What Kind of Return Can You Expect From a Florida Property Investment?

As we’re fond of saying, there are many ways to make a return. The beauty of a Florida property investment is that the returns come in many guises: incredible lifestyle, covering the cost of your holidays, and long term appreciation are some of them. But for many the return they’re looking for is cash flow, i.e., income from the property.

Okay, Bottom Line: What Will it Cost?

Two people on Florida BeachA residence with a view and beach is going to require an investment of about $400,000.  While many investors pay cash, it is very possible to finance up to 65% of the purchase price reducing the cash investment to $140,000.

The costs each month are fairly straight forward:

  • Mortgage payment (if you are financing the investment)
  • Insurance (which covers the contents of your investment rental)
  • Property taxes (which is a fixed percentage on the local government’s assessed value of the property)
  • Utilities (electric, internet)
  • Homeowner’s Association fee (which a fixed annual fee paid in installments that covers building and ground maintenance, rubbish collection, sometimes cable/satellite television programming, etc).

These costs/expenses will be offset by the rent income, less a management fee charged by the onsite office whose responsibility is to manage the renters, cleaning, maintenance, etc..

Annual Breakdown

Potential Rent $1200/week * 52 − management fee (18%) = $51,168

- $4,320 Taxes

- $1,200 Insurance

- $6,000 HOA fee

- $1,200 Utilities

- $17,400 Mortgage (optional)

And What Can I Potentially Make?

People walking on a Florida BeachThis would return the cash investor or the investor with a mortgage about 7% per year ($28,000).

In addition to free vacations, potential appreciation, holding foreign currency via real estate, there is also a cash flow return of $28,000 per year.

Don’t forget as revenue increases and/or cost decrease the return will increase, and certainly with revenue decreases and/or cost increases the return will change. And also bear in mind that on a well-chosen investment property your capital investment is also appreciating, so when you come to sell you should have made and excellent return long-term too.

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About the Authors: Lisa and Lee Mirman, Duke University MBA’s, have built their Florida real estate practice on uncompromising ethics and transparency. Between them they have spoken as real estate experts all over the world, presented in Congress, and written the best selling ‘must-have’ guide for anyone looking to invest in the Florida property market and lifestyle: Your Guide to Florida Property Investment – Owning, Investing and Enjoying the Florida Lifestyle for Global Buyers, which shares their combined 40 years of expertise in the field.

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