Miami Investment Property – Ocean Pkwy

Today I’m analyzing a 3 bedroom metro Miami investment property located in Boynton Beach, FL. Take a look at my analysis of this property and let me know if you agree.  You can also send me an email with additional questions or to learn more about this property.

Metro MIAMI INVESTMENT PROPERTY OVERVIEW

  • Market: Metro Miami Areamiami investment property
  • Listing Price: $135,900
  • Rehab Estimate: N/A
  • Address: NW 13th Ave, Boynton Beach, FL
  • Beds / Baths / Sq Ft: 3 beds / 1 bath / 1,000 sq ft
  • Property Description: Home is in move-in condition.  It is formally a 3 bedroom, but also includes a den for extra space.  Excellent location with newer roof installed in 2011.

NEIGHBORHOOD GRADE: D

  • Median Income: $38,296
  • Poverty Rate: 27%
  • Unemployment Rate: 19%
  • % with Bachelor’s Degree: 21%
  • % of Renters: 35%

The zip code 33435 is below the average for the Miami metro area on key economic factors including median annual income and the poverty rate.

RENTAL PRICE EXPECTATIONS: $1,350/MO

The vast majority of rental properties in this area are 3 bedrooms. These homes generally rent for $1,775 – $4,125 per month with a median of $2,200.  This investment property is much smaller than the average size of 1,575 sq ft so we have assumed rent of $1,350/mo

$1,6350/mo is still a bit expensive when compared to the area’s median income which is only 28x the monthly rent. As a result, investors may find a smaller pool of qualified tenants.

ANNUAL EXPENSE EXPECTATIONS: $8,982 (55% OF GROSS RENT)

  • Property Taxes: $1,219
  • Insurance: $1,350
  • Property Management: $2,363 (assumes 1.75x monthly rent)
  • Vacancy: $1,350
  • Maintenance: $1,350
  • Other: $1,350

The expenses for this property are generally in-line with industry standards with the exception of property taxes, which are well below the typical 2x rent.  Since this is a D-level neighborhood I have a assumed one month of vacancy every 12 months and one month of cushion for unexpected expenses.

Property management is set at ~1.75 months rent.  This factors in regular monthly management fees along with various other new tenant and lease renewal fees that companies may charge.

FINANCIAL SUMMARY

At Listing Price

  • Purchase Price: $135,900
  • Rehab: $0
  • Closing Costs: $4,077
  • Total Investment: $139,977
  • Financed Amount: $104,983
  • Cash Investment: $34,994
  • Annual Revenue: $16,200
  • Annual Expenses: $8,982
  • Interest: $5,249
  • Net Income: $1,969
  • Annual Return: 6%
  • Annual Appreciation: $1,359
  • Total Return Potential: 10%
At Recommended Price

  • Purchase Price: $117,000
  • Rehab: $0
  • Closing Costs: $3,510
  • Total Investment: $120,510
  • Financed Amount: $90,383
  • Cash Investment: $30,128
  • Annual Revenue: $16,200
  • Annual Expenses: $8,982
  • Interest: $4,519
  • Net Income: $2,699
  • Annual Return: 9%
  • Annual Appreciation: $1,359
  • Total Return Potential: 13%

MY RECOMMENDATION

I have analyzed this Miami investment property assuming a financed purchase.  With a neighborhood grade of D, I would normally target a minimum annual return of 15% with an additional 3% margin of safety.  I think 1% annual appreciation of ~$1,359 is a reasonable expectation.  Here the listing price of $145,000 seems high.  I would recommend a $117,000 purchase price to boost the total annual return potential to 13%.

Even at that price, it doesn’t meet my normal return target, but this property would benefit significantly from deducting annual depreciation of $4,228/yr.  As a result, your annual income on this property should be tax free and help offset tax payments on another property too.

Want to place an offer or learn more about this property?

Leave a Reply

Your email address will not be published. Required fields are marked *