Florida is a unique opportunity for real estate investors. The sunshine state is attracting migrants from other parts of the country – and the world – at an impressive rate. The United States Census Bureau says Florida led the country in net migration last year, gaining 211,000 residents.
As a result of rapid population growth, Florida is experiencing an equally fast boom in real estate prices. When comparing home prices to local income, Miami now has the most expensive housing market in the United States. But the eighth-largest housing market in the country has only the 29th-highest sales prices, meaning there is still potential for substantial growth. And while locals might find current prices eye-popping, they could still be quite reasonable by your standards.
If you’re curious about getting a rental property in this hot real estate market, here are the best places to invest in real estate in Florida.
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1. Sarasota County
- Median listed home price: $450,000
- Median price per square foot: $274
- Rental vacancy rate: 1.5%
- Schools in the area: One high school and eight elementary schools with above-average ratings
- Median rental income: $1,910
- Median household income: $64,644
- Recent job growth rate: -6.0%
- Projected job growth rate: 44.6%
With the pandemic mainly in the rear-view mirror, young people looking for a change of scenery have been flocking to Florida’s Gulf Coast for its mix of beautiful beaches, medium-density cities, and single-family housing ideal for remote workers. At the epicenter of the influx is Sarasota County, with a population of 434,000.
As a result, the area is growing rapidly and has a red-hot housing market where the rents are now higher than Miami-Dade, according to Sarasota Magazine. The average rent in Sarasota County has gone up 33% over the past year and recently surpassed $2,000. The trend looks to continue indefinitely as the ultra-low vacancy rate has created a landlord’s market.
Neighboring areas are seeing similar growth as well. To the north, Manatee County has seen a similarly drastic rise in rents, almost reaching an average of $2,000. Areas farther south like Charlotte County and Lee County, have seen less dramatic growth. They could be a source of desirable investments as renters priced out of Sarasota County look for respite nearby.
- Median listed home price: $498,000
- Median price per square foot: $363
- Rental vacancy rate: 6.8%
- Schools in the area: 16 high schools and 74 elementary schools with above-average ratings
- Median rental income: $2,450
- Median household income: $44,268
- Recent job growth rate: -11.1%
- Projected job growth rate: 42.7%
While Sarasota County enjoys rapid growth, Miami remains Florida’s strongest housing market among urban centers. Miami recently became the most expensive housing market relative to wages, even surpassing New York. The median home price is almost $500,000, and the average rent is up 17.8% since last year.
If you’re an active investor looking for a challenge, Miami’s tourism industry makes it an ideal locale to operate a vacation (aka short-term) rental business. Miami is the second-most popular tourist destination in the country after New York City, and tourists spend $26-billion in the city each year, generating over 144,000 jobs. Pay special attention to the city’s bylaws, which require Airbnb operators to obtain a business license, charge and remit state and county tourist taxes, and abide by the zoning code.
If you’re investing in long-term rental properties, it’s important to note that Miami continues to attract an influx of migrants from other parts of the country. This is pushing home prices up and making homeownership less affordable for locals. Their crisis could be your opportunity if you’re willing to take the risk of buying while prices are high.
- Median listed home price: $279,000
- Median price per square foot: $177
- Rental vacancy rate: 7.5%
- Schools in the area: 7 high schools and 42 elementary schools with above-average ratings
- Median rental income: $1,250
- Median household income: $55,531
- Recent job growth rate: -3.9%
- Projected job growth rate: 44.4%
On Florida’s northeast coast, you’ll find Jacksonville, the largest city by area in the United States and the most populous in Florida by a wide margin. While Sarasota and Miami are experiencing hot markets and rapid growth, Jacksonville might appeal to you as a real estate investor for a different reason: stability.
Jacksonville is an attractive market for landlords thanks to its two U.S. Navy stations, which directly employ 34,570 people between them. According to militarybyowner.com, active duty service members are more likely than the general population to rent a home. Their secure employment can make them excellent tenants and helps protect the local economy from recessions. In fact, Jacksonville has the highest household income ratio to housing costs among the state’s biggest cities, which should comfort risk-averse investors.
Jacksonville has the lowest average rent of Florida’s major markets at just $1,411 per month. But it also has the lowest median house price and the lowest price per square foot, making it the most affordable big city to buy-in. Jacksonville is also an ideal location for return on investment, as the ratio of rents to house prices is second only to Orlando. And because prices haven’t been booming as in other parts of the state, there’s less risk that the bubble could burst on your investment.
- Median listed home price: $340,000
- Median price per square foot: $210
- Avg. vacancy rate: 8.9%
- Schools in the area: 4 high schools and 37 elementary schools with above-average ratings
- Median rental income: $1,642
- Median household income: $55,183
- Recent job growth rate: -10.5%
- Projected job growth rate: 51%
A major tourist destination, Orlando is home to five of the world’s ten most-visited theme parks and attracts 75-million visitors each year. Short-term rentals are a challenge here, as the city prohibits renting out more than one-half of a home if it’s zoned as residential. If short-term rentals are your primary interest, look south to Osceola County, where cities like Kissimmee and St. Cloud are close to the theme parks and less heavily regulated.
For long-term rentals, Orlando represents a middle ground for investors who want to get into a growing area without buying into the country’s most expensive markets. Orlando has seen home prices increase rapidly – although not as rapidly as in other cities around the state. The median listing currently asks $340,000 – the lowest of the state’s major real estate markets but up 17.3% year over year. Rents, meanwhile, are up 23.5% over last year.
Thanks to a local economy strengthened by the booming tourism business and supported by bustling technology and entertainment industries, Orlando is poised to continue growing. This market could surpass its neighbor to the west if the trend continues.
- Median listed home price: $375,000
- Median price per square foot: $241
- Rental. vacancy rate: 6.1%
- Schools in the area: 4 high schools and 29 elementary schools with above-average ratings
- Median rental income: $1,488
- Median household income: $55,634
- Recent job growth rate: -4.3%
- Projected job growth rate: 42.7%
Tampa is another Florida real estate market for investors seeking moderate growth. Rent prices have skyrocketed by 28.3% over the past year, marking the most significant increase in the state’s biggest cities. Meanwhile, home prices are still moderate at a median of $375,000 and rising steadily.
However, a challenge for Tampa is that economic growth may be lagging behind its peers. According to local media outlet Bay News 9, Tampa has a weaker job growth rate, local average wage, household income, and education attainment level than other cities in Florida and across the country as of 2021.
A wildcard for Tampa is its proximity to its central Florida neighbor. Only an hour’s drive away from Sarasota, Tampa could be the next target for gentrification and more rapid price growth. It also risks turning into an affordable refuge for the lower-middle-class being pushed out of more desirable nearby areas.
Florida is home to the hottest housing markets in the country right now. If the trend continues, Florida could be a good investment market. If the bubble bursts, investors could find themselves underwater on their home loans. Proceed cautiously and make sure you're prepared for every eventuality before investing.
Ipropertymanagement.com says that 34% of Florida's 7.9-million households are renter-occupied, which puts the state in line with the national average. Some 2.7-million homes are rented in Florida.
According to Zillow, the typical home in Florida is worth $356,349 as of February 2022, which is 9.4% higher than the national average. Florida is the 19th -most expensive housing market out of the 50 states and the District of Columbia.