Almost 113 million travelers visited Florida in 2016, and about 60 percent of them visit the greater Orlando area. The numbers have consistently increased year after year, with Orlando being the number one tourist destination in the US. And while the abundance of hotels and resorts do quite well, domestic and international tourists also flock to vacation rental homes in Florida.
By choosing the right Florida vacation rental property, you can enjoy an additional income stream to support your visits to the sunshine state. If you’re new to this investment strategy, take a look at the tips below. Missteps can be costly so educate yourself on the process and work with industry professionals to ensure successful and stress-free US property ownership.
How to make the most of your Vacation Home Investment Property
- Don’t just choose a popular location; choose a location you like. You’re better positioned to market and manage an investment property in a place you know and appreciate. Plus, you’ll have the option to use the property yourself when visiting.
- Buy rental properties in reliable growth regions. Investment properties are a long-term game. Market fluctuations and so-called “bust-and-boom” cycles affect all property everywhere, but as long as there’s net growth over the years, you should come out ahead.
- Make sure you can rent out your rental property. Most municipalities and homeowners associations (HOAs) in Florida have laws and rules about renting out property, especially on a short-term basis. And in some places, it’s prohibited.
- Pick property close to shopping centers. Tourists who opt for a vacation home over a hotel want to spend time at the house, enjoying the privacy and amenities, even preparing some of their own meals. Easy access to shopping in an unfamiliar area is appreciated.
- Purchase a vacation home with a pool and other amenities. As just mentioned, short-term tenants want to enjoy themselves in the home. A pool is a must in Florida. Sun decks, grill stations and other outdoor features such as hot tubs and well-appointed kitchens are other in-demand amenities for Florida vacation homes.
- Don’t buy by size alone. Yes, the bigger the home, the more you can charge renters. However, that doesn’t necessarily mean it’s more profitable. The bigger the home and lot, the more your mortgage, property taxes, upkeep, and maintenance are likely to cost. Research average rates for comparable properties in the immediate area and compute costs to determine how much of the year you’ll need the vacation home booked to turn a profit.
- Buy the right property type for the right local rental demographic. Orlando is a major family destination, creating demand for multi-bedroom, multi-bathroom single-family homes. In a place like Naples, older couples may prefer cozy condos or apartments that are walkable to the beach downtown’s shopping and dining.
- Consider skipping the fixer-uppers. A home needing significant work can be a great deal, and shouldn’t necessarily be ruled out. However that work takes time (and often more than the projected budget). An income property needs renters as soon as possible. The unpredictability of renovations makes it hard—if not impossible—to book the home until everything is finished.
- Favor homes with simple construction. Vacation rental homes are booked primarily on the appeal of their location and amenities. Special construction, architectural, and design details that make a home unique are less important for this use and they can be particularly difficult and expensive to repair or replace, so usually aren’t worth it according to a cost-benefit analysis.
- Get professional guidance. Choosing the right Florida vacation home investment properties involves complex monetary calculations and carries considerable risk. A qualified professional helps you pick the best properties for meeting your goals, obtain the best financing, understand all the tax implications of your purchase, and ultimately minimize your costs and risk.
