Are Florida Tenanted Properties A Better Bet Than A Holiday Let?

A friend of mine asked me the other day, which one is better, a tenanted property in Florida or a holiday home?

This was a good question, but not one that is difficult to answer if you drill down into what it is you want to achieve from your property investment. At the end of the day it really boils down to whether you’re a holiday investor or a serious investor.

If you’re a holiday investor, there is nothing wrong with that, you might crave the excitement Florida has to offer, the beaches, Disneyland, the fantastic climate in fact you name it, Florida probably has it. This is why people are so attracted by the idea of a property in America’s Sunshine State.

Thanks to the great USA real estate downturn, property is now so cheap you can pick up villas in Florida with a pool for less than half the price of a 2-bedroom apartment in Bolton, UK.

 

Sounds tempting doesn’t it? However, before we dive into that pool let’s take a closer look at the options…

As I mentioned this friend of mine was asking me to tell him which route I would go down, the tenanted property or the holiday home. If I were to go for the latter, I would have my villa in Florida, preferably in a location that attracts a fair amount of tourism so that I can enjoy the twin benefits of a rental income in peak season and a place to spend my holidays and get away from the cold grey winter days back in the UK.

Perfect!

 

Not quite. When we look beyond the obvious attractions and take off the rose tinted specs we find there are costs associated with running this particular holiday home that we didn’t foresee at the time. Consider the following:

  • Council Tax
  • Community Fees
  • Property Booking Fees
  • Property Management Fees
  • Property Cleaning
  • Building Insurance
  • Contents Insurance
  • Furniture
  • Pool Cleaning
  • Electric Bills
  • Water Bills
  • Telephone Bills
  • Internet Bills
  • Lawn Cutting
  • Annual Hotel Licence

“Have a nice day” as they say in the USA!

So as you can see owning a holiday home in Florida can be an expensive business even if the property appears to be a bargain. That said, depending on the area and the season you might also see the benefit of $700 to $1,000 a week for a four-bedroom detached property in Florida.

This is great if you can let the property for more than 30 weeks a year, but outside of peak season this is unlikely without putting in some hard work on advertising your property and even more work dealing with the needs of multiple tenants.

On top of this you might not even cover your mortgage payments, which is the trap many overseas investors often find themselves in.

But don’t despair, there is another way, and that’s tenanted properties in Florida…

 

Like any good investment this will require a degree of sacrifice, you won’t be able to spend your holidays in it, but it will turn the notion of a “holiday  home” on its head.

A tenanted property in Florida will fund your holiday and more importantly pay for itself with steady cash-flow. Your tenanted property is then your “holiday property” for a few reasons:

  • It will reduce your associated property costs by more than half
  • It will produce a constant and steady flow of income
  • You can use the savings and profit to spend on holidays

 

A famous economist named Paul Samuelson once said investing should be more like watching paint dry or watching grass grow, if you want excitement take $800 and go to Las Vegas.”

Before you fly west, the exciting thing about Florida tenanted property is that there are now opportunities to earn a profit of up to $8,000 per annum based on net yields of between 7-10%. This is after you have paid out the following:

  • Council Tax
  • Community Fees
  • Property Management Fees
  • Building Insurance
  • Contents Insurance

Now doesn’t that sound more exciting than watching paint dry? And just think of the extra holidays you could have with that sort of rental profit.

This leaves us with one more concern, what if my property doesn’t have a tenant?

The sub-prime challenges in the US have pushed many to change their attitudes to renting. The most stable markets, from a property investment perspective, are ones where you have strong local demand for property.

In Florida’s case, demand for rental property is huge – as its inhabitants simply do not want to buy in the current economy. The state is actually on track to reach a new sales record this year thanks to demand from those investors who are taking advantage of the distressed market.

You may also have read the report by Florida Association of Realtors, which revealed that the average price for existing homes is now 21% higher than a year ago.

This tells us that the bottom of the USA property market is now well and truly behind us, but the potential of Florida tenanted properties is right there ahead of us. So, instead of taking a bet on a holiday let, I would recommend a more relaxed route to property wealth generation, where the tenant pays your mortgage and costs – allowing you time off to enjoy your holidays!

Review our tenanted Florida real estate.

If you have any questions, we would be delighted to assist you. Please feel free to Call: +44 (0) 207 100 2393 or Email: [email protected].

We look forward to the opportunity of assisting you to invest securely and successfully.

Kind regards,

Loxley McKenzie
Managing Director

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