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Why Invest in Southwest Florida Real Estate Market

by Angela MooneyApr 2, 2022November 7, 2023

The Southwest Florida real estate market has been booming over the last few years, which led many investors to consider buying a property here.

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In general, the state of Florida has been known to be a lucrative location for investors and landlords alike. In particular, Southwest Florida has proved to be a hot spot real estate region within the state. From its proximity to high tourism rates to its growing job market, many things make its real estate market so strong. Keep reading to find out why you should invest in the Southwest Florida real estate market.

How Is the Real Estate Market Doing in Southwest Florida?

As of 2022, the Florida housing market especially in the Southwest region of the state has been performing exceptionally well. While many expected the value of homes to go down due to COVID-19, homes in Southwest Florida continue to appreciate. Additionally, investment homes and rental properties seem to be doing pretty well with both short-term renters and long-term tenants seeking a place to stay. With this, here are the main factors contributing to the flourishing Florida real estate market within the southwest cities:

1. Population Growth

Currently, the Southwest region of Florida is experiencing a boom in its population. With its steady growth of people residing in the area, Southwest Florida is projected to have 1.5 million inhabitants by 2025 from its current 1.3 million residents. Following previous trends, it can be expected that when the population in an area increases, the real estate market follows.

With more people in an area, there will be fewer options for available rentals and properties for sale. This means that prices will go up to control demand and regulate the dwindling inventory of properties. With this, Southwest Florida’s real estate market shifts to a seller’s market, providing investors a higher return on investment.

The Southwest Florida real estate market is welcoming new residents. This presents an excellent opportunity to investors who are looking to expand their portfolio with traditional rentals.

2. Property Appreciation

As mentioned above, when the population of an area goes, so does the value of properties in that location. Currently, the Southwest Florida real estate market is doing just that. It has been calculated that homes in the area have seen a 17.7% increase in median sale prices this year. Additionally, landlords have seen a shorter turnover when it comes to finding potential tenants.

It is expected for rental property listing to take a couple of weeks or even months to be rented out. However, Southwest Florida has been seeing a relatively fast turnover with rental contracts being signed just 12 days after being placed on the market. Not only does this mean that investors will start generating income faster, but they can also pass on maintenance costs like mortgages and HOA taxes to the tenant a lot sooner.

3. Taxes

Another thing contributing to the current state of the Southwest Florida market is its tax policies. While these taxes are not limited to the region alone, it does benefit from Florida’s low real estate taxes. The Florida real estate market boasts a 0.83% property tax, which is much lower than the national average of 1.07%.

Additionally, Florida has no personal income tax. This draws many people to the state and its different cities. With the low taxes bringing in more people, the real estate market all across Florida including the southwest is bound to appreciate.

4. Tourism

On average, Florida sees around 118 million tourists from all around the country as well as overseas. This drives up the short-term real estate market of the area in particular. While these tourists are spread out across the state, a good amount visits the southwest region due to its attractions. With Tampa Bay, Bonita Spring, and Coral Cape all located in Southwest Florida, the region can be considered a tourist hot spot. Due to this, vacation rental and short-term Airbnb rentals do extremely well in this area.

Is the Southwest Florida Real Estate Market Worth It?

Now that you know about the current climate of the Southwest Florida real estate market, it’s time to decide if it’s worth investing in. While it does seem to be promising based on the things mentioned above, there are some key factors to take note of. Here are some of the reasons you should buy an investment property in the Southwest region of Florida:

1. Increase in Property Demand and Value

With the increase in population, Southwest Florida is bound to see an increase in property demand and value. While the estimated increase of 200,000 people may not seem like an outrageous amount of people, that is a 13% increase in the region’s population. In terms of real estate, with every 1% increase in a location’s population, property values usually increase by 1.4% as well. This means that in just a couple of years investors will see a huge return on investment thanks to the influx of people in the area.

Taking this projection into consideration, investors may want to look into the buy and hold real estate strategy. With this strategy, Investors can buy a Florida investment property in the southwest region with the intention of owning it for more than a year. During this time, investors can rent and generate some income before selling their property. By holding it for over a year, not only will the investors gain rental income but they will also be able to sell for a much higher price due to the market value appreciation over time. For more real estate strategies and real estate statistics, sign up for Mashvisor’s investment tools today:

2. Employment Rate

In relation to population growth, Southwest Florida’s job market has shown to be growing as well. From 4.8% of its residences being unemployed only 4.6% of the population has been reported to be jobless this 2022. In the next coming years, this rate is projected to drop even further with more job opportunities coming in the area.

This only strengthens the Southwest Florida real estate market as more people will be coming in for work. With more people coming or staying in the area for job opportunities, they will surely need a place to stay. Additionally, with the strengthening of people’s spending power on rent, investors will be able to ask for higher rent without the risk of pricing their properties out of the rental market.

3. Income From Short-Term Rentals and Travelers

As mentioned earlier, tourism in Florida has been boosting short-term rental businesses in the Southwest Florida real estate market. If you are looking for an investment property with high returns, an Airbnb investment may be a more lucrative option for you in the southwest region. With the high number of tourists varying throughout the year, you can increase and decrease the property rental price depending on the season’s demand.

This can help you get the most money for your investment as you can regularly increase the price, unlike a traditional rental. If you are unsure about how much you should be charging try a rental property calculator to help you decide. A rental property calculator can help you keep up with the market trends of Airbnb and short-term rentals to ensure that you aren’t underpricing your property.

Which Southwest Florida Cities Should You Invest in?

An investment property in Tampa City, Naples, and Fort Mayers may be your first option. However, the biggest cities may not be the best places for investments depending on your real estate strategy. To truly know where you should invest, you will need to take into consideration key data points on the city’s real estate market.

Before investing in the Southwest Florida Real Estate Market, you should take note of the city’s average rental income, cap rate, cash on cash return, occupancy rate, etc. This will ensure that you make the best real estate decision for your investing goals. Here are some of the cities with the best rental markets in Southwest Florida for both traditional and Airbnb rental according to Mashvisor’s data:

Top 10 Cities in Southwest Florida for Traditional Rentals

These are the top 10 Southwest Florida cities for traditional rentals based on traditional cash on cash returns:

1. Rotonda West, Charlotte County

Monthly Traditional Rental Income: $3,594
Traditional Cash on Cash Return: 6.98%
Traditional Cap Rate: 7.14%
Price to Rent Ratio: 10
Number of Listings for Sale: 24
Median Property Price: $445,077
Average Price per Square Foot: $237
Days on Market: 32
Walk Score: 4

2. Venice, Sarasota County

Monthly Traditional Rental Income: $2,331
Traditional Cash on Cash Return: 3.83%
Traditional Cap Rate: 3.93%
Price to Rent Ratio: 19
Number of Listings for Sale: 76
Median Property Price: $526,335
Average Price per Square Foot: $348
Days on Market: 47
Walk Score: 22

3. Port Charlotte, Charlotte County

Monthly Traditional Rental Income: $2,051
Traditional Cash on Cash Return: 3.82%
Traditional Cap Rate: 3.93%
Price to Rent Ratio: 19
Number of Listings for Sale: 240
Median Property Price: $463,506
Average Price per Square Foot: $260
Days on Market: 70
Walk Score: 53

4. Placida, Charlotte County

Monthly Traditional Rental Income: $4,146
Traditional Cash on Cash Return: 3.61%
Traditional Cap Rate: 3.65%
Price to Rent Ratio: 22
Number of Listings for Sale: 6
Median Property Price: $1,069,985
Average Price per Square Foot: $491
Days on Market: 93
Walk Score: 18

5. Moore Haven, Glades County

Monthly Traditional Rental Income: $1,190
Traditional Cash on Cash Return: 3.08%
Traditional Cap Rate: 3.23%
Price to Rent Ratio: 32
Number of Listings for Sale: 6
Median Property Price: $451,217
Average Price per Square Foot: $430
Days on Market: 80
Walk Score: 27

6. Englewood, Sarasota County

Monthly Traditional Rental Income: $2,739
Traditional Cash on Cash Return: 2.93%
Traditional Cap Rate: 2.99%
Price to Rent Ratio: 33
Number of Listings for Sale: 52
Median Property Price: $1,069,403
Average Price per Square Foot: $477
Days on Market: 41
Walk Score: 65

7. Bradenton, Manatee County

Monthly Traditional Rental Income: $2,030
Traditional Cash on Cash Return: 2.91%
Traditional Cap Rate: 2.99%
Price to Rent Ratio: 26
Number of Listings for Sale: 190
Median Property Price: $642,438
Average Price per Square Foot: $333
Days on Market: 33
Walk Score: 47

8. North Port, Sarasota County

Monthly Traditional Rental Income: $1,796
Traditional Cash on Cash Return: 2.83%
Traditional Cap Rate: 2.90%
Price to Rent Ratio: 20
Number of Listings for Sale: 88
Median Property Price: $424,676
Average Price per Square Foot: $241
Days on Market: 52
Walk Score: 52

9. Palmetto, Manatee County

Monthly Traditional Rental Income: $1,965
Traditional Cash on Cash Return: 2.61%
Traditional Cap Rate: 2.66%
Price to Rent Ratio: 23
Number of Listings for Sale: 29
Median Property Price: $546,926
Average Price per Square Foot: $240
Days on Market: 40
Walk Score: 50

10. Longboat Key, Manatee County

Monthly Traditional Rental Income: $4,979
Traditional Cash on Cash Return: 2.70%
Traditional Cap Rate: 2.73%
Price to Rent Ratio: 26
Number of Listings for Sale: 14
Median Property Price: $1,577,850
Average Price per Square Foot: $745
Days on Market: 35
Walk Score: 35

Top 10 Cities in Southwest Florida for Airbnb Rentals

These are the top 10 Southwest Florida cities for Airbnb rentals based on Airbnb cash on cash returns:

1. Cape Coral, Lee County

Number of Airbnb Listings: 841
Monthly Airbnb Rental Income: $4,088
Airbnb Cash on Cash Return: 5.13%
Airbnb Cap Rate: 5.24%
Airbnb Daily Rate: $227
Airbnb Occupancy Rate: 70%
Number of Listings for Sale: 1,509
Median Property Price: $578,387
Average Price per Square Foot: $300
Days on Market: 72
Walk Score: 77

2. Palmetto, Manatee County

Number of Airbnb Listings: 68
Monthly Airbnb Rental Income: $4,225
Airbnb Cash on Cash Return: 5.11%
Airbnb Cap Rate: 5.21%
Airbnb Daily Rate: $215
Airbnb Occupancy Rate: 63%
Number of Listings for Sale: 29
Median Property Price: $546,926
Average Price per Square Foot: $240
Days on Market: 40
Walk Score: 50

3. Naples, Collier County

Number of Airbnb Listings: 736
Monthly Airbnb Rental Income: $6,374
Airbnb Cash on Cash Return: 4.21%
Airbnb Cap Rate: 4.27%
Airbnb Daily Rate: $318
Airbnb Occupancy Rate: 65%
Number of Listings for Sale: 935
Median Property Price: $1,274,364
Average Price per Square Foot: $598
Days on Market: 55
Walk Score: 29

4. Ellenton, Manatee County

Number of Airbnb Listings: 13
Monthly Airbnb Rental Income: $3,267
Airbnb Cash on Cash Return: 3.82%
Airbnb Cap Rate: 3.89%
Airbnb Daily Rate: $152
Airbnb Occupancy Rate: 63%
Number of Listings for Sale: 5
Median Property Price: $648,000
Average Price per Square Foot: $439
Days on Market: 45
Walk Score: 38

5. Clewiston, Hendry County

Number of Airbnb Listings: 17
Monthly Airbnb Rental Income: $2,331
Airbnb Cash on Cash Return: 3.70%
Airbnb Cap Rate: 3.81%
Airbnb Daily Rate: $156
Airbnb Occupancy Rate: 53%
Number of Listings for Sale: 15
Median Property Price: $335,180
Average Price per Square Foot: $210
Days on Market: 72
Walk Score: 72

6. Port Charlotte, Charlotte County

Number of Airbnb Listings: 191
Monthly Airbnb Rental Income: $2,465
Airbnb Cash on Cash Return: 3.45%
Airbnb Cap Rate: 3.55%
Airbnb Daily Rate: $145
Airbnb Occupancy Rate: 63%
Number of Listings for Sale: 240
Median Property Price: $463,506
Average Price per Square Foot: $260
Days on Market: 70
Walk Score: 53

7. Matlacha Isles, Lee County

Number of Airbnb Listings: 83
Monthly Airbnb Rental Income: $3,662
Airbnb Cash on Cash Return: 3.36%
Airbnb Cap Rate: 3.42%
Airbnb Daily Rate: $193
Airbnb Occupancy Rate: 48%
Number of Listings for Sale:17
Median Property Price: $731,706
Average Price per Square Foot: $341
Days on Market: 22
Walk Score: 15

8. Bonita Springs, Lee County

Number of Airbnb Listings: 259
Monthly Airbnb Rental Income: $4,076
Airbnb Cash on Cash Return: 3.31%
Airbnb Cap Rate: 3.37%
Airbnb Daily Rate: $197
Airbnb Occupancy Rate: 69%
Number of Listings for Sale: 301
Median Property Price: $731,043
Average Price per Square Foot: $387
Days on Market: 54
Walk Score: 70

9. Bradenton, Manatee County

Number of Airbnb Listings: 260
Monthly Airbnb Rental Income: $2,717
Airbnb Cash on Cash Return: 3.25%
Airbnb Cap Rate: 3.35%
Airbnb Daily Rate: $186
Airbnb Occupancy Rate: 57%
Number of Listings for Sale: 190
Median Property Price: $642,438
Average Price per Square Foot: $333
Days on Market: 33
Walk Score: 47

10. Placida, Charlotte County

Number of Airbnb Listings: 70
Monthly Airbnb Rental Income: $4,268
Airbnb Cash on Cash Return: 3.15%
Airbnb Cap Rate: 3.19%
Airbnb Daily Rate: $304
Airbnb Occupancy Rate: 41%
Number of Listings for Sale: 6
Median Property Price: $1,069,985
Average Price per Square Foot: $491
Days on Market: 93
Walk Score: 18

The Bottom Line

Overall the Southwest Florida real estate market has the potential to provide investors with lucrative deals to rental income. With the region’s population growth, rise in employment, and tourism rates, it has all the making of being a great investment if done right. While we have provided the top 10 cities to invest in, to make the most of what the Southwest Florida real estate market has to offer, investors should carefully analyze and choose which city or neighborhood offers them the best deal for their real estate strategy. By using Mashvisors real estate investment tools, investors can easily see which properties and areas in Southwest Florida they can invest in to make the most out of their real estate strategy. Sign up for Mashvisor and start your real estate investment journey today!

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