Second property vs Investment property

[Sean Lesser]

I am new to investing in Florida and was wondering how to get around the increase in both Interest rates for an investment property in Florida as well as any advice for reducing Insurance premiums in Florida for Investment/Second Homes? Is one better than the other?

I am going to do ST/LT rentals.

[Dan Maciejewski]

The rates for second homes are going up to almost match investment loans very soon.  A lender just told me they will rise on Monday (2/7/2022) and the internet tells me April -- soon either way.

The requirement for a second home is that you have to personally use it 14 days out of the year.

And you are able to get investment loans for single-family properties as low as 15% down (vs 10% for second home loans) -- I have a few lenders checking into investment loans at 10%, also.

So, they aren't that different, and will soon be basically the same!

INSURANCE in Florida.  Basically the worst in the country.  you can read my rant from a year ago about AOB, but honestly, we are going to have to regulate or legislate something soon, or insurance will really get out of hand.  

For STR / short term rentals, the rates are going to be higher. the only way around that would be to not tell your insurance company, but fraud lays you wide open to all sorts of bad things.

There are companies that won't insure roofs older than 15 years.

There are insurance companies that won't do STR at all.

But your best bet to lower rates (besides shopping around with a lot of brokers) is to reduce their risk.  Have a whistle-clean 4-point.  Get all the wind mitigation discounts.  Stay out of flood zones.  Ask your insurance broker what else you can do, but insurance companies aren't in the business of losing money, so they are going to charge what they can get away with!