Florida’s housing market has recovered dramatically from the market downturn in 2008. In some regions, prices have exceeded pre-recession peaks, proving once again that investing in vacation homes and even primary housing in the Sunshine State is a solid strategy to grow your asset portfolio.
Data from the National Association of Home Builders indicates that about 6 percent or 7.4 million housing units are second homes. Not surprisingly, Florida has the highest number of second homes, accounting for about 15 percent of the total volume of non-homestead houses.1
Why Florida is a Preferred Vacation Destination
There are many reasons why Florida is the traditional and popular destination for those wanting to add vacation property to their portfolio.
Year-round temperate weather
With mild weather most of the year, everyone can enjoy their preferred outdoor activity whether it is biking, boating, golfing, birdwatching or beach-hopping. A second home in Florida makes it possible to escape harsh winter conditions.
Waterfront property
With a coastline of 1,350 miles, beaches are accessible no matter where you are in the Florida peninsula. When you factor in the lakes, rivers and manmade ponds that seem to define every development, a large number of properties have water views, which is a welcome feature for vacation homes.
Property taxes
The average effective property tax rate in Florida is 1.02%, which is slightly below the U.S. average and definitely much lower than other states.2 The rate varies depending on the county and city, so this is a factor worth watching.
Availability of amenities and services
Tourism remains one of the state’s main industries, and the infrastructure and services are designed to accommodate part-time residents and vacationers. Property management companies abound to maintain, secure and market vacation properties. Utilities and other services offer packages for part-time residents.
Popular destination
It bears repeating that Florida is a popular vacation destination, which is an advantage if you are considering renting out your vacation property.
Factors to Consider when Choosing Vacation Property
For many real estate investors, buying a second home is the first foray into investing in housing. The primary home is typically purchased to fit the individual or family’s basic requirements such as proximity to schools, workplaces and other amenities. Choosing a vacation home may be less restrictive, but do not lose track of the financial and economic considerations of owning investment property. Here are some questions you should ask prior to buying Florida investment property.
- Do you intend to rent out the property? How many weeks in a year will the property be available as a rental?
Rental income can pay part of the mortgage and maintenance costs.
- What are the zoning regulations in this area that may affect your ability to use the property as a short-term or long-term rental?
Be clear about what you can and cannot do with your investment property as many communities restrict short-term rentals.
- How do you intend to manage the property remotely?
It is best to have a professional property manager who can handle maintenance and marketing while serving as the emergency contact.
- Do you have a business plan for managing this investment asset?
The business plan should include your income expectations, operational budget, tax planning for rental income and return on investment calculations so that you can monitor if and when it may be time to sell.
- Is the housing market stable?
Aside from rental income, you want to make sure that home values are stable or increasing so that you are not left upside down on your Florida investment property.
Factors that may affect home values include the local economy, demographic shifts, legislative and zoning changes and infrastructure development.
Best Florida Cities for Investing in Vacation Homes
Miami
A report prepared by the Miami Urban Future Initiative shows strong business growth for Miami, ranking eighth among all large metro areas in the U.S. The region’s economic strength is based on robust activity in tourism, agriculture, international trade, transportation health sectors.3
With a strong economy, Miami’s housing market is expected to remain strong, cementing its ranking as the third most active market in Florida. Investor participation will continue to be high in 2019 especially among foreign investors.
Property values rose by 4.6 percent in 2018, and some slow down is expected although the luxury market will remain stable.4 Numerous high-performing schools in the Miami area help boost property values. Investing in vacation homes in Miami will pay back in various ways, including equity growth due to increasing property values, rental income and your enjoyment of the property. Check out available investment properties in Miami at Auction.com.5
Tampa
Home prices may be cooling in the Tampa metro area as experts predict a slowdown in price increases. The local economy will remain strong with unemployment at 4.8 percent, which is lower than the national average. Job growth is expected to reach 1.6 percent on a year-over-year basis, and construction activity is still accelerating as the downtown area undergoes a major face-lift.6 Transportation and telecommunication infrastructure projects indicate regional growth as more corporations move to the area to take advantage of the business-friendly, low-tax and no-income tax environment.
Tampa vacation properties are as diverse as the area. You can find beachfront properties, family homes in gated communities with all amenities included or quiet retreats surrounded by nature. The listings on Auction.com should give you a sense of the potential for Florida investment properties.
Jacksonville
Jacksonville has the largest population in all of Florida. It has experienced rapid growth in the last decade with jobs growth rate at 2.1 year-to-year comparison, which is higher than the national average of 1.6 percent.7 Its economic base is changing due to the drawdown of military presence in the area. Technology, finance and healthcare companies are among the high-growth sectors in Jacksonville.
This metro area is expected to be one of the hottest housing markets in the next few years. Median home values are expected to rise by 12.6 percent, indicating great potential for investments in Jacksonville vacation properties.8 Browse the listings of available properties on Auction.com to see what the city has to offer.
Orlando
The job market in Orlando is expected to expand by 2.5 percent while its unemployment rate is at 3.9 percent, which is much lower than the national average.9 Tourism plays a big part in its economic strength, but the hospitality, finance, education and technology sectors have boosted growth as well.
Median home values grew by 10 percent on a year-to-year comparison.10 Investing in Orlando vacation homes will ensure that you have a place to stay even during the peak season for Disney parks. Find your Orlando vacation home by browsing the listings on Auction.com
Florida will always be a top vacation destination for domestic and international visitors. A Florida investment property makes sense because it is a desirable location for vacations, affordable properties are plentiful and there is tremendous profit potential from renting or reselling down the road. Start searching for your dream vacation home on Auction.com.
Sources:
1 Nation’s Stock Of Second Homes
Zhao – http://eyeonhousing.org/2018/12/nations-stock-of-second-homes/
2Tax-rates.org – The 2017 Tax Resource
http://www.tax-rates.org/florida/property-tax
4,5 The Miami Housing Market Forecast For 2019 | Mashvisor
https://www.mashvisor.com/blog/miami-housing-market-forecast/
6 https://www.bestplaces.net/economy/city/florida/tampa
7 https://www.bestplaces.net/economy/city/florida/jacksonville
8 Key Jacksonville Real Estate Market Trends For 2019 | Mashvisor
https://www.mashvisor.com/blog/jacksonville-real-estate-market-trends/
9, 10 https://www.bestplaces.net/economy/city/florida/orlando
