Investing (Single, Multi, Condo)

[Rafael Ramos]

Hello everyone,

I'm looking for some advice on investments and would love to hear about what’s worked best for you. I currently have a solid base of liquid assets and am looking to diversify my investments.

I own two fully paid-off single-family homes in Tampa and am currently considering buying a luxury condo in Hallandale Beach for $600K. The condo has an HOA fee of around $1,100 per month and offers the option for short-term rentals. It's located at the Hyde Resort.

I’ve also been exploring multifamily properties, but prices in Miami and Broward County seem outrageous. The cap rates are only around 5-6%, which I’m already achieving with high-yield savings accounts—without the hassle of property management.

I’m wondering if it’s worth pursuing the condo in Hallandale Beach or if I should consider investing out of state. My main goals are to diversify from my current business and to invest in assets that can help lower my yearly taxes.

What would you suggest? Has anyone had success with out-of-state investments, or does it make sense to stick closer to home? Thanks in advance for your insights!

[Drew Sygit]

It's always better to stick with markets you know!

Prices for MF may come down next year as many investors overpaid and took short-term loans out that are coming due. Rates are now higher which will kill their cashflow and encourage them to cut their losses and sell.

[Corby Goade]

This really isn't a question of what's the "best" way to invest, it's more what works well for you, your resources and lifestyle. 

Depending on the market, a 5 or 6 cap might be great, especially if there is a higher proforma cap and you can force higher value. Speaking generally, those lower cap rate markets are also higher quality, better tenants and more passive. Putting value add on top of that can be a great way to build a passive portfolio that doesn't drain your will to live. Those markets dealing with 10+ caps are usually pretty rough areas and you get needy tenants, higher Vacancy, higher maintenance costs and turnover expenses. 

Personally, I don't like condos- HOAs and surprise special assessments can eat up any potential profits and in most states, they can just change the rules when they want to and decide that LTRs or STRs are no longer allowed. 

Personally, I like small multis in growing areas with vacancy Rates under 3%. I buy B or better properties, generally. To be honest, they don't always start out as great deals, but when you buy in higher quality areas, they get better and better every year. 5-7% annual rent growth and appreciation adds up to a significant amount after 5 years or so. 

[Benjamin Aaker]

Invest near your home until you really know what you are doing.

Multifamily gives great economy of scale. House hacking a 4 plex is a great way to get started. These property types aren't in as high demand, so they aren't as overpriced as others.

[Jorge Vazquez]

Hey Rafael, after 21 years in this business as a licensed broker and an active investor/landlord, I'd definitely recommend staying away from condos, especially with those high HOA fees—they can feel like a dictatorship! Lol. My advice is to diversify down, not up. Keep buying in the 'higher end of the low end,' which has consistently worked for me. Just my two cents from someone who's been through it all! - Jorge

[Alecia Loveless]

@Rafael Ramos I avoid condos and fees like the plague. Especially HOAs and $1100/month is a large chunk to have to compensate for in a rental.

I don’t want a board telling me what I can and can’t do with my investment property, especially in your case one that’s going to cost $600K.

Personally I like small multis in the 2-10 unit range. You can still get economies of scale through having multiple units and have the potential for higher cash flow.

[John Morgan]

Paid off? I'd do cash out refis on them to scale up for free. I'm a fan of SFR due to lower turnovers, higher appreciation and much easier to sell. And also no drama between people. I self manage 29 SFR and it's easy. 10 are out of state so it's doable for anyone.

[Alex Olson]

AS @Alecia Loveless says, avoid condos. They grow slow and are tied to the HOA and local area. Go for small multifamily and look to the midwest. I like KC of course, because low barrier to entry, landlord friendly and generally low taxes. I have some good data to show you that backs that up.

[Ray Hage]

@Rafael Ramos I would strongly advise staying away from condos especially in south Florida! But if you are going to buy one, make sure it is new construction or recently completed its 40 year inspection. Also, check to see if major work like plumbing/roofing has taken place recently. If not, you could be looking at a huge assessment down the line. There was recently a $224K assessment per condo in Aventura (one town over from Hallandale)! That'll be enough to make the property drop in value. I would advise on a SFH being a STR if you plan on buying something down here. You should be able to make well over 5%.

[Ashish Acharya]

If the condo's high HOA fees and similar cap rates to your savings accounts don't offer much upside, it might make sense to explore out-of-state investments.

Many investors find better returns and growth potential in other markets without the high costs of Miami or Broward County. Partnering with a good property management company can help you handle the distance, but be careful with tax’s material participation rules if you expect tax savings.

Sticking local is convenient, but branching out might give you better opportunities to meet your financial goals.