For those traveling on vacation or looking for a new home, Florida continues to rank among the top US vacation and real estate destinations. Florida was among the top 5 states that Americans would relocate to in 2021, according to United Van Lines’ 45th Annual National Movers Study, making investing in Florida’s rental markets a sound decision for real estate investors.
We anticipate that this pattern of movement will persist in 2022 as a result of people’s continuing priorities shifting in response to the ongoing pandemic. The finest Florida rental markets this year are about this size since they are relocating to smaller, middle-sized towns and cities. Investors in real estate will be able to quickly find an affordable house in the Sunshine State and rent it out.
Florida is not only the nation’s favorite vacation spot, but it also consistently rates as the best state for real estate investment. The Sunshine State checks all the right boxes when it comes to those crucial supply-demand variables. Discover five compelling reasons to invest in Florida’s rental markets this year by reading on.
5 Reasons for Investing in Florida’s Rental Markets
1. Florida’s Economy and Fiscal Stability
Florida was placed #10 in terms of economy and #8 in terms of fiscal stability by US News & World Report when compared to the rest of the nation. When resources and measures are put in place to lessen possible economic crises and smooth out the unavoidable fluctuations in the economy, fiscal stability is at its peak. Florida’s liquidity score of 5.8 is the main factor behind this. The national average is 2.5, so that is more than twice as much.
With 1.9 percent year-over-year job growth compared to the national average of 1.2 percent, Florida ranks third nationally in terms of job growth. Additionally, Florida’s job growth rate increased three times quicker than the rest of the country in September 2021 as a result of the COVID-19 outbreak.
By the end of 2022, according to economists’ predictions, Florida will have a pre-pandemic level of employment. As more people leave their jobs paying less than the minimum wage in favor of higher-paid ones, wages are rising quite quickly as a result. Although Florida’s top rental markets for traditional rent may not be as competitive as those in other states, the state’s excellent yields and consistent cash flow make up for it.
Living expenses
Florida still has a low cost of living despite being one of the most well-liked vacation and retirement locations in the US. Florida’s cost of living is only 1% more expensive than the rest of the country. Those who were residing in pricey locations would relocate here if they could (e.g. remote workers). However, this does not imply that they will purchase a home. Therefore, investing in rental property in Florida to accommodate these newcomers is a fantastic opportunity.
Quality of Living
Florida is renowned for many things, including its warm temperature, fascinating culture, delectable cuisine, and enormous diversity. The excellent weather, with temperatures ranging from 60 to 81 degrees Fahrenheit, enables locals and visitors to take advantage of the numerous recreational opportunities the state has to offer.
2. Effective job creation
Another crucial element of an economy is the production of jobs, which is also a significant driver of the demand for real estate. Florida outperforms the US in terms of employment as well. This year, there should be 2.8 percent more employment available than the national average, and another 3 percent is predicted for 2019.
With the growth of job opportunity in Florida, the real estate demands increases as the employment is the key factor. Florida is a pioneer in the contemporary employment scene and ranks fifth nationally for low unemployment, which is one of the workforce areas with the quickest growth rates. The positive population influx due to job opportunities makes investing in Florida’s rental markets a decision which can yield positive returns in the years to come.
Florida’s Workforce Is Competitive
Florida has one of the best labor markets in the country and the world. The following highlights demonstrate why Floridians are among the best:
- Florida was named first in the nation for innovation by Fast Company.
- Florida is ranked #5 nationwide for high-tech jobs by TechAmerica Cyberstates.
- The third-largest workforce in the country is found in Florida.
- There are about 10.5 million civilian workers in Florida. Put into perspective, that is more people than Switzerland and almost as many as there are in Sweden.
- More than 6.5 million people speak a foreign language in Florida (30.3 percent of the total population)
3. Florida’s population and business growth
Demand for real estate is boosted by population expansion, and the greatest places to invest exhibit steady population growth. This is unquestionably the situation in Florida, where population growth of 430,000 new inhabitants in 2017 and a further 4.7 percent growth this year are predicted. By 2023, when the Sunshine State will be home to 23.3 million people, analysts predict that the population of Florida will have increased by approximately 11 percent.
Miami currently has the sixth-fastest population growth countrywide. To put things in perspective, Miami did not even rank among the top 50 fastest-growing areas in the US from 2000 to 2010. Additionally, Miami is ranked 18th for pay growth (+3.3 percent per year) and among the best in the country for business growth since 2010 (+2 percent per year), both of which are higher than the national averages of 0.7 percent and 1.9 percent, respectively.
Rising earnings and a growing population are two factors that help every region’s economy get a boost. These elements work together to build a strong foundation for Florida’s retail market growth going forward.
Expanding tourism
Florida’s economy is based largely on tourism, and the state is one of the most well-liked vacation spots in the world. The Sunshine State experienced its best quarter ever for tourism between January and March of this year, following record years in both 2016 and 2017. An anticipated 32.3 million travelers selected Florida for their vacation, an increase of 7.4% from the same time in 2017. Domestic tourists increased by 8.5%.
A state’s robust tourism industry serves as an incentive for investment. Holiday rentals have great potential for profit, especially in popular tourist destinations like Orlando or anywhere along the beautiful Florida coastline.
Strong real estate market
Florida had its 75th consecutive month of rising real estate prices in March of this year. Florida condo and townhouse properties increased by 7% to US$183,000 while single-family homes increased by 8.2% to reach a median of US$250,800.
Inventory levels are under a great deal of stress due to the persistently strong demand. For single-family homes, they were at 3.8 months’ supply in March, while for condominiums and townhomes, they were at 5.9 months. Another sign of the booming interest in house purchases is the approximately 10% decrease in the average amount of time a property spends on the market.
4. Excellent choice of a location
Florida is a great place to invest in real estate for a variety of reasons, including the property options. The state offers a wide variety of residences, from condos in resort communities to opulent villas near the beach. Particularly in the suburbs of the major metro areas, single-family homes are frequently the most sought-after type of property. Or you could purchase land in Florida and construct a house there.
Affordable housing
The reduced cost of real estate in Florida compared to other US states is one of the major advantages of doing so. While property values in some parts of the nation have risen above 2007 highs, they are still below those levels in most of Florida.
Florida real estate is also reasonably priced. The Florida land market is robust as the state continues to be a wonderful place to own land, according the 2018 edition of Coldwell Banker’s Lay of the Land Market Report. The report’s conclusion is that “property in the path of expansion will prove to be a fantastic investment” and that “the market to find and develop land for new residential communities will continue to be robust.”
Enormous rental market
Florida provides investors very reasonable pricing, but homebuyers themselves cannot benefit from this. Many first-time buyers are unable to enter the market due to strict mortgage requirements and/or a lack of savings. You have a healthy market for rentals when you combine this with the strong tendency of relocating to places with the best employment markets.
Orlando, Tampa, and Jacksonville, three major metro areas in Florida, are currently in high demand for long-term rental homes. As a result, Florida provides significant potential for returns on buy-to-let investments.
Multitasker
Everyone is drawn to Florida because of its miles of beaches, nice year-round climate, and robust economy. For the second consecutive year, Chief Executive magazine ranked it as the second-best state in the US to conduct business in 2018. Florida ranked eighth in Kiplinger’s 2018 Where to Retire index. The fact that there is something for everyone leads to high demand for real estate everywhere.
Simple to reach
The last but equally significant factor on our list of reasons to invest in Florida is accessibility. Many airports in the state offer regular flights to both domestic and international locations. As a result, the state’s tourism industry grows and, as a result, so does the market for vacation rentals. It also becomes simpler to visit if you decide to buy a second house to live in yourself.
5. Multiple Financing option for Florida rental property
Loans from traditional banks
Contrary to a Federal Home Administration (FHA), U.S. conventional mortgages must adhere to rules established by Fannie Mae or Freddie Mac.
20% of the home’s purchase price is typically required as a down payment when using traditional financing.
With a traditional bank, both your ability to be approved and the type of interest rate that will be applied to the mortgage depend on your individual credit score and credit history.
Future rental income is not taken into account when determining a borrower’s debt-to-income ratio (DTI), and most lenders require borrowers to have at least six months’ worth of savings set aside to pay both mortgage commitments.
Hard money loans
While hard money loans are traditionally short term loans, hard money lenders in Florida such as 14th Street Capital also give out long term rental loans with flexible amortization options at attractive interest rates which make it a great choice for real estate investors in Florida looking to build or grow their rental portfolio.
A hard money loan may be easier to qualify for than a conventional loan, which is a benefit of using one to finance a house flip. While factors like credit and income are still taken into account by lenders, the profitability of the property remains their main priority.
Private loan funding
Private money loans are advances made to individuals. Attending local real estate investing networking events is an excellent way to find private money lenders.
Based on the relationship among the lender and the borrower, the actual loan terms and interest rates on private money loans can vary greatly, from exceedingly beneficial to predatory. These loans are often protected by a legal agreement that gives the lender the right to foreclose on the property if you fall behind on your payments.
Use of Home Equity
A fourth approach to acquire an investment property is to draw on the equity in your home through a home equity loan, home equity line of credit (HELOC), or cash-out refinance. Most of the time, you can borrow up to 80% of the equity in your house to put toward buying, renovating, and maintaining an investment property.
Depending on the sort of loan you select, using equity to finance a real estate transaction offers both advantages and disadvantages. For instance, with a HELOC, you can borrow money against the equity just like you would with a credit card, and frequently, you simply pay interest each month. The rate is typically variable, though, so it might go up if the prime rate does.
Florida’s 5 Best Rental Markets
It has been demonstrated that Airbnb’s produce a larger return on investment than do conventional rentals. To assist out-of-state investors who want to diversify their portfolio in this state, we only included markets on this list that permit non-owner-occupied Airbnb’s. However, we advise you to confirm if you can set up a short-term rental in the region with the local government or HOA.
1: Crestview, Okaloosa County
Rental income from Airbnb: $4,272
Return on Airbnb Cash: 8.02 percent
Daily Price for Airbnb: $124
83 percent of available rooms on Airbnb
Property median price: $390,347
Days on Market: 50 Average Selling price per Square Foot: $185 Walk Score: 57
Since its great temperatures in comparison to the rest of the state, Crestview, the main city in Okaloosa County, is sometimes referred to as the “Icebox of Florida.” It is situated where the Yellow and Shoal Rivers converge. People travel to this region to visit their loved ones who are stationed at Eglin Air Force Base, in addition to notable tourist attractions like the Emerald Coast Zoo, Panhandle Opry, and artisan distilleries.
2: Citrus Springs, Citrus County
$3,236 in Airbnb rental income
Return on Airbnb Cash: 7.45 percent
$187 per night on Airbnb, with a 60% occupancy rate.
Property median price: $280,104
Days on Market: 82 Average Price per Square Foot: $152
Walk Rating: 21
In Citrus County, which includes Citrus Springs, you can find restorative springs, magnificent scenery, and fascinating aquatic life. Year-round tourism is maintained in the area by the consistently pleasant weather. The best activities in the area for outdoor enthusiasts are kayaking, biking, and snorkeling. Citrus Springs is traversed by the 46-mile Withlacoochee State Trail, a popular biking route.
3: Seffner, County of Hillsborough
$3,692 in Airbnb rental income
Return on Airbnb Cash: 7.40 percent
$224/day for Airbnb, with a 66 percent occupancy rate
Property median price: $411,518
Days on Market: 31 Average Price per Square Foot: $285
Walk Rating: 29
After World War II, many of the population of Seffner, a municipality in Hillsborough County, relocated to Tampa, which is situated 13 miles to the west, turning it into a sleepy Florida hamlet. The Florida State Fair and Hard Rock Casino Tampa are nearby, and it is known for its casinos and gardens. Although Seffner is not as well-known as other Florida tourist spots, people travelling to Kissimmee or Sarasota may choose to stop here on their way there.
4: Clay County, Orange Park
$3,820 in Airbnb rental income
Return on Airbnb Cash: 7.11 percent
Daily Price on Airbnb: $197
61 percent of available rooms on Airbnb
Property median cost: $350,985
Days on Market: 49 Average Price per Square Foot: $171
Walk Rating: 62
For tourists seeking to get away from the hectic pace of the city, Orange Park in Clay County offers a tranquil respite. Tourists can plan their travels to coincide with a number of the town’s community events, such as the Fall Festival. Meanwhile, the two-day Kids’ Fest is a great event for families with young children because it offers entertaining family-friendly activities.
5: Volusia County’s Lake Helen
$3,086 in Airbnb rental income
Return on Airbnb Cash: 7.05 percent
$113 per night on Airbnb, with a 64% occupancy rate.
Property median price: $331,483
$199 is the average price per square foot.
54 days on the market
Walking Index: 49
One of the few places in Volusia County where you can list a short-term rental (under 30 days stay) is Lake Helen, a city known as the “Gem of Florida” Time in this city flows slowly, allowing visitors to unwind and take in the lush, swampy scenery, despite the fact that it is only a 30-minute drive from Orlando. Parks, country clubs, and fair events are among the outdoor pursuits available in and around the city.
Bottom Line
Florida is an excellent area to live or visit because of the wonderful temperature, limitless activities, and low cost of living. As a result, the Sunshine State should be taken into account if you are a real estate investor seeking for a fresh investment opportunity. We hope that our list of Florida’s top 4 rental markets may aid in the beginning of your quest.
14th Street Capital, a seasoned lender, will assist you in obtaining a hard money loan for non-owner occupied buildings. Simple asset-backed hard money loans ensure that you have access to the funding you need despite having a low credit score, being self-employed, or a history of foreclosure. These loans have flexible terms and no extensive paperwork. Get in touch with us to begin making real estate investments right away.