Real Estate Investing in Florida 101: Passive Income - The Coto Group

Real Estate Investing in Florida 101: Passive Income

  If you are looking for information and tips on how to generate passive income through real estate investment in the state of Florida, you’ve come to the right place. We know that this is a hard topic to search online, given the amount of misinformation on the web, but we’ll try to make it easy to digest. That being said, you should not take this article (or any articles you find online) as financial advice, our goal here is to help and guide you through some of the basic concepts regarding this topic. 

Now, let’s start talking about what you need to know: 

What is Passive Income? 

 This is a key concept for our discussion so let’s make it simple. Passive income is defined as a type of investment that generates constant revenue, requiring minimal to no effort by the investor. There are many ways and investments tools to build a passive income portfolio, like stocks and bonds. Nonetheless, we should leave that for financial advisors to explain. We are here to talk about real estate investments and as you might already know, this is one of the best ways to start generating passive income.

What are the options to generate passive income in the real estate sector? 

  In today’s world, you have many options to start your journey into financial independence through passive income and real estate. With the power of technology and the stock market, you don’t even need to buy a property to start investing in real estate. One of the most recognized investment tools to do so is REIT’s. Real Estate Investment Trusts (REIT), are investment funds that focus on real estate investment (residential, commercial and many others), that have become increasingly popular over the last few years. They buy properties and you can purchase shares from their fund, to get a piece of the reward. 

  On the other hand, we have the traditional way of buying and renting a property. Some may argue about which alternative is best but, as we said, our goal is not to provide financial advice. Thus, we will leave that debate to the scholars and focus our attention on the traditional way of becoming a homeowner. 

  Sounds great, doesn’t it? Earning money without putting in the effort. It sounds like it’s too good to be true, but remember that buying a property to generate passive income is not something to take lightly. Don’t worry, we will give you some tips to take into consideration. 

Picking the best place to invest

  Like everything in real estate, it all comes down to the 3 magic words… Location, location, location! Nevertheless, this is the most important part of the investment. You need to purchase a property that suits your needs and that will deliver the revenue that you desire. Ideally, you want to choose a city that attracts many visitors so you can easily rent it.

 What better place than Florida? Did you know that the port of Miami is known as the “Cruise Capital of the World”? It serves over 5 million passengers from all over the world each year. Now THAT is what we call exposure. Miami is visited by over 14 million people each year and based on occupancy rates alone, it is one of the best cities to own a rental property on. Maybe it wouldn’t hurt to book a consult with a local real estate agent that specializes in the area (@thecotogroup). These are professionals that can guide you through the process and have enough experience to turn numbers and metrics into the passive income that you want. 

Cash Flow is key! 

  Remember that this is an investment, you are not necessarily shopping for the home of your dreams! You need to be objective and find a place that will give you the return that you planned for. That being said, cash flow should be one of the first things you evaluate when buying a property. Positive cash flow means that your expenses (loans, rent, renovations, etc.) are lower than your monthly revenue. Why is this important? A positive cash flow translates into, lower risk for your investment and quicker ROI (return on investment). Take the time to analyze local metrics: for example, Florida has an unemployment rate lower than the national average. Also, it is extremely touristic and has a growing local economy; making it an ideal place to rent. 

Self-managed vs Company-managed? 

  Let’s clarify the “minimum to no effort” part of the equation; because renting a property is not effort-free. You have to show the property to potential tenants, evaluate each candidate (background and financial checks are crucial to ensure your peace of mind and protect your investment), deal with repairs, collect payments, and other obligations that may come up. If you don’t have the desire or the time to deal with the management of the property, don’t worry. There is a solution for you! Property management companies will handle everything for a monthly fee (average fee of 10%). With the help of these companies, you don’t even have to be on the same zip code as your rental property! However, if you do decide to invest in Miami this wouldn’t be a problem because who wouldn’t want to live in the sunshine state? 

Ultimately, remember that the difference between investing and speculating is using the proper data and metrics to accurately make a decision based on objective parameters. Thus, don’t take this matter lightly. Research on your own and always seek advice from real estate agents with experience on the matter. 

  For more information, visit our website ( where you can find other useful articles and posts like this. If you would like to speak to one of our experts, please call our headquarters at 305.422.9286. 

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