Should I Own a Vacation Property or Second Home in Florida?
With all that Florida has to offer, a second home in Florida might not only be a great place to vacation, but could also be a smart investment. There are a number of cities and towns in Florida that are always ranked among the top places to purchase a second home.
Depending on what’s important to you and your family, there is little doubt that there is a place in Florida that you can find a great second home. With interest rates still at historically low levels, now could be the perfect time to purchase that vacation property or second home for your family.
Why is Florida a Preferred Vacation & Second Home Destination?
In 2011 it was estimated that Florida had more than 100 million domestic visitors and millions of visitors from out of the country, making it one of the most popular vacation destinations in world.
Why is Florida a popular place to visit?
- Great Weather
- Outstanding Annual Festivals and Events
- Historic Sites
- Outstanding Dining and Nightlife
- Amazing Golf Courses
- Nature Experiences and National Parks
- Great Shopping
- Home of the World’s Busiest Cruise Ports
- Unique Sporting Events
- Fishing, Diving and Water Sports
- Amazing Hotels and Resorts
- World Class Theme Parks
- Some of the Worlds Best Beaches
Learn more by reading our post: 13 Reasons to Vacation in Florida This Year.
Questions to Ask When Considering a Vacation Property
There are a number of things to consider when buying a vacation property or second home. Following are some of the questions you should ask before moving forward.
Where in Florida should I buy a second home or vacation property?
Florida has a number of great places to own a second home or vacation property but before you decide where start your search, there are a number of locational factors to consider:
- Do I want to be close an airport which has a large number of flight options?
- Is being near the beach a prerequisite? What about a golf course or marina?
- Should I chose a quiet location versus one with more things to do?
- Is having a low maintenance home important?
- Is renting the property a consideration? (ie. Airbnb, VRBO, etc).
- What amenities am I seeking? (ie. private pool vs community pool, country club community, etc)
- Do I want to be near shopping, dining and entertainment centers?
Top Florida Destinations for Second Homes
- West Palm Beach – Boca Raton
- Greater Orlando
- Greater Fort Lauderdale
- Miami-Dade County
- Naples – Fort Myers
- St. Petersburg – Clearwater Beach
- Panama City Beach
- Destin – Pensacola Beach
- Cocoa Beach – Melbourne
- Jacksonville Beach – Ponte Vedra – St Augustine
How much time will my family personally use the home?
How much time you and/or your family will spend at the home is one of the most critical questions that need to be answered. If you plan on just using the property for a short time during the course of a given a year, then it may just make sense to rent either a home or just use one of Florida’s many hotel options. If you plan on making multiple trips or visit for weeks /months at a time, then a vacation property or second home could be right for you.
Beyond just how much time you and your family will spend at this property is the reasons why you want to have a second home or vacation property.
- Spend more quality time with family.
- Enjoy longer term or seasonal stays
- Host weekend getaways for friends.
- Allow friends and family use of your home.
- Take a last minute trip with limited packing
What type of property should I look for?
Typically there are three types of properties that you can choose from:
- Single Family Homes: If you want space and privacy, a single family home may just be the way to go. There are no neighbors up or below you and you don’t share walls with anyone. There are also personal amenities like a private pool and patios which are more typical in a single family property. However, with all things being equal (location, quality, size), single family homes are more expensive than other property types and there is the added costs of maintenance including landscaping, repairs and on going maintenance.
- Condominiums: If low maintenance is your preference for your vacation or second home, then a condominium might be the right way to go. Typically in most condominium communities a monthly or quarterly fee is assessed to each individual homeowner for the maintenance of the common areas, amenities, building insurance and exterior maintenance. Some can also include water/sewer, trash removal, cable television and internet service in their fees. Additionally, condominium communities can have more extensive amenities than a traditional single home including resort style pools, clubhouse rooms, tennis / sports courts and more. In exchange for all these benefits, you surrender the ability to make decisions entirely on your own as most condominium since the community will have a “Board of Directors” that will make decisions impacting the property. In addition, you will be in close proximity to neighbors so privacy and noise concerns could be a consideration.
- Townhomes and Villas: With a townhome or villa you get the feel of a single family home with the low maintenance lifestyle and share amenities of a condominium. Typically townhomes & villas are either single or two-stories so there are no neighbors above or below you, but you can share a common wall. Exterior and common area maintenance is also typically handled by the community for a monthly or quarterly fee.
Depending on your preference as well as your budget, there will be a number of different options for you to choose when finding that perfect vacation property or second home.
Will I Want to Rent My Vacation Property or Second Home?
Renting your vacation or second home does require some level of commitment to being a landlord and does depend on home much time you will occupy the property. Even when hiring a full-time property/rental manager, there are a number of additional considerations that will impact your decision.
- What can I expect for rental income?
- How will renting impact my personal usage (rental term).
- Will I use a local leasing and property management agent (maintenance, cleaning, repairs, etc).
- Does local zoning codes and association regulations allow for short term rentals? (Not all cities and / or homeowners associations allow for homes to be rented on a short term basis).
- Will the mortgage lender allow me to rent the home?
- Where will myself and my family put our personal “stuff” when renting to an unknown tenants?
- Am I fine with additional “wear and tear” on my home?
- Do we want “strangers” staying in our home?
If you can answer those questions and are comfortable renting the property, there are a number of options available for you to do so.
Since all real estate markets are local in nature and Florida is no different, there is the option of engaging a vacation rental management company. They can market & lease the property for you on your timetable as well as coordinate cleaning and general property management services. There are a host of reputable companies and a quick on-line search will provide a number of results. If this is the route you choose, carefully interview the provider and check some of their references to see how they have serviced clients in similar situations.
Another option is to handle the rental management yourself. Technology has done amazing things to the vacation rental market and it continues to evolve every side day. With the advent of web sites like Airbnb, VRBO (Vacation Rental By Owner), HomeAway, HomeToGo, Flipkey and more, it has never been easier to attract tenants for your vacation or second home. If you choose to do it yourself, make sure you are carefully screening those who use your property as well as the service providers that perform the cleaning and maintenance.
What is my budget for a second home or vacation property?
There are two “costs” to be aware of when purchasing a second home or vacation property. The first of the two is the initial purchase costs which will include your purchase price, closing costs, furnishing expenses and other “set up” costs.
- The Purchase Price or what you are paying for the home is likely the most significant costs.
- Closing costs include title insurance, recording fees, lender fees (if applicable), etc.
- Unless you purchase a fully furnished property (which are available in the market at this time), you will need furnishings for your bedrooms, living / family rooms, dining areas, kitchen utensils & plates, linens (towels, bedding, etc), televisions and more.
- Set up fees include deposits for insurance and utilities as well as any necessary repairs, improvements or upgrades you want to make to your new property like new paint, carpet/flooring, bathroom improvements, a modern kitchen, etc.
The second “cost” is your on going expenses which could include:
- Utilities will include electric service, water/sewer, gas, etc.
- Maintenance – lawn and landscaping maintenance, pool service, pest control, etc.
- Association Fees which could monthly or quarterly (if applicable)
- Property Insurance – hurricane insurance is not cheap and is must, this is Florida after all.
- Property Taxes in Florida typically range from 1.5% from 2% of value but there are not any homestead protections on vacation properties and second homes.
- Repairs – roof, mechanical systems (appliances, hot water heaters, air-conditioning units).
Like owning any home or property, there will be the need to have money available on a regular basis to effectively manage these expenses. Whether it is from rental revenue that is used to offset your costs or if you will just pay from your current income, you should make sure that you are fully prepared to address all the expenses that come with owned a second home or vacation property.
Can I finance my second Home or Vacation Property?
The short answer is yes there are a number of available options which you can utilize to finance your second home or vacation property but that is highly dependent on your current financial status. Interest rates are still at historically low levels so the cost of financing your new property will be quite low.
Most lenders will, at a minimum, evaluate your credit, verify the amount and assess the quality of income & assets as well as appraise the property to confirm its value. Down payment requirements will vary but for second homes or vacation properties, they can range from as low as 10% to as high as 35% of the purchase price. Typically a 20% to 25% down payment would be a fair estimate for a size of a down payment. There are a number of lenders that specialize in second / vacation home financing and a quick on-line search will give you a very large list of names.
If you plan to rent out your property you should be aware that in the eyes of a lender, there is a significant difference between a “second home” and an “investment property”. However under new guidelines established by Fannie Mae, requirements for second home properties are as follows:
- Must be occupied by the owner/borrower for some portion of the year.
- Restricted to a single unit dwelling
- Suitable for year-round occupancy
- The owner/borrower must have exclusive control over the property.
- Must not be a rental property or timeshare arrangement.
- Cannot be subject to any agreements that give a management firm control over the occupancy of the property.
Below you will find a mortgage calculator which will assist you in calculating a monthly payment on your second home or vacation property.
Will My Second Home or Vacation Property Go Up in Value?
While it is possible that your second home or vacation property will go up in value, it would be prudent to not make that a major factor into your decision. Since the recession in 2007/2008, generally speaking overall property values in Florida have continued to climb with substantial appreciation but that does not include all markets and in all communities.
The following chart published by Florida Realtors shows the trend in the average sale prices are all properties throughout the State of Florida.
How to Get Started in Buying a Second Home or Vacation Property?
To help our audience with finding the perfect vacation property or second home, Endless Summer has affiliated with Quantum Realty Advisors, Inc. (“Quantum”) which is a licensed Florida real estate company that has been in business since 1998. Quantum has successfully assisted buyers & sellers of properties on hundreds of transactions throughout the State of Florida as well as in a number of major markets throughout the United States.
From less than $500,000 to more than $5 million, the Quantum team will be happy to assist with your vacation home buying process and can be reached at 561.584.8555
Quantum Realty Advisors, Inc
4440 PGA Boulevard, Suite 308
Palm Beach Gardens, FL 33410
Quantum’s experienced real estate advisors will take the time to discuss exactly what your are looking for in a vacation home as well your what will fit into you budget. And when you are ready to begin, they will be with you every step of the way. Click here to learn more.