Best Florida Cities to Invest in Rental Property

According to NAR’s Chief Economist, 2024 is shaping up to be a great year for home sales.

Although rent prices are dropping in Florida, and properties are selling at a premium to buyers, this state is attractive for many reasons.  And if that happens, home buyers and rental property investors will be looking to grab up homes and buildings that begin trickling onto the market.

We’ve covered the outlook for the best cities in California for rental investment.  and gross rent yields in California have been outstanding. Now we move onto Florida, an entirely different market with different demand factors and a tremendous potential for property investors.

In November, as reported by Florida Realtors®, a downward trend reversed to produce gains in home sales and prices and strong price gains for condos/townhouses across the state.

Florida Home Prices and Sales for November 2023. Screenshot: Florida Realtors Association®.

Big Demand, Warm Sunny Climate, Vacation Homes, Babyboomers & a Falling US Dollar

Florida Condos Intracoastal Waterway.

You can find better rent/price ratios around the US, yet Florida has an allure, potential, and strength that’s hard for property buyers to ignore. The premiums tell you that investors and vacation home buyers recognize that value.  With the US dollar falling, more demand could return from foreign investors.

This winter and spring should be the low points in demand, although Florida Realtor’s November market report shows how much latent demand might be present. As the FED rate eases, and the US economy picks up momentum, all boats in the harbor may rise.

Condo Sarasota Florida

It’s a good sign that housing prices have risen substantially and sustainably from 2019 to now 4 years later, a sign that owners and investors alike view Florida as an inviting place to live and do business. And as with any city or state, supply is the key driver. With continuous demand, home and condo prices may only rise further.

You might not be sold on Florida yet, but have heard positive comments and reviews about rental profit returns, rising home values, lower property prices and better cap rates. However, like California, property damage from hurricanes is an issue, given some insurance companies won’t offer coverage to region and cities at risk, or offer insurance coverage that is too expensive.

Gross Rentals Yields in 2023

While not as high as gross rent yield growth in California, some Florida cities are producing well for single-family rentals:

The biggest increases in potential annual gross rental yields from 2022 to 2023 among counties with a population of at least 1 million are in Miami-Dade County, FL (yield up 34.1%); Broward County (Fort Lauderdale), FL (up 32.4%);  and Palm Beach County (West Palm Beach), FL (up 29.5%). — Attomdata report.

Here are some good reasons that support a commitment to property investment in Florida.

1. Strong Rental Market: Florida has a robust rental market due to its growing population, driven by both domestic migration and international immigration. Cities like Orlando, Tampa, Miami, and Jacksonville are experiencing steady population growth, which fuels demand for rental properties. Americans are leaving other states such as California for Florida and businesses too are finding this state more reliable and cost-effective in tough economic times. This supports a strong economy and job growth.
2. Tourism Industry: Florida’s thriving tourism industry, centered around destinations like Orlando (Walt Disney World, Universal Studios), Miami’s beaches, and the Gulf Coast (Tampa, St Petes, and the Panhandle cities), creates a high demand for short-term rentals. This sector may offer higher yields than traditional long-term rentals.
3. Favorable Tax Climate: Florida is one of the few states with no personal income tax, which can be advantageous for rental income. Additionally, the state’s overall tax burden is relatively low, making it financially attractive for investors.
4. Diverse Economy: Beyond tourism, Florida has a diverse economy with growing sectors like healthcare, technology, and finance. This economic diversity can provide a stable rental market, as people move to the state for job opportunities.
5. Year-Round Rental Potential: Florida’s warm climate and appeal as a retirement destination ensure year-round rental demand. Unlike some northern states, where demand may be seasonal, Florida’s climate attracts tenants throughout the year.
6. Lower Property Prices:  Other than the Miami area, home prices are much lower than New York, Boston, Los Angeles, San Diego, Denver, San Francisco and Seattle. This allows landlord investors to buy more properties.
7. Appreciation Potential: Real estate in many Florida markets has shown strong appreciation over the years. Especially in high-demand coastal areas and rapidly developing urban centers, property values have been rising steadily.
8. Rent Growth Potential: Rent prices are lower than other states such as California or New York and New Jersey, but likely will catch up as competition causes rent price growth.
9. Pro-Landlord Regulations: Florida tends to have more landlord-friendly laws compared to other states, which can make property management and dealing with tenants less cumbersome for property owners.
10. International Appeal: Florida is a popular destination for international buyers and renters, expanding the potential tenant base. Its cultural diversity and global connectivity, especially in cities like Miami, enhance its attractiveness to international investors.
11. Infrastructure and Development: Ongoing infrastructure improvements and new developments in many Florida cities enhance property values and attract a growing population.
12. Variety of Investment Options: The state offers a wide range of real estate investment opportunities, from urban apartments to suburban single-family homes and beachfront properties, catering to various investment strategies and budgets.

Support for Profitable Rental Investment in Florida

Before calculating individual rent yields and cap rates, we are wise to capture a clear view of the marketplace in the Sunshine State, from buyer demographics to construction trends to cities on a strong growth curve.

Unlike California, Illinois and New York, Florida’s economy is in good shape with much less government debt which means lower taxes. In fact with zero income tax and no estate taxes, older investors see this state as the ultimate home of investing.  Florida’s are less restrictive and more landlord-friendly which puts real estate investors at ease.

The Best Cities in Florida

Florida Property Management company located in the Sunshine State posts their picks for the best of Florida:

1. Weston (median 2bdrm rent price: $2600/mo.)
2. Boca Raton (median 2bdrm  rent price: $2815/mo.)
3. Fort Lauderdale (median 2bdrm  rent price: $3784/mo.)
4. Miami Beach (median 2bdrm rent price: $3500/mo.)
5. Coral Gables (median 2bdrm rent price: $2600/mo.)
6. Doral (median 2bdrm rent price: $2600/mo.)
7. Miami  (median 2bdrm rent price: $4800/mo.)
8. Tampa (median 2bdrm rent price: $2112/mo.)
9. Orlando (median 2bdrm rent price: $1818/mo.)
10. Jacksonville (median 2bdrm rent price: $1394/mo.)

Best Short-Term, Vacation Rental Cities:

For Short Term Rentals in Florida, GetChalet using Airdna and Zillow data, offers their 7 Top picks:

1. Fort Walton Beach (avg daily rent of $299 with occupancy rate of 65% with annual rent revenue of $53,652 and yield of 16%)
2. Pensacola (avg daily rent of $240 with occupancy rate of 74% with annual rent revenue of $37,992 and yield of 15.3%)
3. Kissimmee  (avg daily rent of $283 with an occupancy rate of 77% with annual rent revenue of $36,948 and yield of 12.46%)
4. Cape Coral (avg daily rent of $240 with occupancy rate of 81% with annual rent revenue of $42,552 and yield of 11.2%)
5. Pompano Beach  (avg daily rent of $237 with an occupancy rate of 71% with annual rent revenue of $39,102 and yield of 11%)
6. West Palm Beach (avg daily rent of $275 with an occupancy rate of 70% with annual rent revenue of $43,716 and yield of 10.5%)
7. Destin (avg daily rent of $432 with an occupancy rate of 71% with annual rent revenue of $66,400 and yield of 10.5%)

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See also: Property Management Software for Landlords | Best Cities for Rental Property | Florida Rental Properties | Best Florida Cities to Buy Property | Best Cities to Buy Property in California | Best Type of Property to Buy | Rental Listings | Short Term Rental Market | Will Rent Prices Go Down? | Rent Prices City by City | Investment KPIs | Buy vs Rent | Florida Rental Properties | Florida Property Management Companies | Rental Market Forecast