The Top 2 Areas in Brickell for Short-Term Rental Investments

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In a previous research study, we analyzed all neighborhoods in Miami-Dade County to determine where an investor could achieve the highest returns in short-term rentals. Our analysis concluded that Miami Beach and Brickell had the best returns.

In the following article, we will delve deeper into Brickell to identify precisely where to invest in order to maximize your returns. There are two areas that stand out as particularly promising for investors, the northeast area between Miami River and SE 6th Street, and the section between SE 11th Street and 13th Street. By focusing you search on these areas, you can increase your returns as an investor.

North East (Miami River to SE 6th street)

North East between Miami River and SE 6th street enjoy the best views in Brickell and luxury condos. The average daily rate is $274 and the Gross Rental Income per month is $6,576 projecting an occupancy rate of 80%.

The median property price for apartments under 775 square feet is $495,000. At this price point, the expected Gross Rental Income to Price Ratio ($6,576 / $495,000) is over 1.3%. This ratio is particularly high compared to other areas in Miami.

Once you have your lists of properties that meet these standards, the next step is to calculate the Capitalization Rate (Cap Rate) for each property. The cap rate is the net operating income (NOI) divided by its purchase price. If you intend to use debt to leverage the purchase of the property the CAP rate includes the interest rate the costs associated with financing a property. When interest rates are high, you may want to limit the amount of financing as this will damage your CAP Rate.

To analyze the cap rate you need to list all the expenses related to managing the property. You can use our calculator for free at getfoothold.com/us/calculator or build your own excel file to analyze the return. Your analysis should include:

  • Property taxes
  • Insurance
  • Utilities
  • HOA
  • Airbnb commission (3%)

Maintenance, repairs and cleaning fees can be charged to the guest though the “cleaning fee”. When performing this analysis this approach is good for simplification.

If you can find apartments in this area that are suitable for Airbnb and priced under $495,000, you could potentially generate cap rates of over 10% and IRRs over 14%. However, it is important to pay special attention to HOA fees when calculating these metrics, as they can vary significantly between luxury condos and may impact your profitability if not carefully considered.

South East (SE 11 to 13th street)

The area between SE 11th Street and 13th Street enjoys the second-highest occupancy rates in Brickell. With an average daily rate of $196, the gross rental income per month is projected to be $4,704 at an occupancy rate of 80%.

The median property price for apartments under 775 square feet is $502,000. At this price point, the expected Gross Rental Income to Price Ratio ($4,704 / $502,000) is over 0.9%.

If you can find apartments in this area that are suitable for Airbnb and priced under $300,000, you could potentially generate cap rates of over 10% and IRRs over 14%. However, it is currently not possible to find apartments being sold at this price point.

Conclusion

The area located in the northeast between the Miami River and SE 6th Street has the highest gross income ratio to property price. For investors looking to maximize returns, apartments under 775 square feet and priced under $495,000 in this area offer the best opportunity.

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