Buying Vacation Investment Properties in Florida: Where Should You Invest?
If there’s a common goal on every beach lovers’ wish list, it’s to own a vacation home near the shore. But aside from the obvious benefit of providing a location for a much-needed family getaway, owning a second home can also be a lucrative asset – particularly if you invest in one in Florida. After all, the Sunshine State holds one of the most profitable vacation rental markets in the country, with multiple cities poised to earn homeowners more bang for their buck. Deciding where to buy a vacation rental property means considering various factors, but for most people, it’s all about the location, location, location! However, other factors come into play when buying a vacation home to be used as a short-term rental (STR) in Florida, including median home sale price, net operating income, and navigating the sometimes challenging short-term rental regulations. There are so many layers to the vacation investment property buying process, and Signature International Real Estate is here to help you cultivate a deeper understanding of what you can expect on your investment home-buying journey. In this guide, we’ll shed light on why Florida is a preferred vacation destination, factors to consider when purchasing an investment property, and some of the best places to buy a vacation home in Florida.
Why Florida is a Preferred Vacation Destination
There are so many reasons why the Sunshine State is a popular destination for those wanting to add a vacation rental property to their portfolio. Here are just a few:
Year-Round Temperate Weather
With comfortable weather most of the year, everyone can enjoy their favorite outdoor leisure activities. Biking, boating, golfing, tennis, fishing, sunbathing, paddleboarding, and bird-watching are popular year-round activities in the Sunshine State.
Lower Property Taxes
The average effective property tax rate in Florida is 0.98% which is slightly below the U.S. average and much lower than other states. The tax rate varies depending on the county and city, so it is a factor worth watching on your property search.
Abundant Waterfront Options
With 580 miles along the Atlantic Ocean and 770 miles along the Gulf of Mexico, the state of Florida has a total of 1,350 miles of coastline! Beaches are easily accessible no matter where you are in the Florida peninsula. When you factor in the waterways, lakes, rivers, natural springs, and ponds featured in many communities, a large number of Florida properties boast incredible water views, which is definitely a welcome feature for vacation homes.
Variety of Amazing Amenities & Services
Tourism has long been one of the state’s top industries, and the infrastructure and services are designed to accommodate vacationers and part-time residents. For instance, utilities and other services offer packages for part-time residents, and there are many property management companies that maintain, secure and market vacation properties.
The Sunshine State is a Popular Vacation Destination
A significant advantage of owning a vacation rental property in Florida is that the state is one of the country’s most popular year-round vacation destinations.
Factors to Consider When Purchasing a Vacation Investment Property
For many, purchasing a second home is the first foray into investing in real estate. After all, the first home is usually purchased to suit the needs of an individual or a family’s basic requirements, like proximity to work, schools, and other amenities. On the other hand, choosing a vacation home is usually much less restrictive. That said, it’s essential not to lose track of the financial and economic considerations of owning an investment property. Here are four factors to consider before purchasing a Florida investment property:
- Do you intend to rent out the property?
Rental income can potentially pay part of the mortgage and maintenance costs of your property. Before purchasing an investment property, think about how many weeks or months you’ll make your property available to renters. This can help you decide on your budget as you search for homes.
- Are there restrictions in this area or neighborhood that may affect your ability to use the property as a rental?
This is an important factor to discuss with your Signature real estate agent as you search for properties, as some areas or communities may have restrictions against short-term rentals.
- Do you have a business plan for managing your investment property?
Your business plan should include your income expectations, operational budget, tax planning for rental income, and return on investment calculations.
- Do you plan to manage your property remotely?
In many cases, it can be advantageous to have a professional property manager who can handle your property maintenance needs while also serving as an emergency contact, especially if you don’t live in the area full-time.
Best Florida Cities For Investing In Vacation Properties
So you’re ready to buy vacation rental property in Florida, but you’re undecided about where to find the perfect property. And who can blame you? The Sunshine State is home to plenty of beautiful cities that attract vacationers throughout the year. According to Forbes, 6.6 million people booked a short-term vacation home via Airbnb in 2019, with hosts generating total revenue of $1.2 billion. To get the best ROI on your property, it’s essential to remember that short- and long-term renters alike crave unique experiences combined with incredible locations. While there are undoubtedly many good options, these four cities are at the top of our list.
Miami is one of the state's – and the world’s – most popular vacation spots. Although it’s often said that specific destinations have something to offer everyone, Miami does indeed offer multiple enticements for every taste. The trendy nightlife in Wynwood, the high energy of South Beach, the seemingly endless shopping opportunities, the lure of deep-sea fishing, world-famous art festivals, frequent outdoor food and wine extravaganzas, and of course, the gorgeous beaches. In addition to all that, Miami also has a robust and healthy real estate industry. When deciding where to invest in real estate, the location is always paramount to its profitability. And when that real estate investment is within Miami, Florida, then the odds of success are in your favor.
Median Listing Price: $499K
Panama City Beach
Florida’s Gulf Coast is one of the more profitable spots in the country to own a vacation rental property. Panama City Beach boasts nearly 100 public accesses to 27 miles of white sandy beaches along the Gulf of Mexico. Like many vacation destinations, Panama City Beach has distinct neighborhoods that have something for every homeowner and traveler. This means you can find the style of house you prefer and target your optimal renters.
Median Listing Price: $344K
Tampa is a wonderful place to play and unwind with its mix of historic architecture and modern landmarks, a culture infused with Cuban and Spanish flavors, vibrant districts, and beautiful waterways. Available properties in Tampa are as diverse as the area. You can find beachfront properties, quiet retreats surrounded by nature, and townhomes in gated communities with all the vacation-style amenities you can imagine.
Median Listing Price: $340K
Delray Beach is a vibrant, intimate town with big-city sophistication. Located on Florida’s southeast coast, Delray’s tropical climate and abundance of arts and culture, fabulous nightlife, world-class dining, and shopping have put the city on the map as one of South Florida's most popular beach destinations. In fact, Travel Holiday magazine recently named Delray’s Municipal Beach as the top beach in the southeastern United States.
Aside from Delray’s booming tourism industry, residents and tourists enjoy the lush greenery, culture and attractions, and the proximity to Boca Raton, West Palm Beach, and more.
Median Listing Price: $289.9K
Investing in a vacation rental property is such an exciting milestone – while also being an enormous undertaking! At Signature International Real Estate, our knowledgeable agents have extensive experience with the vacation rental market in Florida, which puts us in the best position to serve you. Let us help you find the perfect investment property. Contact a Signature real estate professional today!