Have you ever stayed in a Florida vacation rental and dreamed of owning it? Maybe you’re thinking about escaping Michigan’s wintry mix right about now! If you owned a vacation home in Florida, you could visit whenever you want or use it as a rental property. What’s not to love?
Pros: Reasons to buy a second home in Florida
- A personal getaway. Owning a second home in a place with sandy beaches and welcoming weather is a win-win if you’re from Michigan. With 10 months of warm weather and few dips of daytime temps below 60, Florida is a great escape!
- Vacation rental income. Short-term rental income may be a great way to pay off the mortgage. Vacation rentals consistently outperform every other class of real estate, especially in Florida.
- Diversifying your investments. Florida home values have risen by about 80% over the past 5 years and a positive trend is forecasted for the next 5 years. Statewide home values have increase 14.2% last year according to Redfin. A Florida vacation home can be an asset that appreciates faster than your mutual funds.
- Retirement home with tax respite. If you’re looking to (eventually) retire in a place where Mother Nature doesn’t suffer wintry mood swings and there’s no tax, look no further. Florida doesn’t have a personal income tax, nor does it have an estate tax or an inheritance tax.
Cons: Considerations of buying a second home in Florida
- Housing Prices. The same appreciation factor that makes a Florida home a great investment also can make affordability an issue. However, increased interest rates have cooled the otherwise hot market slightly, making it more attractive for those with a long game in mind.
- Home security. Remember to consider who will watch over the home when you’re not there. This might require investing in security cameras, or hiring help for onsite checks and hurricane prep.
- Maintenance and property management. Someone needs to be responsible for making repairs and renting the home if it’s a rental, which could require extra time or money.
Financing a Second Home
Debt-to-income ratio, credit scores, and liquidity are crucial factors when financing a second home. By working with a strategic lender, you may be able to leverage your assets to achieve a strong ROI while readying a warm nest for a future “snowbird” flight!