Investment properties: vacation home or income, with the return calculated before you buy

Two strategies, two analyses

A vacation home is evaluated by seasonal occupancy, nightly rate, management costs and your own use. An annual rental is evaluated by monthly rent, vacancy, taxes, insurance and maintenance reserves. Mixing the two analyses is the most common way to buy badly; separating them is the first step to buying well.

What my investment advisory includes

• Return analysis: expected rent, expenses, taxes, insurance and vacancy.
• Selection of areas and property types according to your budget and horizon.
• Negotiation and support through closing, with inspections and association documents.
• Property management afterwards, if you prefer not to handle the day-to-day.

South Florida or the Caribbean

In South Florida, annual rent and appreciation depend on location, the association and insurance. In Punta Cana and Samaná, vacation rent depends on the area, the management and the property’s title. I know both markets and tell you, with numbers, which fits your goal.

And once acquired, I manage it

Many of my investor clients later entrust me with the management of their properties: tenant or guest screening, rent collection, maintenance with trusted vendors and monthly reporting. One person accountable for your investment, from purchase to rent.

How I calculate a property’s return

I start from expected rent based on real area data, not the brochure. I subtract operating expenses: property taxes, insurance, association fees, maintenance, management and a vacancy allowance. The result is net operating income, which compared with the purchase price gives gross and net yield. With financing, I also calculate the return on the capital you put in. Everything in writing, so you compare properties with the same yardstick.

The costs the brochure does not show

• Florida insurance: wind, flood and the insurer’s requirements on roof and systems.
• Association fees and special assessments in condos.
• Vacancy: no property rents twelve months every year.
• Management: if you do not do it, it costs money; if you do, it costs time.
• Maintenance and reserves for replacements: roof, air conditioning, appliances.

Financing investment property in Florida

Investment loans require a larger down payment and carry different terms than a primary residence; some products are approved on the property’s expected rent rather than your personal income. I work with lenders used to investors and foreign buyers so financing does not stall the deal.

What I need from you to start

• Your budget and whether you will finance or pay cash.
• Your goal: personal use, rent, or both, and your time horizon.
• Your tolerance for management: hands-on or fully delegated.
• Your preferred markets: South Florida, the Dominican Republic, or open to both.

Vacation rental or annual rental: how to decide

Vacation rental offers more gross income in tourist-demand areas, in exchange for more management, more turnover and local rules that must be verified before buying. Annual rental offers stability, less management and less gross income. The right decision depends on your time, your area and your tolerance for variability, and I explain it with the numbers for each option.

Frequently asked questions