Since the housing market crash of 2008, the Florida real estate market has returned to its former glory as one of the most profitable places to buy rental properties in the U.S. Over the last five years, home values have gone up 81.7%. The average home now sells for about $407K, a 27.8% increase compared to last year.
Job growth—the most critical driver of housing demand—is up 5.1% alongside a rising population of more than 21 million. These trends will keep Florida real estate in short supply, shifting demand to the rental market. As occupancy rates soar over 93%, annual rent increases have hit 55% in some areas.
Despite the steep climb in housing prices, there are ways to invest in Florida real estate without breaking the bank. The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method is one strategy that focuses on buying distressed properties under market value to rent out and refinance for a down payment on another property.
For example, say you estimate $20,000 in repairs on the rental property below listed at $200K, resulting in an after-repair value (ARV) of $250,000. Following the 70% rule, you will buy the property for $155,000 (ARV x 70% – repairs).
Assuming you put down 20% and find a tenant to pay the going rate of $2,000 in monthly rent, you will net around $61K in cash flow over five years and get a cash-on-cash return of ~20%. A good rule of thumb is to generate at least $100-$300 per unit in monthly cash flow and a 10% return on cash invested.
Once the property accrues enough equity, you can refinance the mortgage to $200,000 ($250K appraised value x 80%) and cash out $76,000 (new mortgage – $124K original mortgage) to use as the down payment for a second Florida real estate investment property. This is just an example, not investment advice.
Buying long-term rental properties is a great way to earn passive income regardless of your investment strategy. Here is our list of the best places to invest in real estate in Florida to help kickstart your portfolio in the Sunshine State.
Median property price: $430,000
Price per square foot: $268
Economic growth rate: 4.7%
Average household income: $91,281
Employment rate: 61.6%
Median rental income: $2,300/monthly
Median home value increase year-over-year: 25.4%
Median rent increase year-over-year: 21.1%
Average property tax: 0.91%
Praised for its world-class beaches and low cost of living, Tampa consistently ranks as one of the best cities in the U.S. for real estate investing. A strong job market continues to fuel this growing metropolis of nearly 396K, pushing the renter fraction to 51% in lieu of a limited housing supply.
Rent prices are up by more than 20% over last year. Two-bedroom units are the most popular, but three-bedroom units deliver more reliable rent increases. These properties usually rent for $2,399 monthly. Neighborhoods in Downtown Tampa and Northeast MacFarlane can produce higher returns, with average rent prices hitting $3,325.
Median property price: $395,000
Price per square foot: $234
Economic growth rate: 4.2%
Average household income: $80,986
Employment rate: 63.7%
Median rental income: $2,101/monthly
Median home value increase year-over-year: 25.8%
Median rent increase year-over-year: 23.5%
Average property tax: 0.89%
Dubbed the “Theme Park Capital of the World”, Orlando is home to Disney World, Sea World, and Universal Studios. This magical city has seen a 30% increase in population since 2010, with recent gains of 4.2% in job creation and 114.7% in tourism. Low inventory and high demand dominate 63% of local real estate with renter-occupied units.
Although median rent prices spiked by 23.5% over last year, occupancy rates remain steady at 90.5%. Orlando rentals over $2,000 per-month take up 40% of the market, with two-bedroom units being the most common. You can buy these properties in South Semoran for about $175K and charge $1.2K-$2.5K in rent to help speed up your returns.
Median property price: $321,000
Price per square foot: $197
Economic growth rate: 4.6%
Average household income: $76,190
Employment rate: 59.9%
Median rental income: $1,350/monthly
Median home value increase year-over-year: 24.6%
Median rent increase year-over-year: 19.6%
Average property tax: 0.90%
Jacksonville (nicknamed “Jax”) offers more than 950,000 residents an affordable suburban lifestyle within arms reach of big city amenities. As one of the fastest-growing metros in the country, this market has the perfect combination of 24.5% property appreciation, low home prices, and 93.4% occupancy rates.
Median property prices sit around $321K, while rental prices average $1,350 per-month overall and are closer to $2,000 in metro areas. While inventory is tight, 58.7% of homes sold below the asking price last month. Most markets have listings under $200K that you can rent for $1,300-$1,800 to generate more cash flow.
Median property price: $589,000
Price per square foot: $411
Economic growth rate: 2.1%
Average household income: $74,731
Employment rate: 60.4%
Median rental income: $3,700/monthly
Median home value increase year-over-year: 29.4%
Median rent increase year-over-year: 24.4%
Average property tax: 0.90%
Miami is a coastal metropolis of nearly 440,000, making it the second most populous city in Florida. As more people migrate from higher-priced metros for favorable tax rates and warm weather, housing costs will keep going up. In just ten years, Miami real estate has seen a cumulative appreciation of more than 100%.
With the current price-to-rent ratio of 23, 70% of Miami properties are occupied by renters. The average home will run about $589K, but high appreciation rates and rent prices can help offset the acquisition costs. Rent fluctuates between $2,100-$6,500, with four-bedroom units seeing the biggest gains of 30%.
5. Fort Lauderdale
Median property price: $625,000
Price per square foot: $441
Economic growth rate: 2.9%
Average household income: $104,110
Employment rate: 61.5%
Median rental income: $3,334/monthly
Median home value increase year-over-year: 27%
Median rent increase year-over-year: 26.2%
Average property tax: 1.00%
With its bustling city center and booming job market, Fort Lauderdale is a popular place for young professionals to plant their roots. Over the past decade, this city has seen a 43% lift in the millennial population (25-44), and Fort Lauderdale real estate appreciated by 167.30% in the same time frame.
Accelerated demand has added 20 new urban core developments expected to launch in 2023. This rapid expansion and annual rent increases of 26.2% will help ease the buyer’s remorse on paying $625K to break into the market. Sunrise Intracoastal is the most affordable neighborhood, and these listings start around $200K and rent for $2,200-$6,500 per-month.
Whether you’re a first-time investor or simply looking to expand your portfolio, you can’t go wrong with the Sunshine State. Our rental property calculator will give you an in-depth analysis of cash-on-cash return, annual cash flow, and capitalization rate to help you find the best area in Florida to invest in real estate.
Learn more about being a Florida landlord with our Florida Real Estate Investing Guide.