Guide to Buying Vacation Rental Property in Florida

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One of the finest methods to make money and accumulate wealth in real estate is to invest in vacation rental properties. According to recent data, North American Airbnb hosts made a total of $14.2 billion in total revenue in 2019. Gross sales decreased to $12.6 billion in 2020 as a result of travel bans and orders to stay at home brought on by the coronavirus. Nonetheless, the short-term rental market is anticipated to significantly recover in 2021 with the availability of the Covid-19 vaccines and the reopening of economies.

The Florida housing market has traditionally been one of the best places to purchase a vacation house to rent out. There are several benefits, including the popular Florida vacation locations and tourist attractions, the influx of visitors, the somewhat low cost of real estate, and the friendly Airbnb regulations.

Why Florida is a preferred location for a vacation rental?

Florida is a well-known and preferred location for people looking to expand their vacation rental portfolio for a variety of factors.

Stable weather all year long

Everyone can enjoy their favorite outdoor activity, whether it’s bicycling, boating, golfing, birdwatching, or beach hopping, thanks to the moderate weather that prevails for the majority of the year. It is feasible to avoid harsh winter weather by having a second house in Florida.

Inheritance fees

Florida has an average effective property tax rate of 1.02 percent, which is significantly lower than other states and just slightly below the national average.

This is a topic worth paying attention to because the rate changes depending on the county and city.

Services and amenities are accessible.

The infrastructure and services are set up to support temporary inhabitants and tourists, even if tourism is still one of the state’s major industries. There are many firms that care for, protect, and advertise vacation homes. Packages are available for part-time residents from utilities and other services.

Waterfront real estate

Beaches are reachable from anyone on the Florida peninsula thanks to its 1,350 miles of coastline. Many properties offer water views, which is a great feature for holiday homes, especially when you take into account the lakes, rivers, and artificial ponds that seem to characterize every development.

Favored location

Florida is a well-liked vacation destination, which is beneficial if you’re thinking about renting out your vacation home.

What to think about when purchasing a Florida vacation rental

The third-most populated state in the US, Florida is called the Sunshine State. Airbnb’s in Florida continues to draw in millions of visitors each year thanks to its immaculate beaches, safe weather, and variety of attractions. Disney World, the Kennedy Space Center, Clearwater Beach, Universal Studios, the Salvador Dali Museum, and the Ringling, SeaWorld Orlando are a few of the state’s well-known tourist destinations. According to VisitFlorida.org, 86.7 million visitors traveled to Florida in 2020, a 34% decrease from the previous year. However, it’s anticipated that the figures will increase dramatically in 2022, leading to a tremendous demand for short-term rentals.

Florida has been one of the US states with the most lenient regulations regarding short-term rentals. Local governments are now not able to enact legislation that forbids Florida vacation houses. However, make sure to visit regional government sites to keep up to date on just about any changes in the laws before purchasing homes in Florida to rent out on Airbnb or other services.

Using hard money loan in Florida

You might take into account alternatives including a cash-out refinance,  private lenders, home equity line of credit (HELOC), and real estate partnerships when applying for a vacation home loan to buy a home in Florida. Be aware that lenders frequently want a higher credit score and a greater down payment. Additionally, compared to principal properties, vacation homes often have higher loan rates.

Real estate investors can employ hard money loans in Florida as short-term financing options for investment projects. This kind of loan is frequently a tool for real estate developers and home flippers whose objective is to develop or restore a property, then sell it for a return. Private lenders rather than traditional financial organizations like banks make hard money loans.

Hard money funding does not depend on the borrower’s creditworthiness, in contrast to conventional bank loans. Hard money lenders instead base their decision to approve a loan on the worth of the property itself. Lenders concentrate on the “after repair value,” or ARV, which is a projection of the property’s value following the completion of the remodeling or construction phase.

Best cities in Florida to invest in a vacation homes

The real estate markets in Florida remains to draw investors whether it is for a fix or flip project in Florida or investing in vacation rentals. Here are the top markets in Florida for real estate investors.

Miami

According to a research from the Miami Urban Future Initiative, Miami has had significant corporate expansion and is currently the eighth-largest metro area in the country. The vigorous activity in the tourist, agricultural, international trade, transportation, and health sectors is the foundation of the region’s economic strength. 

Miami’s housing market is anticipated to continue to be strong, solidifying its position as Florida’s third-most active market. 2019 will see significant levels of investment activity, particularly from international investors.

In 2018, there was a 4.6 percent increase in property values, and while a slowdown is anticipated, the luxury market will continue to be solid.

Property values in the Miami area are helped by a number of high-performing schools. Purchasing a vacation house in Miami will pay off in a number of ways, including rental income, equity gain through rising property values, and personal pleasure of the residence. 

Tampa

As experts anticipate a halt in price growth, home prices may be cooling in the Tampa metro region. With unemployment at 4.8 percent, which is lower than the national average, the local economy will continue to be robust. On an annual basis, job growth is predicted to be 1.6%, and the downtown area is undergoing a significant makeover, so building activity is still picking up speed. 6 As more businesses locate in the area to benefit from the business-friendly, low-tax, and income tax environment, transportation and telecommunication infrastructure developments show regional expansion.

The variety of vacation rentals in Tampa mirrors the city itself. Beachfront homes, houses for families in gated communities with all the facilities, and peaceful retreats amidst nature are all options. 

Jacksonville

Florida’s largest city, Jacksonville, has the most residents. It has expanded quickly over the past ten years, outpacing the national average of 1.6 percent with a jobs growth rate of 2.1 year over year. 7 Due to the reduction in military activity in the region, its economic foundation is changing. The high-growth industries in Jacksonville include those in technology, finance, and healthcare.

In the upcoming years, this metro area is anticipated to have one of the hottest property markets. There is a lot of potential for investing in vacation properties in Jacksonville as median property values are predicted to increase by 12.6%. 

Orlando

Orlando’s job market is anticipated to grow by 2.5 percent, despite the city’s unemployment rate, which is far lower than the national average at 3.9 percent.

Its economic prosperity is largely attributed to tourism, although it has also benefited from the hospitality, finance, education, and technology industries. On an annual basis, the median home value increased by 10%.

Purchasing a vacation home in Orlando will guarantee that you have a somewhere to stay, even during the busiest time of year for Disney parks. 

For both local and foreign tourists, Florida will always be a prominent vacation spot. A Florida investment property makes sense due to the state’s popularity as a holiday destination, the abundance of reasonably priced homes, and the enormous potential for future profit from rentals or sales.

You can get a hard money loan from 14th Street Capital, a seasoned lender, to purchase, restore, and then sell the property while flipping houses in Florida. Flexible terms and minimum documentation come standard on these quick, no-process hard money loans.