Are you thinking about moving to southwest Florida, or spending your winters there? A lot of Americans—many of them retired, and referred to as “snowbirds”—head to the Cape Coral/Fort Meyers area to escape the cold winter months they experience in other parts of the country. Others visit for the warm, tropical climate and beautiful white sand beaches during the summer months when school is out.
Whether or not you are planning on staying there, southwest Florida is a great place to invest in real estate. There are plenty of visitors year round who are looking for a place to stay, whether seasonally or for longer periods of time.
Real estate prices are lower in this area than in many other areas in the state, and tourism has ignited a lot of new development. There are quite a few properties available at affordable prices especially in Cape Coral. Here is how you can go about purchasing an investment property in this popular area of the state.
Why Southwest Florida?
Southwest Florida is a beautiful place with warm weather all year. It also enjoys a lower cost of living than other areas of the state. The Cape Coral/Fort Meyers metropolitan area offers many amenities, great schools, recreation, and beachside living. The area is full of beautiful canals—Cape Coral has over 400 miles of canals, which is more than any other place in the world. Unemployment rates are low, and rental returns are high, making it a great place to rent out properties. Investing here can give you an opportunity to spend time in the beautiful sunshine state while also saving up funds for retirement or other financial goals.
Owning rental properties here can also offer some tax breaks if certain conditions are met. Some are eligible for a 1031 tax deferred exchange, which allows investors to defer taxes on capital gains from the purchase of the property. This exchange can be a significant advantage—as you search for your rental property to purchase, talk to your realtor and bank about this benefit to property owners.
What Types of Properties Are Available, and Which is Right for You?
Your choices are not limited to multi-family housing complexes that are rented out to tenants year round. Investments can take the form of a second home, vacation rental, or a traditional residential income property.
Depending on your budget, property purchase prices can be found within a wide range. Waterfront properties will be higher priced, of course. Cape Coral has some beautiful condos and single-family homes along the canals and beaches. Fort Meyers and Fort Meyers Beach also offer some spectacular vacation homes. If you are looking for a vacation home with a view, and have $300-400,000 to invest, then those properties may be right for you. If you are planning to rent out to working-class families, going inland a little, you will see lower prices closer to $100-200,000, but possibly have to do some renovations.
If you are planning on staying in the home yourself, you can consider purchasing a second vacation home. This can be a single-family home, condo, or townhouse. This has advantages over renting—you can build equity, and start paying down the principal now so that you can end up using the home as your permanent residence during retirement. It is wise to rent out the house when you are not there to offset operating expenses. Most property owners who do this opt to hire a property management company during the months the house is rented out, so they don’t have to worry about micromanaging things like lawn care and renter concerns.
If you don’t plan on living in the home at all, you can purchase a traditional rental property. Most are duplexes, triplexes, or fourplexes, but you can also purchase condos or single family homes to be used purely for renting. Some investors just own these rental properties and live elsewhere, while others also have a vacation property (above) and are in the area part of the time. As with renting out a vacation home, most investors will have a property management company handle their rentals if they are not in town.
Where to Look
There are quite a few ways to find homes for sale in the southwest Florida area. If you are computer savvy, there are many websites out there that list homes for sale and offer detailed photos and other stats about the home. Working with a trusted realtor from the area can be advantageous if you want the assurance that you are looking in the right places and at the right factors.
Websites like Trulia and Zillow are known real estate hubs where you can find properties for sale and rent across the country. Other websites of local real estate agencies will often list more properties in a niche market for a particular area. Property Management companies who specialize in managing properties in southwest Florida can also be helpful to contact—they’ll know the ins and outs of the market and have first-hand experience dealing with any issues that may come up when renting properties in that specific area but for a more personal and customized assessment of your needs, you may contact me or schedule a call with me using the form below.
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If you have a particular area in mind and are not able to find anything, it could be a good idea to be open minded and let a pro show you around. It could be that the place you had envisioned is actually not the best location to get the most return on your investment and that another property in a similar neighborhood could actually bring you a better positive cash flow.
Do’s & Dont’s of Buying An Investment Property in Southwest Florida
As noted above, many property owners opt to have a separate third party manage their buildings when they are away. Some may hire the company year-round, while others may live in the home part of the year and not need those services.
Wherever you buy, pay attention to any rules related to renting. Some gated communities and condominiums may have rules about how many times a year you can rent out the property, or if any animals are welcome. If you know before purchasing that you aren’t going to be able to comply with these rules—say you want to rent out your vacation home on a weekly basis in the summer but the condo association says you can only rent it out three times a year—consider purchasing another property that will offer you more flexibility.
If you are managing the property yourself, you will be responsible for everything from home maintenance to writing lease agreements to finding and screening tenants. There are many websites, both local and national, where you can list the property for rent. Be sure to thoroughly screen tenants and come up with a detailed lease so that there are no surprises, and residents are held accountable if they cause any damage to the home while they are there. Also, before deciding on a rent price, do your research and find out what other rentals go for in the area. You want to charge a price that is competitive but can also bring you a positive profit.
Overall, buying an investment property in southwest Florida can have many advantages. If you buy a property during your earning years before you retire, you can capitalize on the appreciation of the home and have a lot of equity built up before you turn it into your permanent residence. If you purely rent, you can continue building your wealth as long as you have a positive cash flow. Allow me to help you find and manage your investment property in SWFL. Get started now by filling the form below to schedule a call.
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