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Florida Keys Vacation Homes
Can Be A Profitable Investment

Florida Keys vacation homes and investment properties are a topic many of our Readers are interested in.

There's something magical about owning a piece of Florida property in this tropical paradise.

Whether you're looking to buy a vacation home, a permanent home, or a vacation rental property, the timing couldn't be better.

You may even start off like some people do, and take advantage of a Florida Keys vacation rental for a year or two.

This gives you an opportunity to see which area of the Keys you prefer before making your vacation home investment.

Key Haven, Stock Island Key West Villa Al Mar

Key Haven On Stock Island, Key West
Has Many Beautiful Resort Style Homes

Photo Courtesy of James Westfall

There are many beautiful Florida Keys rental homes, and Florida Keys homes for sale in this tropical paradise. The key is to find the Realtor and the property that's right for you.

Florida Keys Vacation Homes Interview

FKV: Lela Ashkarian, you've been a Realtor in the area for a while. Out of all the islands, which of the Keys is the most affordable for Florida Keys vacation homes, permanent homes and investment properties?

LA: There are certain areas, or pockets of areas starting from Key Largo to Key West that have subdivisions where you could buy a little mobile home on a canal from $250,000 to $350,000.

There are also areas like Islamorada, Marathon and the Lower Keys, especially Big Pine area, where for $350,000 you can get a piece of land, and a nice two bedroom/2 bath single family home.

It really depends on a buyer's definition of affordable and where they want their Florida Keys vacation home, permanent home, or investment properties to be located.

FKV: That's good information because each of our visitors will have different criteria regarding Florida Keys vacation homes and investment properties. Your answer provides them with a helpful guideline to work within.

Knowing what you just said, and with real estate being what it is in this downturn of a market, is there any particular Key that would be better at holding it's value over another?

LA: For Florida Keys vacation homes, investment properties and home sales, there are certain pockets of the market that have retained their value.

To name a few, Key Colony Beach which is in the heart of the Florida Keys. Duck Key which has beautiful luxury homes, and Shark Key which is about 7 miles east of Key West.

In the Upper Keys, other places would be Islamorada, Plantation, and Key Largo. Other parts of the islands where they have kept their identity will hold value as well.

These are the places that are also going to appreciate faster than other areas in the Keys such as Big Pine or Ramrod.

FKV: Ramrod and Big Pine won't hold their value as well, is that what you're saying?

LA: I wouldn't say it that way exactly. Their appreciation down the road would be about 2% - 3% on average. If someone was buying Florida Keys vacation homes, investment properties or homes in Islamorada, Lower Matecumbe, Duck Key, Key Colony Beach, or Shark Key - those are the areas that would probably appreciate 4.5% - 5.5% in the years to come.

FKV: That's good to know. So basically, if you're in Islamorada or Lower Matecumbe you'll have a higher appreciation rate on Florida Keys vacation homes and other properties than if you were in Ramrod?

LA: Yes, that's correct.

FKV: Over the last few years, the real estate market in the United States has substantially dwindled. How do you feel the Florida Keys compares to the rest of the State of Florida in terms of the recovery process that's just beginning?

LA: That's a very good question. Our market dove in 2005, 2 - 3 years before the nation's market really took it's dive. This was because of Hurricane Katrina and Wilma.

When these hurricanes passed through, consumers started to become concerned about investing in Florida Keys vacation homes and other types of properties.

In 2007 when the economy took a major down turn, and the entire nation took a dive in the real estate market, our market had already dived 2 years earlier. Over the last 4 years our average list price declined -26%.

Now we're leading the nation again but in a positive way. Our market is turning upward 2 years earlier than in the rest of the country. For example, the number of properties for sale decreased -10% to 3,359 from 3,752 in December 2010.

Something else that's worth looking at is the original list price to sale price which is the price of the property when it was first listed. For the year 2011 that was 76.48%.

The final list price to sale price, which is the price of the property at the time of obtaining a contract that resulted in the sale, did not change from 2011 at 90.97% compared to 2010 at 90.77%.

FKV: You said the Florida Keys are about 2 years ahead of the recovery process compared to the rest of the nation. So you're already seeing some improvement.

Does this mean that you don't have as much inventory for Florida Keys vacation homes, and investment properties as you did a couple of years ago? And is the inventory starting to get picked over making it hard to find a really good buy?

LA: Investment properties, Florida Keys vacation homes, permanent homes all lost their value. It wasn't in just specific islands, it was certain areas such as Key West, Marathon, Big Pine, Lower Keys have considerably lost their value by as much as 33% - 40%. They all took a serious dive.

So after 2009 - 2010, and the following 2011 and 2012, the number of property sales decreased minus 10%. Between 2006 - 2009 we had 4,700 properties in Key West, now we have 3,500 properties in all of the Florida Keys.

If you look at the months of inventory, which is the months required to sell the existing inventory - on December 31, 2011 if no other properties are placed on the market for sale, it decreased by -21% to 20 months or 1 year, 8 months.

This is excellent. This absorption quotient measures the relative health of the market and provides a measure of the relationship between the number of listings and rate of sales.

Simply put, if you looked at the current trend as a graph you'd see that it has turned upward in sales and downward in listings.

FKV: That's good news. So there's reasonable inventory for people looking for Florida Keys vacation homes, investment properties and permanent homes to pick through.

Do you feel that it's starting to become more of an equal buyer's - seller's market. That it's not just favoring the buyer as much anymore?

LA: I believe it will take another 6 months if the market keeps going like it is, and then they're will be 2,400 listings between Key Largo and Key West. This is when the market will equalize. We will then have more of a balance of harmony between buyers and sellers. It'll probably be another 2 years before this changes and then becomes more of a sellers market.

Any buyers waiting til then will have missed out on a chance to buy investment properties that had once been really high and then had the big price reductions. They're going to miss out on that opportunity to buy Florida Keys vacation homes and other investments and they're going to say, "I wish I..., I could have..., I should have..."

FKV: So what's happening right now is that a buyer can still pick up some of those premium Florida Keys vacation homes, and other investment properties that just a few years ago were prohibitive. The type of property people usually only dream about, because they don't believe they can afford them. They're still out there right now, correct?

LA: Yes, and I'd like to give you an example of a property that I just closed on Friday. I call it a trophy property.

That property cost the seller $4 million. It has beautiful water views, is a 4 bedroom, 4 bath home, and the property closed on Friday for $1,750,000 including furniture.

My buyers were ones I had in my database, past clients, and they knew that they were going to miss it, if they didn't buy it now.

The trophy properties are selling very good, and they're still some great choices because there are 3,500 listings throughout the Keys.

Anyone interested in Florida Keys vacation homes, permanent homes, or investment properties at these great prices needs to come down now.

FKV: Obviously one of the things that everyone dreams about is owning Florida Keys vacation homes on the water. Open water preferably. Of course there's also only so much land on water available so it's always at a premium. When someone is looking to buy water property, what would be a guideline to expect to pay for a low end vs a high end?

LA: Let's take a closer look at the area. I'd be very comfortable saying that the average sale price for 2011 was $404,000 between Key Largo and Key West.

Now in Key Colony Beach, you could get a nice half of a duplex, 2 bedroom 2 bath, walk in from the beach. A buyer could get a place like that for between $400,000 - $425,000 - $500,000.

I'm concentrating on Key Colony Beach for this example because this is the paradise people who come down here love. They love it for the beach, the canals, and because of the community, so they could pick up a very nice half of a duplex for $425,000.00.

FKV: What about purchasing a single family dwelling as a Florida Keys vacation home. How much more would they have to pay for a home over half a duplex?

LA: In let's say Key Colony Beach, Duck Key, or Marathon, a nice 3 bedroom 2 bath single family dwelling that could be turned into a vacation rental property would rent from $1800 - $2500/week. That house is going to cost a buyer between $850,000 - $950,000 on a canal.

FKV: Some buyers purchasing a Florida Keys vacation home may want to do just that - treat them as investment properties. They could keep it as a vacation rental property for some of the year, and then use it part of the year for themselves.

I know you do not handle property management, but are people very successful with renting their Florida Keys vacation homes out in the summer months? Are they successful with renting year round as well, or is it typically just the winter months that are productive for people to rent out their Florida Keys vacation homes?

LA: December, 2011, has been the highest in 55 years for vacation rentals and there's a reason for that. Due to the economy, a lot of people don't want to leave the United States.

Also, since some people have lost their homes, buyers are coming in and picking up these homes as investment properties at very nice prices. They're then turning those properties into vacation rentals and they're making money.

Starting August, 2011, vacation rentals and long term rentals have been very, very good, and it's going to continue like this for many years to come.

FKV: So do people rent these Florida Keys vacation homes for long periods at a time?

LA: Well Florida Keys vacation homes that are rentals require a transient license, and there are certain areas you can rent and there are certain areas where the city and county will not let you rent less than 28 days.

Back to Key Colony Beach, if you had a 3 bedroom 2 bath or a 4 bedroom 3 bath, a house like that could rent upward of $2700 - $3500/week.

My customers that have bought these properties are making $80,000 - $100,000 from these properties a year. Now that's a great vacation rental investment.

FKV: Yes, it sure is. Especially if you can use the property as your own Florida Keys vacation home.

Another question regarding water property, and I'm sure there are different views on this subject, but it's regarding the Atlantic side vs. Florida Bay or the Gulf side. Which side would have the greatest resale value?

LA: That really depends on what the buyer wants. If they want a sunrise or a sunset that's the only real difference between the two sides.

The Atlantic side will give a buyer beautiful sunrises and the Florida Bay and Gulf side will give them wonderful sunsets.

FKV: So there really isn't any difference in value or price, it simply comes down to personal preference when looking for Florida Keys vacation homes.

LA: Exactly.

FKV: Are there are restrictions for a non-US citizen or resident to purchase property in the Florida Keys or on the water? The reason I ask is that some countries, Mexico for example, they won't allow non-citizens to purchase ocean front property.

LA: Foreign buyers have increased their appetite for property in the Keys, and I believe that 24% of this coming year, 2012, will be foreign buyers.

The reason is the dollar is low, mortgage rates are low and inventory is high so it's the perfect time for foreign buyers to pick up some great investment properties.

However, they do have to follow Federal government requirements for such things as visas, federal taxation, recording and compliance, financing and credit, property tax and insurance. Other than that I'm inclined not to comment as I can't give legal advise.

FKV: Fair enough. Can you give us some sort of an idea as to what to expect to pay for property taxes in Monroe County for a Florida Keys vacation home?

LA: Taxes in Monroe County - hmm, well I'm going to give you an example that I give to my prospective buyers. Let's say on a $1 million home, expect to pay $10,000 in property taxes. That will be for school, county, and water district.

For more specific information regarding a property, they can either call me 305-395-0814 or visit Monroe County Tax Appraiser's Office.

FKV: This is kind of a fun question for you Lela, because it's what people often think of when they think of the Florida Keys. The Keys are made up of all these wonderful islands and you'll see these tiny little islands tucked off all by themselves. Is it possible to still own an island and have your own Florida Keys vacation home there?

LA: Sometimes people will see an island that is listed and it's really very inexpensive - and they think they can buy it and live on it.

If an island does not, or did not have an existing structure on it, it will be very difficult, not impossible, but difficult to get permitting to build a house on that island.

However, if the island has an existing structure on it and it needs remodeling, come on down island lovers - because that's very doable.

FKV: That's a good point. I was wondering how that would work because if it's a raw island, meaning no structure has ever been there, how would they get water and utilities to it? There would have to be water, correct? You wouldn't want to be living on something that's like the Dry Tortugas National Park. So how do these people survive on these islands? Do they have wells and power?

LA: I showed a couple of homes to a client and he wanted to live in Deer Key, the No Name Key. This house was a big house, it collected the rain water, and it did not have electricity but they had the battery operated home and they lived happily ever after there.

Yes, you don't really need to have electricity, you have battery operated generators instead. The batteries are huge and everything is solar powered.

FKV: Well that's interesting because of course this is now the era of satellite. So you have phone, internet, you have solar power and rain water, and your Florida Keys vacation home is very self sufficient.

LA: Yes - they have everything they need on their little island.

FKV: I know in the State of Florida, insurance is very different compared to other States because of hurricanes. Many insurance companies stopped insuring after 2005. What can you tell us about insurance in the Keys? What do buyers need to have to properly protect their Florida Keys vacation homes?

LA: Buyers need to understand that everyone who lives in the Florida Keys has insurance. For example, the $1 million home we talked about earlier, their insurance will be $10,000 +/- per year.

That will cover their wind insurance and their flood insurance, so whether it's a high or low end property there's insurance for it.

The only difficult part is when it's a mobile home. If the mobile home was built before 1976, they have to get Lloyd's of London, or a carrier like that. That will be very expensive - but they'll get the insurance.

FKV: You've lived and worked in the Keys for a number of years, but if you could look at the area from a brand new, first time perspective - what would be your first and favorite pick for a place to live?

LA: Well as someone who loves the Keys and as anyone who lives here will find out, it's that your life is a magical miracle when you live here.

When you choose to live in these islands whether it's Key Largo or Key West you have to be connected to the ecosystem. You have to be connected to the sun, the moon, the wonderful sunsets, and of course to your community.

No matter where you go in the Keys you're going to find something in your life, whether it's fishing, diving, snorkeling, there's something wonderful for everyone. If you're a water lover, you're going to be out and about enjoying all the many water sports.

When I came in 1983, I had moved from Lebanon. I'd worked for the American Ambassador Secretary there. I had to evacuate Lebanon, and so when I moved here I chose to live in Marathon because if anything happens, say because of a hurricane, evacuation is important to me. The last thing to close and the first thing to open is an airport.

So I situated myself in Marathon. It's a nice community that's away from the hustle and bustle of Key Largo and Key West. For almost 30 years, Marathon has been home to me and I absolutely love it.

FKV: So if you did have to evacuate, you can get out from Maathon fairly quickly.

LA: Yes, and I don't mean to take away from the other islands because they're wonderful and they have their own special flavor. Each island has it's own characteristics and personality, and they attract people who appreciate those characteristics.

FKV: Yes, that true. People that like Marathon prefer the more laid back lifestyle. Those who want Key West Florida real estate do so because they love all the activity and night life. People in Key Largo like being closer to Miami. So based on what you just said, what is your most favorite thing to do? What do you enjoy doing the most?

LA: Here and now, the most interesting thing I'm doing in my life is empowering, impacting and inspiring people. I read a lot, I'm an avid reader, and I'm an author.

Other than that I like sailing and I absolutely used to be an addict for night time fishing for yellowtail. I also love to fish for mangrove snapper, grouper during the day, and sailfish.

I used to also go out the 28 miles to the Marathon Hump and fish for tuna. But I would go almost every night to fish for yellowtail and I used to also dive. But right now, here at this point in my life, I enjoy reading deep subjects on spirituality, personal mastery, and organizational leadership.

FKV: Lela, this last question has several parts. If you had to name off the top of your head the "best of" communities for golf, luxury and waterfront - what would you say the best communities are?

LA: That's hard because there are several nice golf courses, Marathon and Key Colony Beach and of course Key West, but to be right there, the one at Sombrero would be nice. I have a home under contract right now and the property is sandwiched between the Sombrero Country Club and Boot Key Harbor.

FKV: Well that home certain has the best of everything, the golf course and the water! What would you say the best luxury communities are for Key West, Marathon and Key Largo?

LA: Well that's a very hard question because there are homes in Duck Key that are $3 and $4 million, there are homes in Key Colony Beach that go from $4 million to $6 million, and there are wonderful homes in Lower Matecumbe and Key Largo, North Key Largo - Ocean Reef area and the Sunset Key in Key West.

FKV: I suppose those properties are also Florida Keys waterfront homes. That means luxury properties are synonymous with waterfront properties in the Keys?

LA: Yes, that's correct

FKV: Well thank you Lela for providing us with insight into the real estate market. The trends affecting the Florida Keys will help buyers interested in Florida Keys vacation homes, permanent homes and investment properties.


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Local Weather Zip Codes

Key Largo - 33037
Marathon - 33050
Key West - 33040