Wondering if buying a house in Florida is profitable? This covers everything about the topic as well as the best places for investment.
Table of Contents
- What Makes Florida an Attractive Investment Location
- Best Places to Invest in Florida Real Estate for Long Term Rentals
- Best Places to Invest in Florida Real Estate for Short Term Rentals
Purchasing real estate properties for short-term or long-term investment can be a rewarding experience. But like any other business venture, you need to know how to play your cards right; otherwise, you’ll end up frustrated. Successful investors in the Sunshine State share one thing in common—they know where to find the best places to invest in real estate in Florida.
Although finding the right location is key to profitable real estate investing, you also need to put in a lot of hard work. You are expected to do a lot of research to know which property will give you your desired profit. Honing your marketing skills can be beneficial when you’re ready to put your property on the market for rentals.
If you are looking to invest in real estate and are ready to put your heart into it, now is a good time to start looking for the best places to invest in real estate in Florida.
The Florida real estate market flourished in 2022 and is one of the most profitable in the US. It is expected to continue driving Florida’s economy in 2023, despite the expected rise in prices and low inventory spurred on by the high demand for houses.
In this article, we will guide you in choosing between long term and short term rentals and assist you in looking for the best places to invest in real estate in Florida.
What Makes Florida an Attractive Investment Location
Despite rising home prices in recent years, the Florida housing market predictions show no indications of slowing in the near future. Whether you want to invest in a rental property, a vacation house, or relocate to Florida permanently, now is the time.
Before making a Florida real estate investment, let’s take a look at why real estate in Florida remains attractive and how the factors influence real estate trends in 2023.
Vacation Way of Life
Florida is often regarded as one of the most pleasant and relaxed states in the United States. While the state is still extremely successful in commerce and trade, tourism is its main draw. Florida is home to several big theme parks, the most well-known of which is Disney World.
The vacation feeling, on the other hand, can be felt across the state. Whether you’re drinking coffee or going for a walk down the street, Florida’s way of life is very different from the rest of the state. This makes it an ideal spot to unwind, rest, and start a family in peace.
Cultural Diversity
Florida is a state with a wide range of cultures. Many individuals move to Florida from other regions of the country, and the state is packed with people from all over the world. This implies that in Florida, you’ll be able to experience and taste languages from all around the world.
This variety also demonstrates the state’s embrace of other cultures. This is why people from different backgrounds feel at ease when they relocate to Florida. Whether you’re visiting or relocating to Florida, Floridians are among the friendliest and most welcome individuals in the country.
A Shift in Lifestyle Preferences
The pandemic has changed the meaning of “home” for most people. A home is no longer just a place for sleeping and storing clothes and furniture. Being forced into spending more time at home has made people seriously think about where they want to stay.
This new mindset has led many to relocate to Florida, known for its warm climate, natural sceneries, theme parks, and relaxed tax laws, increasing the demand for residential properties.
Florida’s Real Estate Market
In recent years, the Florida housing market has experienced rapid expansion. This is because individuals are flocking to Florida in historic numbers in search of a better way of life. While prices vary widely between places in Florida, the median property price in the state is $625,492, according to Mashvisor’s December 2022 data.
If you’re considering investing in real estate, you should consider the rate of return on your investment before making any big decisions. According to Mashvisor’s December 2022 data, the cash on cash return for long term rentals in the state averages 4.04%.
Florida’s Affordability
The fact that the state does not gather personal income tax is the largest savings someone may expect if they relocate to Florida. This implies that simply going to Florida can save you hundreds of dollars every year.
Florida is one of a few states in the country that produces enough revenue from the commercial industry to avoid collecting personal income tax.
Although the state does not charge personal income tax, the cost of living in Florida is also low. Many expenditures are cheaper than the national average, allowing you to enjoy a nicer life in Florida than in many other regions of the country.
The median cost of living in Florida is roughly $43,615 per year. This equates to approximately $9,255 for housing, $6,675 for healthcare coverage, $3,693 for food, $580 for gas and electricity, and approximately $23,413 for miscellaneous personal costs. This indicates that the typical person in Florida spends roughly $3,635 every month.
Wages and Workforce
The workforce in Florida is highly qualified, technically proficient, culturally and linguistically diversified, and recognized for its outstanding work ethic. Globally renowned academic institutions and cutting-edge scientific and technological courses make it simple to discover the skilled workforce required by practically any type of organization.
Meanwhile, labor expenses in Florida are extremely competitive. This is especially when compared to other top-tier business destinations in the United States and most major economies.
Look for Waterfront Homes in the Best Places to Invest in Real Estate in Florida in 2023
Best Places to Invest in Florida Real Estate for Long Term Rentals
The shift to work-from-anywhere and distance learning modes have afforded people to move where they really want to live. This shift has led residents from other parts of the country to move to Florida, which provides investors more opportunities for long term rental.
Long term rental assures you of a fixed monthly income for the duration of the lease. The tenant will also be responsible for paying the utilities, so you need not worry about the monthly bills.
Related: Estimate Rental Value In 6 Easy Steps
If you’d like to have more time for yourself, then investing in a long term rental might be for you. This is because the lease lasts for a month up to a year.
There are downsides to it, though. If you need to convert your property into cash, you cannot do so until the lease with your current tenant expires. If you are unlucky to have a tenant who does not care about maintaining the property, you could be spending so much on the property’s upkeep.
Worse, your tenant could be a neighborhood bully, and dealing with them and alleviating the situation might pose a challenge.
Looking for the best rental market in Florida is no easy task, but there is hope. If you want to know where to find the best investment properties in Florida, Mashvisor’s data can easily provide you with the answer.
The data below, coming from various reliable sources, is a result of Mashvisor’s December 2022 Florida real estate market analysis. The long term cash on cash return used in our analysis was applied to develop the following list (from highest to lowest), showing you where to buy property in Florida.
1. Vero Beach
- Median Property Price: $734,654
- Average Price per Square Foot: $339
- Days on Market: 94
- Number of Long Term Rental Listings: 658
- Monthly Long Term Rental Income: $2,592
- Long Term Rental Cash on Cash Return: 4.30%
- Long Term Rental Cap Rate: 4.36%
- Price to Rent Ratio: 24
- Walk Score: 78
Start searching for profitable long term rental properties in Vero Beach, FL.
2. Naples
- Median Property Price: $992,412
- Average Price per Square Foot: $529
- Days on Market: 88
- Number of Long Term Rental Listings: 1,660
- Monthly Long Term Rental Income: $3,986
- Long Term Rental Cash on Cash Return: 3.62%
- Long Term Rental Cap Rate: 3.66%
- Price to Rent Ratio: 21
- Walk Score: 29
???? Explore Available Investment Properties in Naples
3. North Miami
- Median Property Price: $771,038
- Average Price per Square Foot: $421
- Days on Market: 60
- Number of Long Term Rental Listings: 269
- Monthly Long Term Rental Income: $3,155
- Long Term Rental Cash on Cash Return: 3.43%
- Long Term Rental Cap Rate: 3.47%
- Price to Rent Ratio: 20
- Walk Score: 52
4. Lantana
- Median Property Price: $903,306
- Average Price per Square Foot: $439
- Days on Market: 69
- Number of Long Term Rental Listings: 112
- Monthly Long Term Rental Income: $2,672
- Long Term Rental Cash on Cash Return: 3.35%
- Long Term Rental Cap Rate: 3.41%
- Price to Rent Ratio: 28
- Walk Score: 65
5. Tampa
- Median Property Price: $594,095
- Average Price per Square Foot: $411
- Days on Market: 95
- Number of Long Term Rental Listings: 1,665
- Monthly Long Term Rental Income: $2,444
- Long Term Rental Cash on Cash Return: 3.34%
- Long Term Rental Cap Rate: 3.39%
- Price to Rent Ratio: 20
- Walk Score: 46
???? Explore Available Investment Properties in Tampa
6. Punta Gorda
- Median Property Price: $647,447
- Average Price per Square Foot: $316
- Days on Market: 107
- Number of Long Term Rental Listings: 370
- Monthly Long Term Rental Income: $2,713
- Long Term Rental Cash on Cash Return: 3.29%
- Long Term Rental Cap Rate: 3.33%
- Price to Rent Ratio: 20
- Walk Score: 14
7. Melbourne
- Median Property Price: $481,727
- Average Price per Square Foot: $277
- Days on Market: 77
- Number of Long Term Rental Listings: 617
- Monthly Long Term Rental Income: $2,037
- Long Term Rental Cash on Cash Return: 3.26%
- Long Term Rental Cap Rate: 3.31%
- Price to Rent Ratio: 20
- Walk Score: 73
8. Pompano Beach
- Median Property Price: $729,416
- Average Price per Square Foot: $479
- Days on Market: 72
- Number of Long Term Rental Listings: 927
- Monthly Long Term Rental Income: $2,879
- Long Term Rental Cash on Cash Return: 3.13%
- Long Term Rental Cap Rate: 3.18%
- Price to Rent Ratio: 21
- Walk Score: 39
9. West Palm Beach
- Median Property Price: $712,559
- Average Price per Square Foot: $460
- Days on Market: 79
- Number of Long Term Rental Listings: 1,667
- Monthly Long Term Rental Income: $2,828
- Long Term Rental Cash on Cash Return: 3.13%
- Long Term Rental Cap Rate: 3.19%
- Price to Rent Ratio: 21
- Walk Score: 46
10. Miami
- Median Property Price: $810,450
- Average Price per Square Foot: $636
- Days on Market: 80
- Number of Long Term Rental Listings: 8,439
- Monthly Long Term Rental Income: $3,277
- Long Term Rental Cash on Cash Return: 2.94%
- Long Term Rental Cap Rate: 2.97%
- Price to Rent Ratio: 21
- Walk Score: 56
???? Explore Available Investment Properties in Miami
Are you interested in searching for profitable long term rentals in Florida? Start here.
Related: How to Calculate the Occupancy Rate for Rental Properties
Best Places to Invest in Florida Real Estate for Short Term Rentals
Florida remains a popular vacation destination for Americans and foreigners alike. The state continues to draw vacationists like a magnet because of its tropical climate, scenic spots, and tourist attractions. Although the tourism industry in Florida went to a halt in 2020, it rebounded these two years, attracting a total of over 97 million visitors from January to September 2022.
The number of visitors from other parts of the US, which went up by almost 60% YOY, helped boost the state’s overall tourist arrivals. Overseas visitors in Q3 also went up by around 85.5% in comparison to 2021.
Similarly, the job scene in Florida offers several opportunities for businesses, increasing business travels to the Sunshine State. International companies are now operating at several locations all over Florida, bringing in more than $150 billion for the state.
The influx of vacationists and transient business people provides plenty of opportunities to earn through short term rental investment strategy.
Short term rentals offer higher income because you can charge twice the average long term rental rate, especially if your property is in a prime vacation location. And the bonus? If your family needs a vacation place, you can use your rental property to save on the cost of paying for a hotel.
Are you interested in investing in short term rentals? Check out the list below for some of the best cities to invest in real estate in Florida, based on Mashvisor’s December 2022 real estate data. The list is organized by the highest to the lowest short term rental cash on cash return.
1. Brandon
- Median Property Price: $405,206
- Average Price per Square Foot: $245
- Days on Market: 69
- Number of Short Term Rental Listings: 120
- Monthly Short Term Rental Income: $3,567
- Short Term Rental Cash on Cash Return: 5.38%
- Short Term Rental Cap Rate: 5.45%
- Short Term Rental Daily Rate: $167
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 74
Start searching for profitable short term rental properties in Brandon, FL.
2. Inverness
- Median Property Price: $317,473
- Average Price per Square Foot: $203
- Days on Market: 68
- Number of Short Term Rental Listings: 129
- Monthly Short Term Rental Income: $2,620
- Short Term Rental Cash on Cash Return: 5.25%
- Short Term Rental Cap Rate: 5.36%
- Short Term Rental Daily Rate: $168
- Short Term Rental Occupancy Rate: 54%
- Walk Score: 32
3. Ft. Pierce
- Median Property Price: $808,460
- Average Price per Square Foot: $259
- Days on Market: 104
- Number of Short Term Rental Listings: 198
- Monthly Short Term Rental Income: $2,623
- Short Term Rental Cash on Cash Return: 5.19%
- Short Term Rental Cap Rate: 5.32%
- Short Term Rental Daily Rate: $172
- Short Term Rental Occupancy Rate: 50%
- Walk Score: 66
4. Palm Bay
- Median Property Price: $336,657
- Average Price per Square Foot: $210
- Days on Market: 77
- Number of Short Term Rental Listings: 134
- Monthly Short Term Rental Income: $2,840
- Short Term Rental Cash on Cash Return: 5.09%
- Short Term Rental Cap Rate: 5.18%
- Short Term Rental Daily Rate: $142
- Short Term Rental Occupancy Rate: 52%
- Walk Score: 45
5. Winter Haven
- Median Property Price: $333,617
- Average Price per Square Foot: $186
- Days on Market: 81
- Number of Short Term Rental Listings: 113
- Monthly Short Term Rental Income: $2,832
- Short Term Rental Cash on Cash Return: 5.01%
- Short Term Rental Cap Rate: 5.10%
- Short Term Rental Daily Rate: $137
- Short Term Rental Occupancy Rate: 63%
- Walk Score: 74
6. Lakeland
- Median Property Price: $373,746
- Average Price per Square Foot: $213
- Days on Market: 71
- Number of Short Term Rental Listings: 194
- Monthly Short Term Rental Income: $3,014
- Short Term Rental Cash on Cash Return: 4.76%
- Short Term Rental Cap Rate: 4.84%
- Short Term Rental Daily Rate: $134
- Short Term Rental Occupancy Rate: 55%
- Walk Score: 36
7. Sweetwater
- Median Property Price: $475,800
- Average Price per Square Foot: $350
- Days on Market: 79
- Number of Short Term Rental Listings: 525
- Monthly Short Term Rental Income: $3,507
- Short Term Rental Cash on Cash Return: 4.66%
- Short Term Rental Cap Rate: 4.71%
- Short Term Rental Daily Rate: $181
- Short Term Rental Occupancy Rate: 51%
- Walk Score: 82
8. Crystal River
- Median Property Price: $403,874
- Average Price per Square Foot: $270
- Days on Market: 70
- Number of Short Term Rental Listings: 195
- Monthly Short Term Rental Income: $2,891
- Short Term Rental Cash on Cash Return: 4.65%
- Short Term Rental Cap Rate: 4.73%
- Short Term Rental Daily Rate: $199
- Short Term Rental Occupancy Rate: 50%
- Walk Score: 51
9. University Park
- Median Property Price: $607,548
- Average Price per Square Foot: $354
- Days on Market: 16
- Number of Short Term Rental Listings: 406
- Monthly Short Term Rental Income: $4,514
- Short Term Rental Cash on Cash Return: 4.46%
- Short Term Rental Cap Rate: 4.51%
- Short Term Rental Daily Rate: $171
- Short Term Rental Occupancy Rate: 54%
- Walk Score: 69
10. Sebring
- Median Property Price: $309,484
- Average Price per Square Foot: $189
- Days on Market: 74
- Number of Short Term Rental Listings: 116
- Monthly Short Term Rental Income: $2,278
- Short Term Rental Cash on Cash Return: 4.33%
- Short Term Rental Cap Rate: 4.42%
- Short Term Rental Daily Rate: $129
- Short Term Rental Occupancy Rate: 52%
- Walk Score: 69
Are you ready to search for profitable short term rentals in Florida? Start here.
Related: 5 Steps to Conducting an Accurate Rental Market Analysis
Conclusion
We expect that by the end of 2023, the days on market will have greatly grown. It will take significantly longer to sell a home than consumers have been accustomed to during the last two years. This is a fantastic opportunity for both buyers and sellers. If you’ve been waiting for a sign to take action, this article is it.
Moreover, new citizens and business relocations from high-tax urban areas such as New York are driving demand for South Florida real estate. While increasing home prices are bad news for many homeowners, they are fantastic news for rental property investors, assisting in explaining why rental expansion and demand are so strong in South Florida.
However, you need to arm yourself with the right investment tools to find the best places to invest in Florida real estate. Whether you are looking for Florida investment properties for sale or the best place to buy a rental property in the state, Mashvisor’s real estate market analysis and investment property analysis will help you get there.
Start out your 7-day free trial with Mashvisor now to search for and analyze houses in Florida for sale.