Florida’s lifestyle is, quite simply, exceptional – with 300 days of sunshine a year, some of the best beaches in the US, crystal clear warm waters, and spectacular natural flora and fauna. It is also one of the best investments you can make; not only providing you access to the vacation lifestyle but giving you solid financial returns on top.
Did you know Florida holiday homes can offer as much as 7-10% cash flow returns while keeping 17 weeks a year free for family and friends? The key to this type of opportunity is to invest in a place that allows for short term rental periods and has strong demand due to great visitor traffic.
For example, if you are drawn to the attractions of the Orlando area, you could own a property that would allow your friends and family several weeks of vacation time per year, and have a management company rent it out for you the rest of the year. We just reviewed an opportunity in a Kissimmee resort complex, for example, that allows buyers a 4-5 bedroom house with a private pool for $350,000.
This property was set to return around $24,000 cash flow — renting 35 weeks of the year. And all within 15 minutes of the famous theme parks that draw millions of visitors each year. It’s worth remembering that in most areas as the market recovers, properties are also appreciating steadily, so you conservatively stand to make 3-4% capital appreciation on top of your cash flow return too.
Our Tips to Choosing a Vacation Home as Investment in Florida:
1) Location, Location, Location
When you’re considering to buy a Florida vacation property as an investment, the location of your property is the most important factor which will determine both the long-term financial potential of your property purchase, as well as your personal enjoyment when using the property. In other words, it is first critical that you choose a place that you really enjoy going to. If that is a beach town, we suggest you go for the best you can possibly afford in terms of proximity to the beach and it will pay off long-term through better occupancy rates, long term appreciation, and your own personal vacation lifestyle. If it’s an inland resort town, make sure the location is a good one for proximity to the major attractions, and in an area that has proven good rental demand. Desirable commands a premium in rental rates.
2) Choose an excellent Realtor
Your Realtor will perhaps be the most important decision you make, other than the home itself. In the U.S., Realtors are compensated from the proceeds of the seller, so it doesn’t cost buyers to have an agent to work for them. However, if that person has the right know-how and experience, they will make sure you have the best protection, information, and outcome.
So, for us, hiring an excellent Realtor is a no-brainer. The right Realtor will help you find your ideal property and do everything in their professional power to get the deal done once you’ve found it. Their expertise, experience, and efficiency will likely define your experience of buying a Florida vacation home.
For example, their knowledge of the micro-markets, rental incomes, and market costs within your chosen area is critical to your decision-making process. Additionally, their advice on how to proceed in every stage of the process, skills in negotiating to your advantage, and responsibility to steward the entire process until the deal closes, are all factors in optimizing a positive buying experience here in Florida.
Finding people you trust is critical to the process. Do your due diligence on them thoroughly, and then follow their advice or guidance. Once you find people you trust, you have to be prepared to defer to their expertise and experience. You need to place your trust in the experts you hire to get the best outcome.
3) Do Your Research
Knowledge of the market, rental markets, communities, and sales data can make all the difference between an investment that works, and one that doesn’t. It is critical that your Realtor is well versed in the areas and opportunities available to you and has all the data on hand to help you make the best choice. They can help you learn about the differences between different zip codes, communities, and even streets.
When you begin looking for holiday homes in Florida to buy you should have this knowledge to hand, so you know if what you’re looking at is over-priced, under-valued, or un-rentable. Your Realtor should provide you with a Competitive Market Analysis (CMA) to make sure you understand the market. You should also be aware of the most desirable properties for rental in the area – typically, we’ve found 4-5 bedroom homes, with private pools and at least 3 baths are at the top of vacationers’ wish lists.
However, one caveat: always remember to trust your gut, too. Even if all the numbers add up if you just feel something’s not right about a home, trust that instinct. No matter the deal or price incentive offered, if it isn’t right for you, it isn’t right. Period!
4) Spend a Bit Up Front for Protection
In our eyes, it’s better to spend a bit of money up front to make sure you are protected in all aspects according to your unique financial situation. A few hundred dollars with a tax accountant and financial adviser you trust — who is impartial — can mean that you know your exact financial, tax, and estate situation, and exactly what you can afford and may be liable for.
We say that with the additional note that Florida has some very favorable income tax laws, and good estate planning can mean your estate remains intact down the road.
Schedule a free 20 minute video conference with Lee to talk about real estate investment opportunities. Just select a day that fits you on the sidebar.
