6 Best Places to Buy Rental Property in Florida[2024]

Florida’s housing market remains competitive, with home prices increasing by 3.2% year-over-year as of May 2024. The inventory of homes for sale stands at 180,337, reflecting a vibrant market with a median of 37 days on the market. (Source: Zillow)

This robust growth, favorable economic conditions, and high rental demand make Florida an ideal destination for real estate investment. Whether you’re seeking steady rental income from short-term rentals or long-term appreciation potential, Florida offers many homeownership opportunities. 

This guide will explore the best places to buy a house in Florida for 2024, highlighting both top and emerging markets for real estate investors. 

Best Places to Buy Rental Property in Florida

Below are the best cities in Florida to invest in for 2024, suitable for those interested in short rentals (STR).

Now, let us look at each of these cities in detail: 

1. Key West 

Key West, a tropical paradise known for its beautiful sunsets and laid-back atmosphere, is one of the most expensive real estate markets in Florida. It’s a hotspot for luxury short-term rentals due to high tourist demand, but the high property prices mean investors need to carefully assess the return potential. 

Top Areas to Invest: Old Town, New Town, Midtown

2. Naples 

Naples, known for its upscale lifestyle, luxury shopping, and Gulf Coast beaches, is a prestigious real estate market. While it offers a great quality of life, it has a higher vacancy rate and lower rental yield compared to other cities. Investors targeting Naples should be aware of potential risks related to vacancies. 

Top Areas to Invest: Pelican Bay, Old Naples, North Naples

3. Miami 

Miami is a global hotspot for tourism, finance, and real estate. Its multicultural vibe, nightlife, and beaches make it one of the most sought-after destinations for visitors and investors alike. Though it has relatively higher property prices, Miami’s solid rental demand makes it an attractive market for short-term rentals, especially with growing international interest. 

Top Areas to Invest: Brickell, Wynwood, Coconut Grove 

4. Fort Lauderdale 

Located just north of Miami, Fort Lauderdale is known for its boating canals, luxurious lifestyle, and pristine beaches. It has emerged as a strong market for both residential and vacation rentals. Fort Lauderdale’s real estate market continues to grow, making it a competitive choice for property investors.

Top Areas to Invest: Las Olas Isles, Victoria Park, Harbor Beach 

5. Orlando 

Orlando, often called the “Theme Park Capital of the World,” is a top global destination, attracting millions of tourists annually. Its strong rental market is bolstered by year-round demand, making it an ideal location for short-term rental properties. Investors are drawn to Orlando’s relatively affordable housing and high returns, especially for vacation rentals. 

Top Areas to Invest: Lake Nona, Dr. Phillips, Winter Park

6. St. Petersburg 

St. Petersburg is known for its sunny weather, beautiful beaches, and vibrant cultural scene. As one of Florida’s top destinations for tourism and real estate investment, it offers a thriving market for short-term rentals. With a growing population and increasing demand for vacation rentals, St. Petersburg has emerged as a prime location for property investors looking to capitalize on Florida’s tourism boom. 

Top Areas to Invest: Downtown St. Pete, Old Northeast, Jungle Prada

ROI Analysis of Best Florida Cities for Buying Rental Properties

This analysis aims to help investors assess the profitability of short-term rental (STR) properties in key cities across Florida. We will evaluate critical metrics such as rental yield, vacancy rates, mortgage payments, and revenue to provide a well-rounded understanding of potential returns in each market. 

Rental yield is one of the most important metrics for investors to assess how much return they can expect relative to the property price. Here’s how each city compares: 

High Rental Yield Cities in FLorida

1. St. Petersburg: With a rental yield of 16.12%, this city provides the highest return on investment, making it highly attractive for investors seeking strong cash flow from STR properties. 

2. Orlando: Offers an impressive 13.83% rental yield, making it a close second in terms of high returns relative to the property price. 

Moderate Rental Yield Cities in Florida

1. Fort Lauderdale: With an 11.08% yield, it remains a solid option for investors looking for a balanced return with reasonable property prices. 

2. Miami: The rental yield is 10.47%, slightly lower but still offering a good return for STR investors. 

Lower Rental Yield Cities in Florida

1. Key West: With a rental yield of 10.18%, Key West offers high revenues despite its higher property prices, making it a solid choice for investors seeking attractive returns in a prime vacation destination. 

2. Naples: Although 9.04% represents the lowest yield on this list, it’s still a strong rental yield, particularly in a luxury market like Naples. Investors here benefit from stable, long-term returns. Any rental yield that covers monthly mortgage expenses and generates positive cash flow is a good yield, making Naples an appealing option for those seeking consistent profitability in an upscale location. 

2. Vacancy Rate and Risk Assessment 

Vacancy rates help investors understand the risk of having vacant properties, which could impact revenue. Lower vacancy rates are better, reducing the risk of downtime in rental income. 

Lower Vacancy Rate Cities: 

1. St. Petersburg (41%) and Orlando (45%) have the lowest vacancy rates, making them the least risky in terms of losing revenue due to vacancies. 

Moderate Vacancy Rate Cities: 

1. Key West: A vacancy rate of 44% is average and manageable. 

2. Miami (46%) and Fort Lauderdale (46%): Similar vacancy rates, indicating that properties may experience some periods of vacancy, but these are not extreme. 

Higher Vacancy Rate Cities: 

1. Naples: With a high vacancy rate of 53%, investors should be prepared for longer periods of no revenue, increasing the investment risk. 

3. Mortgage Payment vs. Revenue Analysis 

Mortgage payments are a significant factor in cash flow.

Let’s use the Miami example to break this down: 

➡️ Loan Amount: $459,492 (after 20% down payment) 
➡️ Interest Rate: 6.52% (as of October 10, 2024) 
➡️ Monthly Mortgage Payment: $2,847 

Note: To make calculations easier, you can use HomeAbroad’s Monthly Mortgage Calculator to know your monthly mortgage payments. 

Average Monthly Revenue in Miami is $5,007.42, so: 

Revenue Minus Mortgage Payment: $5,007.42 - $2,847 = $2,160.42 (before other expenses). 

In this scenario, the DSCR (Debt Service Coverage Ratio) helps assess whether your rental property generates enough income to cover the mortgage payment. The DSCR is calculated by dividing the property’s monthly revenue by the mortgage payment. Using the figures from above: 

DSCR = $5,007.42 ÷ $2,847 = 1.76 

A DSCR of 1.76 indicates that the property generates 76% more income than the mortgage payment, which makes it a favorable investment for lenders. Generally, a DSCR above 1.25 is considered good for securing financing. 

HomeAbroad Loans offers specialized DSCR loans for financing short-term rental properties based on rental income, making it easier for investors like you to secure financing. For more details, check out our comprehensive DSCR Loan Learning Hub. 

This leaves a positive cash flow after the mortgage payment. When compared with other cities: 

• Orlando: Average monthly revenue is $4,803.15, and the mortgage payment would be significantly lower given the housing prices. 

• St. Petersburg: Similar high STR revenue with lower housing prices means this city has the strongest revenue-to-cost ratio. 

4. Net Cash Flow Projections 

Net cash flow is calculated by subtracting the mortgage and other expenses from the STR revenue. For example: 

Miami Example: 

➡️ Revenue: $5,007.42 
➡️ Mortgage Payment: $2,847 
➡️ Other Expenses (e.g., insurance, management): Let’s assume $500. 

Net Monthly Cash Flow: 

Net Cash Flow: Revenue - (Mortgage Payment + Other Expenses) 

So, Net Cash Flow = 1660.42 

For mortgage financing purposes, HomeAbroad Loans considers the gross rental income when determining eligibility for DSCR loans. This allows investors to maximize their financing options. You can learn more about how DSCR loans can help finance short-term rental properties by visiting our DSCR Loan Hub.  

Similar projections can be made for other cities: 

• St. Petersburg: With lower housing prices and high rental yields, this city would provide one of the strongest net cash flows after expenses. 

• Orlando: Also offers a positive cash flow due to its high rental yield and relatively low housing prices. 

5. City-by-City Recommendation 

• St. Petersburg: Best option for investors seeking high rental yields (16.12%) and lower risks (41% vacancy rate), with strong potential for positive cash flow. 

• Orlando: Another top choice with a high rental yield (13.83%) and manageable vacancy rate. Its affordability makes it attractive for maximizing returns with minimal investment. 

• Miami: A balanced option with moderate returns (10.47%) and a reasonable risk profile. This city offers stable revenue but may require a higher upfront investment. 

• Fort Lauderdale: Higher yield (11.08%) than Miami, but similar vacancy rates make it another solid option for balanced returns and risk. 

• Key West: High revenue and decent yield (10.18%) but higher property prices and vacancy rates may increase risk. 

• Naples: The least favorable option due to lower rental yields (9.04%) and the highest vacancy rate (53%), leading to potentially inconsistent cash flow. 

Based on the analysis, St. Petersburg and Orlando emerge as the top choices for investors looking to maximize returns on short-term rental properties. These cities offer high rental yields, manageable vacancy rates, and strong potential for positive cash flow. 

Investors should carefully evaluate their risk tolerance and financial goals, but based on these metrics, St. Petersburg offers the best balance of high returns and lower risk, while Orlando provides affordability and strong revenue potential. 

How Did We Come Up with This List? 

We followed a comprehensive and methodical approach to determine the best areas to invest in Florida. This involved gathering data from reliable sources, analyzing key metrics, and verifying our findings with in-house real estate experts. 

We collected data from a variety of reputable sources to ensure accuracy and comprehensiveness: 

• US Census Bureau: Provided population data and growth rates for the cities under consideration, helping us identify the best places for homebuyers and homeowners. 

• Real Estate Market Platforms: Zillow and Realtor.com were used to gather information on average monthly rents, property values, and market trends in the Florida housing market. These platforms also offered insights into homes for sale and changes in home prices. 

• Short-Term Rental Analytics: AirDNA provided valuable insights into short-term rental performance, including average nightly rates, occupancy rates, and monthly revenue. This data is crucial for evaluating potential returns from vacation rentals and rental properties. 

• Local Government Websites: Offered additional demographic and economic data, including migration trends and local housing reports. This information helped us assess property values and the potential for appreciation in different Florida real estate markets. 

• Tax Information: The Tax Foundation and state government websites were consulted to verify the state income tax status. Understanding the tax implications is vital for both homeowners and real estate investors looking at the overall cost of homeownership. 

• In-House Expertise: Our in-house real estate experts reviewed and validated the data and analysis to ensure reliability and accuracy. Their expertise played a critical role in assessing home values, rental yields, and the impact of property taxes on investment returns. 

Verification and Expert Review 

After collecting and analyzing the data, our findings were reviewed and validated by our in-house real estate experts. Their expertise ensured that the data was accurate and the analysis was reliable. 

By combining quantitative data from multiple reliable sources with qualitative assessments from our real estate experts, we identified the best areas to invest in Florida.  

The analysis focused on key metrics such as appreciation potential, rental yield, and population growth, which influence real estate investment returns. This comprehensive approach ensures that investors have the information they need to make informed decisions in the Florida real estate market. 

Find Your Dream Home in Florida 

Finding your dream home in Florida is exciting, and HomeAbroad is here to make it smooth and rewarding. We specialize in assisting US and foreign investors with personalized service and expert guidance through every step of the home-buying process. 

Whether you’re interested in Miami’s vibrant lifestyle, Naples’ serene beaches, or Orlando’s family-friendly communities, we help you identify the best areas for your investment.  

We offer tailored investment mortgage programs at competitive rates to fit your unique needs. Our team will guide you through securing a pre-approval letter, understanding closing costs, and ensuring a smooth home purchase.

Ready to find your dream home? Contact HomeAbroad today and get a quote to start your journey toward homeownership in the Sunshine State. 

FAQs 

About the author:

Michele Lawrie, a seasoned real estate professional licensed in New York and Florida, serves as the Chief Real Estate Officer at HomeAbroad. With over 15 years of experience and specialized certifications from the NAR (National Association of Realtors), Michele is a trusted expert for foreign nationals buying US real estate.

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