Townhouses in Miami, good investments?

Question

I live in Miami, West Kendall area, and have been analyzing deals in this area. I will be using a VA home loan so the house does need to be in a livable condition. I also plan to rent out the spare bedrooms at around 600 each which should cover a lot of the mortgage. I know the general advice is to avoid townhouses, but houses here run around $200k and townhouses can be found for around $150k. I have rented a townhouse before and the complex seems to be fully rented all the time, as do other complexes, given the shortage of affordable housing in Miami. Prior to me renting the townhouse the family that lived there before had lived there for many years so these aren't temporary housing, at least in Miami.

Has anyone invested in townhouses here for rentals with success?

Jack V. Ospina · Answer

Hey Account Closed Townhomes are great investments if bought correctly. Technically the HOA will not allow a room rental unless the person is added as an additional occupant ad or guest. To be added as an additional occupant they would have to go through the screening process as any regular tenant. Also, just like Astro Josue mentioned HOA's are like mini governments and they can manipulate cost and assessments. This is an issue every HOA is going through now a days. Also some townhomes are considered Condo Units and not a LOT and BLOCK property which sometimes affects financing. I would verify this with your lender. Either way if you can get a deal on a townhome while doing proper due diligence I would definitely go for it. If you need assistance in analyzing any property I'd be happy to check it out.

Gabriel Amedee · Answer

Ryan Bianchi you should check out Devon Aire villas. I am assisting a client close on a property there next week. The HOA is about $50 a month and they are lot and block so you can finance FHA/VA with them. With lot and block townhomes/villas you do own the land under them. Feel free to reach out with anymore questions. Happy investing !

Aaron K. · Answer

While an HOA would likely have no problem with you renting out an entire unit they are more likely to have a problem with you renting out extra bedrooms, make sure you are allowed to do that before any purchase. Also be aware that HOA fees can eat your returns alive and if you were to apply HOA fees to a mortgage in many cases you would be able to afford a far more expensive SFR with no HOA. For example I have seen $200-$300 a month HOAs that kill condos/ townhomes for investment purchases.

Account Closed · Answer

@Gabe Amedee awesome! Thanks for the tip. I’ll look into it.

Account Closed · Answer

Thanks for all the knowledge and advice! Good to always learn sometime new

Account Closed · Answer

And that’s coming from an agent haha. Yea from what I’ve seen I’d have to do extensive research on each complex as they are different, I guess considering them as mini governments work. Maybe the area meets your criteria but that particular development doesn’t and you didn’t do all your research 100%. Yikes

Account Closed · Answer

Frank, it seemed more appealing than I see it now. Still am considering it though. It’s crazy how high home prices are here with taxes and insurance compared to the rents!

Account Closed · Answer

Aaron, I see you aren’t from Miami. A little about here, sfh sell for 250 on a low end but usually about 300-400 average. At least in decent neighborhoods. Townhomes here can run 250 for a really nice one. It’s a big difference. I was doing some research and don’t think I want to get into it, but not closing the book just yet. HOA fees can change, I’m sure it’s in a contract when they will be allowed to and by how much, but you can’t see into the future. Also rental policies can change. I’m sure there’s some grandfathering in of older rules and whatnot. But that’s speculation on my end. And HOA fees aren’t tax deductible unless it’s a pure rental (maybe they are partially deductible for a house hack?). Since I’d like to use my VA home loan, (I have to live in the property) that’s not the case. I think it’d be easier to drive an hour north where housing is more affordable and use a conventional loan or possibly move there depending on this new job I just got. I’ve heard a story from an investor about how they changed the rental policy one month after he bought it and they had to fight it (I believe). Also the fact that you don’t own the land is a bit unsettling. The complex could be bought out and sold to be demolished, leaving you with fair market price(?) I’d hope. Not that I’d think it’s very likely to happen down in Miami.

Astrelain Josue · Answer

Considering HOA's are like mini governments, I'm usually apprehensive about placing a dollar into a Townhome. However, if the price is right and the HOA is rental friendly, I'd go for it.

Frank Boet · Answer

Ryan, I live in West Kendall too. I'm looking for condos and townhomes because sfh are very expensive, over $300,000 in West Kendall. I don't see a problem at all investing in a townhouse.