is why you need to be careful before you start flipping houses.
Do You Need a License to Flip Houses in Miami?
In Florida, you don’t need any specific licenses or permits to flip houses nor do you need a contractor’s license when renovating a property. Now that doesn’t mean you can do whatever you want, you still need to adhere to local building codes and rules.
Other Cities to Look At for Profitable House Flipping
If you think the Miami area isn’t the one for you, don’t worry – there are other cities in other states that may be more suitable:
- Flipping Houses in Detroit: Detroit is the largest city in Michigan and it provides great opportunities for house flippers as it’s budget-friendly.
- Flipping Houses in Austin: Parks, lakes, and country music are just 3 of the reasons people flock to Austin and 3 of the reasons you should flip homes here.
- Flipping Houses in San Diego: San Diego has warm weather and beaches and although it’s expensive to live there, it’s a good market for home flipping.
Wrapping Up
House flipping in Miami can be a great way to make money, but it takes a lot of forethought and plenty of careful planning. You need to pick the right house, find the right investors (or get the right loan), figure out the costs, create an amazing home, and still manage to keep an eye on the property market.
As the Miami area grows and changes, the property market will change. Even if now doesn’t seem like the ideal moment, there is no time like the present to get started house flipping and to try your hand at running a run-down home into a profitable investment for all. Plus, armed with these tips we’ve given you the best chance at success.
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