Florida has been booming recently, and more Americans are moving to the Sunshine State and buying homes. Many people are also buying second homes and vacation homes in Florida. A vacation home has many life-enriching benefits because it gives you a specific place to spend more time with family and friends and create new memories.
Before you take the plunge, you should understand all aspects of buying and maintaining vacation homes in Florida. Keep reading to learn the pitfalls of buying a vacation home in Florida, and if you have questions, speak to a Vero Beach real estate attorney in your area today.
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Pitfalls Of Owning A Florida Vacation Home
There are many good things about owning a Florida vacation home, but there are pitfalls to consider:
The Market Can Get Saturated
Florida is popular for investors, vacationers, and second homeowners. So, there can be a lot of competition for homes in Orlando, Miami, and various popular coastal communities. Competitors actively driving up prices can result in increased costs. Vacation rentals can saturate the market if you intend to rent the property when not there. Renting your vacation home at the price you want can be difficult.
If too many vacation properties are available in your area, getting renters can become intensely competitive, affecting your rental income and occupancy rates. Also, buying a vacation home in an oversaturated market can affect your property value. Having too many vacation homes in a certain community can cause property values to stagnate. Maintaining the property's condition may become critical to ensure it is competitive in the rental market. If you have an older vacation home that lacks certain modern amenities, it also may affect the rentability and value.
Not Knowing The Income It Can Produce
Many Florida vacation homebuyers assume they can make money on the property by renting it out when they aren't there. But 'renting a vacation home' and consistently making money doing so are different things. Many people get so excited about buying a vacation home in Florida that they neglect important homework, such as understanding what the property can produce in income minus expenses.
If you plan to rent the home when you aren't in residence, consider average occupancy rates, advertising costs, whether you will use a property manager, and upkeep and cleaning expenses. Consider all these factors on your calculator, as they determine if the property will generate income when you're not there.
It's common for vacation homeowners to overestimate their rental income, so carefully research and analyze the local rental market before signing a contract. Remember that every Florida paradise has high and low seasons, so you may have to drop your rental price when demand is low.
Risks Of Hurricanes
Hurricanes are a regular problem; these storms bring powerful winds, torrents of rain, and storm surges. Properties in the hurricane area can be severely damaged or even destroyed. Hurricane risks can bring several problems to vacation homeowners. Repairing or rebuilding your home from hundreds or thousands of miles away can be difficult and stressful.
Also, being prepared for hurricanes is a regular fact for Florida vacation homeowners. You must purchase storm-resistant items, such as heavy-duty windows and a stronger roof. You also should have a good evacuation plan ready. Being prepared for hurricanes can be expensive and complicate owning the home. Plus, your insurance premiums for hurricanes can be quite high, which adds to the cost of ownership. Be sure that you understand your insurance coverage and what the deductibles are. If a hurricane hits, you want to grasp your insurance fully so you'll know what to do if you need to file a claim.
Buying The Wrong Size
It's easy to fall in love with a location and a particular home; a low price may tempt some. But you should think carefully about whether the home fits your needs. Many homeowners regret buying when they discover the home is too big or too small for them. Consider how often people will use the home and buy accordingly.
Buying On Emotion
Many Florida vacation home investors decide after returning from vacation, 'That's it, we're going to buy our vacation dream home!' But if you do that, you are at least partially buying on emotion. Beware of doing that! You must do your full due diligence on any property you buy. Before signing a purchase contract, you must understand what you're getting into financially and logistically.
A common mistake with many Florida investors is not considering how often they'll use the property. Many Americans only get a few weeks of vacation per year. For example, you may need to use some of your vacations to visit relatives, so you can be at your second home for two weeks a year. Why should you buy a property and deal with all those costs if you can't be there often?
Not being there often can make you rush into renting the home, leading to many other problems. You must consider your plan to rent the property carefully, or you can end up with damages, high vacancy rates, and other headaches. The bottom line is never buying on emotion and understand why you are buying a particular property and how often you can be there.
Not Researching The Florida Community
There is much more to buying a good Florida vacation home than simply 'liking the area.' In addition to price and location, you want to ensure that the community has everything you or your guests will want: good cell phone and wifi service, proximity to grocery stores and other shopping, and possibly a major airport for easy access.
Also, understand the local rules on renting your home when absent. If you can't be there as much as you like, you need to know the HOA or local regulations for renting the place. Some communities may not allow rentals, or they don't allow renting to families with children.
Not Researching Your Property Management Company
Assuming you aren't spending most of your time at the property, you may want to rent it out when you are not onsite. It's important to hire property management professionals to deal with the home and who will stay there. Choosing the correct property management company is as important as the real estate agent you use for the purchase. The management company will oversee home marketing, finding guests, and dealing with the entire rental lifecycle. They also will be responsible for cleaning and maintaining the property. So, you should spend a lot of time choosing the property management company, or you can have a headache on your hands from afar before you know it.
Buying Without Visiting
Under no circumstances should you buy a Florida rental property without visiting first. A competitive local real estate market can tempt you to buy the property sight unseen. Always visit the home and community a few times before committing financially. You should have the home inspected and understand the local area during peak and off seasons. If your real estate agent pressures you to buy a property without visiting, you should resist and find another agent. Even if you miss out on a particular property, similar ones will be on the market soon enough.
Managing The Property
When you aren't at the property, it will need routine upkeep to maintain its condition. This means landscaping, pool cleaning and maintenance, electrical repairs, plumbing, etc. Finding a reliable and affordable maintenance professional is an ongoing challenge for many Florida homeowners.
Also, if you want to rent your home, you must deal with the retinal process. This means managing advertising, guest communication, cleaning, and dealing with issues. Many owners hire a property management firm to deal with these matters, but that comes at a cost.
Spending Too Much
Sticking to your budget is one of the most important things when buying a Florida investment property. In addition to the cost of buying the home, you will need to spend plenty on HOA fees, furniture, maintenance, and other things that can blindside you if you aren't prepared. Also, consider the property's costs if you rely on a property management firm. Some Florida homeowners discover that they have overspent on their dream vacation home, which puts them in a financial bind.
Underestimating Managing The Home From A Distance
No matter how often you visit your new Florida home, you must consider how to deal with it when you aren't there. Many people decide to rent their home, but the headaches that accompany managing from afar can be too much. That leads people to hire a management company with its expenses. Whatever you decide to do with the home when you are not there, you need to plan to deal with occupancy, theft, and damages.
Benefits Of Buying A Florida Vacation Home
There are potential pitfalls and mistakes when buying a Florida vacation home. But we would be remiss if we didn't mention a few of the many benefits of buying a vacation home:
Always Having A Place To Stay
For most of us, going on vacation in Florida means researching where to stay, amenities, shopping, tourist attractions, etc. Owning a vacation home in Florida encompasses all these aspects. You already know everything about where you are staying and going. All you need to do is pack up, get on a plane or in a car, and get to your vacation home! Many vacation homeowners say they love simply going to their destination without worrying about where to stay.
Great Weather And Beaches
Florida has a well-earned reputation as the Sunshine State, with lots of sun and mild winter weather. The regular warm temperatures and sun mean you can have fun at the beach and various outdoor venues whenever you visit. You also will have a lot of access to fishing, snorkeling, scuba diving, and just strolling on the beach.
Making Extra Income
Florida is always a popular tourist destination. Your vacation home can probably make extra money when you aren't there. The rental income from your second home can offset some of the property's costs. The money you make from renting it out to vacationers can cover the mortgage, property taxes, maintenance, and insurance.
Build Value Over Time
Real estate is generally a good investment over time because properties rise in value. When you want to sell your Florida vacation home, you can usually sell it for more than you paid and take the cash. Also, you can make modifications and improvements to boost the home's value, which makes it easier to sell. Florida is typically a good place to invest in vacation homes because it's always a popular tourist destination.
Tax Advantages
Another compelling reason to buy a Florida vacation home is the tax benefits. Florida also has a homestead exemption, which offers tax savings to people who live there full-time and sometimes part-time. The exemption can shield much of your home's value from property taxes.
Also, your mortgage interest, property taxes, and certain home improvements may qualify for tax breaks, reducing your tax liability. Meet with your tax advisor and discuss your plans before buying Florida property.
Retirement
Buying a second home in Florida also gives you a potential place to retire when the time is right. Florida offers many retirement-friendly communities with boating, fishing, golf, cultural attractions, and beach havens for taking it easy. Eventually, retiring in your Florida second home gives you the best in convenience and flexibility. You can slowly shift to retirement mode by spending longer and longer time at the vacation home before moving there for good.
Speak To A Real Estate Attorney Today
Are you thinking about buying a new vacation home in Florida? This is an exciting time, but you should have proper legal counsel to avoid some of the pitfalls mentioned in this article. With a real estate attorney's help, you can ensure your vacation home purchase will go smoothly. Speak to a real estate attorney today for more information.