Buying a second home in Florida has become an increasingly popular option for those looking to enjoy our state’s sunny weather, beautiful beaches, and wonderful attractions. In fact, Florida is home to some of the most sought-after vacation spots in the U.S., and 10% of the homes in our state are used exclusively for vacation purposes. 

But navigating the purchase of a second home can be a complex undertaking, especially as you explore key financial and logistical considerations. In this post, we’ll answer common questions potential homebuyers often ask (or should ask!) before taking the plunge into second home ownership—from determining property goals to exploring options for home loans for rental and second properties.  

What are my specific goals for my second property?

Purchasing any property is a major financial commitment—both upfront and ongoing. That’s why it’s so important to realistically think about your goals for your second home, as well as how owning a second home can support or impede your lifestyle. 

How you plan to use your home will often dictate the most important perimeters for your search, from budget to location. Typical second homes fall into one or two of the following categories:

• Vacation home
• Part-time residence
• Future full-time residence
• Vacation or short-term rental
• Long-term rental
• Investment property to be resold (“flip”)
• Residence for a family member (for example, a college student)

Once you have a specific purpose in mind for the property, you can begin to research your options. Consider:

• Market conditions: What is the market like right now in the areas that most interest you, and is now the right time to buy? 
• Location: What locations will best meet the needs for your lifestyle, including transit, shopping, recreation, entertainment, walkability, and travel?
• Type of property: Size, maintenance requirements, security, and upkeep costs can all factor into your decision.
• Amenities: Whether you are planning on renting to vacationers or simply enjoy the property by yourself, what amenities would enhance your property?
• Budget: More than just your upfront cost, ongoing expenses, taxes, and rental income are all key components of determining a workable budget.

Don’t navigate these essential questions alone; leaning on the expertise of your local lender and realtor can help you avoid pitfalls and ensure you find the right property for your needs. 

Am I planning to rent it out?

In Florida, many second homes serve as vacation rentals, offsetting the cost through income received from renting. However, renting a residence isn’t as simple as posting an ad and collecting payments. Local regulations on short-term rentals, plans for cleaning and emergency repairs, and tax implications are all items to familiarize yourself with before jumping into investment property ownership.

• Licensing: If you rent a property more than three times in one year (for less than 30 days at a time) you need a special vacation business license from the Florida Department of Business and Professional Regulation. Your locality may also have other licensing and permit requirements.
• Short-Term Rental Regulations: To preserve homes for residents and protect existing hotels, some municipalities have strict rules on the allowance of short-term rentals like Airbnb’s. Familiarize yourself with your area’s rules before purchasing a property.
• Listing: Whether you use a local realtor or utilize online rental platforms, understand the process, requirements, and fees.
• Cleaning and Guest Assistance: From turning over the property after a stay to ensuring there is someone available should your guests face an issue, you’ll need a well-considered system for managing the property if you will be out of the area.
• Taxes: Income from rental properties that are rented out more than 14 days is taxable, and you may even be required to pay a hotel tax. On the other hand, maintenance, repairs, depreciation, and even mortgage interest may be deductible for rental properties. Speak to an accountant to get a better understanding of how renting your second home will affect your tax picture. 

For a thorough overview of the short-term rental process, check out this Homeowner’s Guide to Short Term Rentals in Florida. 

What are the additional financial considerations of owning a second home?

As we touched on above, understanding the tax implications is essential. If you itemize your deductions, mortgage interest on a second home is generally tax-deductible. Renting the property may also provide additional tax deductions for repairs and operating expenses. Consulting with a tax professional can help you navigate these complexities and ensure you make the most of available tax benefits while avoiding potential pitfalls. 

Additionally, in Florida, homeowners’ insurance is an important expense to consider—especially if you are choosing to purchase a home along the coast. According to the National Association of Realtors, you can expect to pay an average of $11,000 per year on insurance, depending on your location. Note that many policies do no include flood protections, which may be an additional cost.

Finally, don’t forget those maintenance costs. Extreme weather, heat, and an ongoing growing season can mean more upkeep costs year-round. While not necessarily reducing out-of-pocket costs, purchasing a home in an HOA community can simplify your life. 

What are the financing options for my second home?

If you plan to spend time in the property yourself, it’s entirely possible to obtain a conventional mortgage loan or jumbo home loan for your second home. Keep in mind, however, that lenders may require a higher down payment for properties that aren’t a primary residence—often around 20%—and interest rates may be a tiny bit higher, too. If your second home will be an investment property, you may need to obtain a special investment property mortgage—speak to your lender to determine which loan makes the most sense for your situation. 

An additional option for homeowners who have significant equity in their current homes is to utilize a Home Equity Line of Credit (HELOC) or Home Equity Loan. HELOCs require lower, interest-only payments in the initial phase, which can lead to lower payments in the early years—useful if you are hoping mortgage rates will fall and you plan to refinance. And sometimes you may be able to unlock a lower rate with a home equity loan than an investment property mortgage. Perhaps most importantly, neither will require a down payment upfront. 

A final option is to choose a hybrid of the two—using a HELOC or home equity loan for your down payment for your mortgage. Because of more complex credit implications, it’s important to speak to your lender first if you hope to pursue this option. 

Work with a Bank that Understands Your Needs

Our lenders live and work in Florida and understand the unique needs of buying a home in the sunshine state. When you partner with Cogent, we will take the time to work with you to explore your options and find the right financing to help you achieve your goals for your dream getaway. 

Whether you’re buying your first, second, or third property, our team of mortgage specialists are ready to assist. Visit or call your local banking center in Clearwater, Fort Myers, Jacksonville, Lake Mary, Naples, Ocala, Orange City, Orlando, Sarasota, Tampa, or Winter Park today to see what we can do for you!

The information contained herein is for informational/educational purposes only.  The views and opinions expressed in this document may be those of the individuals and may not necessarily reflect those of Cogent Bancorp and its subsidiaries and affiliates, or the entities they may represent. Content contained herein may be used in connection with the advertising and/or marketing of products offered by Cogent Bank or Cogent Private Wealth. The material is not intended to provide or substitute for legal, tax, or financial advice or to indicate the availability or suitability of any Cogent Bank product or service. You should consult with a legal, financial, tax, or other appropriate professional(s) for your specific needs and/or objectives before making any decisions.