There are many ways to start a career in real estate investing, and buying a vacation home might be the easiest one of them.
Buying a second home provides you not only with a homey experience in your favorite location during your annual vacation but also with the opportunity to rent it out for the rest of the year to start making money in real estate investing. Not to mention the tax deduction benefits which you can enjoy from owning a vacation home.
When talking about vacations, Florida is definitely a top location in the US housing market. However, the Sunshine State is so vast and so diverse that it is not enough to just say that you should buy a second home in Florida.
You as a real estate investor also have to know which the best places to buy a vacation home in Florida are. Just keep reading and you will figure out soon which the best places to buy a vacation home in Florida are.
How Do We Define the “Best Places to Buy a Vacation Home in Florida”?
To be clear from the start, we first have to define what we mean when we say the “best places to buy a vacation home in Florida”. Since we are talking about renting out a second home or a vacation home, we should be thinking about Airbnb as the optimal rental strategy.
An Airbnb rental will allow us to use our investment property as a location for our own vacation each and every year while also allowing us to rent it out for the time of the year when we are not there. A traditional rental simply cannot do the job.
Before deciding to invest in an Airbnb rental property, read our blog “Four Things to Consider Before Purchasing an Airbnb Investment Property”.
Second, since we are talking about the “best places to buy a vacation home in Florida” to use as an Airbnb rental, we should look at the Airbnb return on investment – or profitability – which various locations across the Sunshine State offer.
There are many real estate metrics which measure the profitability of rental properties including rental income, capitalization rate (or cap rate, for short), cash on cash return (or CoC return, for short), etc. Here, when searching for the best places to buy a vacation home in the Florida real estate market, we will focus on the Airbnb cap rate as the most popular metric of profitability in real estate investing.
What Is Cap Rate?
Quickly, before we start exploring the best places to buy a vacation home in Florida, let’s go over what is cap rate. Cap rate (or capitalization rate) is the net operating income (NOI) of an investment property over the current market value of the rental property.
Every real estate expert and even some novices will point out the one big disadvantage of the cap rate as a measure of profitability in real estate investments. The cap rate does not take into account the method of financing (all in cash or mortgage) when calculating the return on investment.
Realistically speaking, very few real estate investors manage to buy rental properties all in cash, so the method of financing is an important factor when it comes to return on investment.
However, it is also very specific to each and every real estate investor’s case what proportion of the investment property will be paid in cash and what through a mortgage. Thus, using the cap rate simplifies things. Using the cap rate is a straightforward way to decide which place is better than the rest.
Since we are talking about cap rate, we have to ask another important question before we move to the best places to buy a vacation home in Florida: What is a good cap rate for investment properties? Well, most real estate experts would tell you that anything above 8-12% is a good cap rate.
However, we have to be realistic. The world of real estate investing has become so competitive that anything above 5-6% in terms of a cap rate is excellent.
What Data Do We Use?
In our ranking of the best places to buy a vacation home in the Florida housing market based on Airbnb cap rate, we use data computed by Mashvisor’s investment property calculator.
Mashvisor’s rental property calculator uses traditional and predictive analytics to provide accurate and reliable estimates of the expected rental income, rental expenses, cap rate, cash on cash return, and occupancy rate for both Airbnb rentals and traditional rentals.
Thus, this real estate investing tool eliminates the need to conduct complicated and tiresome real estate market analysis and investment property analysis.
What Are the Best Places to Buy a Vacation Home in Florida?
To answer this question, let’s take a look at the most profitable locations for buying and owning a second home across the Sunshine State, those which offer the highest Airbnb cap rate according to Mashvisor’s rental property calculator:
To start your free 7-day trial with Mashvisor to find the best investment properties in Florida, click here.
1. Lake Worth
- Median Property Price: $83,000
- Airbnb Rental Income: $1,560
- Airbnb Cap Rate: 10.6%
- Airbnb Cash on Cash Return: 10.6%
- Airbnb Occupancy Rate: 51.6%
- Traditional Rental Income: $950
- Traditional Cap Rate: 2.3%
- Traditional Cash on Cash Return: 2.3%
Lake Worth is #1 among the best places to buy a vacation home in Florida, according to data from Mashvisor’s investment property calculator. The expected Airbnb cap rate is excellent, mostly as a result of the highly affordable property prices.
Lake Worth is a city in Palm Beach County in Florida, which lies on the Lake Worth Lagoon. Lake Worth is home to a vibrant Florida community, which makes it an ideal place for spending your vacation and thus a top location for owning an Airbnb rental property.
2. Briny Breezes
- Median Property Price: $152,000
- Airbnb Rental Income: $1,880
- Airbnb Cap Rate: 8.2%
- Airbnb Cash on Cash Return: 8.2%
- Airbnb Occupancy Rate: 37.5%
- Traditional Rental Income: $1,300
- Traditional Cap Rate: 3.9%
- Traditional Cash on Cash Return: 3.9%
Briny Breezes is the second among the best places to buy a vacation home in Florida. This small coastal community is comprised of less than 500 mobile homes but still offers excellent Airbnb cap rate, a result of affordable median property price and high Airbnb rental income. If you are looking for a non-typical location to buy a rental property, Briny Breezes might just as well be the right place for you.
3. Weeki Wachee
- Median Property Price: $250,000
- Airbnb Rental Income: $2,760
- Airbnb Cap Rate: 8.1%
- Airbnb Cash on Cash Return: 8.1%
- Airbnb Occupancy Rate: 59.5%
- Traditional Rental Income: $1,410
- Traditional Cap Rate: 3.1%
- Traditional Cash on Cash Return: 3.1%
#3 in our ranking of the best places to buy a vacation home in Florida according to data from Mashvisor’s rental property calculator is Weeki Wachee. Before you decide to buy an investment property there to spend your vacations and to rent out on Airbnb, you should know that in 2016 this location has a population of 13!
Still, it’s an excellent place if you wonder where to invest in real estate for high Airbnb cap rate in the Sunshine State.
4. Port Richey
- Median Property Price: $130,000
- Airbnb Rental Income: $1,720
- Airbnb Cap Rate: 7.9%
- Airbnb Cash on Cash Return: 7.9%
- Airbnb Occupancy Rate: 54.3%
- Traditional Rental Income: $840
- Traditional Cap Rate: 2.2%
- Traditional Cash on Cash Return: 2.2%
If, on the other hand, you are looking for a location which is a bit bigger for your next real estate investment, you could consider Port Richey, the fourth among the best places to buy a vacation home in Florida for Airbnb cap rate.
The benefits of investing in real estate in Port Richey also include affordable property prices, which makes it an ideal location for beginner real estate investors who don’t have much cash to buy an investment property yet.
If you are wondering what were the top locations to invest in an Airbnb rental property in Florida around the same time last year, read our blog “The 7 Best Places to Buy a Vacation Home in Florida”.
5. Holiday
- Median Property Price: $132,000
- Airbnb Rental Income: $1,610
- Airbnb Cap Rate: 7.9%
- Airbnb Cash on Cash Return: 7.9%
- Airbnb Occupancy Rate: 42.7%
- Traditional Rental Income: $940
- Traditional Cap Rate: 2.8%
- Traditional Cash on Cash Return: 2.8%
Another location you could consider for buying a rental property is Holiday. After all, Holiday just sounds as the right place to have a second home and an Airbnb rental property. No wonder it is among the best places to buy a vacation home in Florida. Once again, it is very affordable in terms of property prices, while the Airnbb rental income is high enough to result in an excellent Airbnb cap rate.
6. Brandon
- Median Property Price: $230,000
- Airbnb Rental Income: $2,840
- Airbnb Cap Rate: 7.5%
- Airbnb Cash on Cash Return: 7.5%
- Airbnb Occupancy Rate: 60.7%
- Traditional Rental Income: $1,410
- Traditional Cap Rate: 2.4%
- Traditional Cash on Cash Return: 2.4%
If you are looking for a bigger location to invest in real estate in the Sunshine State, Brandon might be the right place for you. It is #6 among the best places to buy a vacation home in Florida according to data from Mashvisor’s rental property calculator, in terms of Airbnb cap rate. While the median property price is a bit higher in Brandon than in the previous locations in our ranking, so is the Airbnb rental income as well.
7. Kissimmee
- Median Property Price: $240,000
- Airbnb Rental Income: $2,850
- Airbnb Cap Rate: 7.4%
- Airbnb Cash on Cash Return: 7.4%
- Airbnb Occupancy Rate: 70.8%
- Traditional Rental Income: $1,380
- Traditional Cap Rate: 1.4%
- Traditional Cash on Cash Return: 1.4%
What makes the Kissimmee housing market one of the best places to buy a vacation home in Florida to rent out as an Airbnb rental is its proximity to amusement parks. Both you and your Airbnb hosts would like to have some fun during your vacation in the Sunshine State.
Thus, it is worth paying a bit more when buying an investment property in Kissimmee as the Airbnb rental income will compensate for this. Moreover, Kissimmee offers the highest Airbnb occupancy rate of all locations in our ranking.
8. St. Augustine
- Median Property Price: $420,000
- Airbnb Rental Income: $3,300
- Airbnb Cap Rate: 7.3%
- Airbnb Cash on Cash Return: 7.3%
- Airbnb Occupancy Rate: 59.5%
- Traditional Rental Income: $1,550
- Traditional Cap Rate: 1.9%
- Traditional Cash on Cash Return: 1.9%
St. Augustine could just as well be the oldest city in the US. It offers beautiful Spanish colonial architecture as well as sandy and tranquil Atlantic Ocean beaches. That’s the perfect combination for the ideal vacation, right? No wonder St. Augustine is one of the best places to buy a vacation home in Florida.
9. Panama City
- Median Property Price: $225,000
- Airbnb Rental Income: $2,290
- Airbnb Cap Rate: 7.2%
- Airbnb Cash on Cash Return: 7.2%
- Airbnb Occupancy Rate: 45.8%
- Traditional Rental Income: $1,020
- Traditional Cap Rate: 1.8%
- Traditional Cash on Cash Return: 1.8%
When you think about vacation in the Sunshine State, you think about long white-sand beaches, seafood, marina, amusement parks, and dolphins. Well, Panama City real estate has it all, and that’s why it is last – but not least – on our list of the best places to buy a vacation home in Florida to rent out on Airbnb.
Once you’ve settled on which city to invest in real estate in Florida, read our blog “How to Find the Best Investment Property Using a Heatmap”.
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Is Airbnb Legal in Florida?
Since we are talking about Airbnb rentals here, we have to address the issue of whether Airbnb is legal in Florida. Generally speaking, Airbnb rentals are legal in Florida though various restrictions apply in some locations. Moreover, this year promises to see further adjustments in the Airbnb regulations in Florida, so interested real estate investors have to keep up with news in this regard.
Florida is definitely a top choice for spending your vacation as well as for investing in real estate, which makes it such a great location for buying a vacation home. It’s hard to decide on just a few of the best places to buy a vacation home in Florida because there are many excellent locations for buying an investment property to rent out on Airbnb.
If you are thinking of investing in real estate in Florida, you don’t have to limit yourself to the 9 places above; you could also consider Daytona Beach, Tamarac, Largo, Miami, and others.
To start exploring the best neighborhoods in your city of choice to buy a vacation home in Florida, click here.