Looking to purchase first STR in Fort Myers, FL area - Any tips from other investors?

Question

Hi all,

I am planning to purchase my first STR in Fort Myers, FL sometime in 2024 with my brother. I have two other properties in my home state (NJ) with long term tenants, however I plan to sell one rental and 1031 into this STR, as I feel there is more money to be made in STR in a nicer area like Fort Myers?

I am looking for anyone's thoughts/opinion on that statement about STR > long term, as well as any pointers to begin looking in this specific market , checking out comps, figuring out if certain properties allow STR, etc.

I just found out about AirDNA which shows the analytics. Any other websites similar to this, and is it worth upgrading to basic plan?

Really any pointers about any of this would be helpful. Thanks in advance.

Jason Wray · Answer

Joseph,

Lee County is a great place to buy properties all around Fort Meyers/Cape Coral is really a dynamite spot.  A lot of people pulled out and became a little sacred due to a recent hurricane and insurance hikes.  To be honest as a Florida resident, Banker and investor in that area it’s a natural cycle so we may not see another hurricane for 10 years.  We do not get hit every year but if your new and one hits is can be a little scary.

That being said insurance will be back down investors cannot afford to have a No-Cash flow situation and if homes start selling off the County will get involved and they will agree to balance out insurance premiums once again.  This happened years ago after another bigger hurricane that hit premium skyrockets investors sold and got out and Florida re-adjusted premiums back down.

Fort Meyers is a great a lot of vacant lots on the intercoastal still priced in favor or buyers/builds.  Homes in certain neighborhoods still in a range from $185K to $285k with cash flow potential.  Cape Coral is building every month more attractions, homes, stores, foodie dives and more.  Take a look at The "7 Islands Project" that will create a huge market and valuation increase in the next 3-5 years alone.

My advice is use a good seasoned agent get your pre-approval ready 60-90 days in advance and bid smart.  Since you and your brother are in NJ you could use this opportunity to buy a home in Fort Meyers as a Second Home/Vacation Home, only 10% down.  The home can still be rented and on the second year pull cash out and transition it into a LTR rental!

Feel free to reach out with any questions.

Andrew Steffens · Answer

We are primarily in Tampa area but do have a few in Ft Myers and Naples.  We are seeing better occupancy and better ROI's in Tampa.  There is more of a draw with having an international airport, NHL/MLB/NFL, Busch Gardens, Urban as well as coastal options etc.  Personally I love the Ft Myers area but feel the investments are better in Tampa

Yvonne Gallegos · Answer

hi Joseph

Cape Coral is ok but got a little saturated and many had a hard time getting good occupancy rates. I feel Bonita shores, Bonita springs and even beach walk isles in fort Myers that allow nightly rentals are better options. Depending your price point even Estero has some good spots as the ritz residences are going up by coconut point all more trendier places right now down here.

Stetson Miller · Answer

@Joseph Kirk All great advice above for reference. In my opinion (you can see there's many) Cape Coral would be your best bet for a consistent and well-established STR industry, but the property type, location, and management are paramount in an ever increasingly competitive market. Because of this, the price point for an entry-level STR here has gone up drastically, which may cut out the majority of buyers. Depending on your price point, some markets in Fort Myers or Bonita Springs may be a better fit

Regarding analytic sites, the only one I use consistently that I don't see mentioned above is Awning.com, which has a free income projection tool and also provides rental comps

Zach Edelman · Answer

Joseph - regarding market analytics, there are ample options. Some of them that come to mind are Rabbu, Revedy, and STR Insights. I know one key differentiator for Revedy is you can actually plug in specific inputs for amenities and how the STR is going to be managed (I.e self managed vs. professionally managed) to get a rental estimate. Not sure of your financing status, but it’s might be helpful to know that  of the lenders that can lend on STRs using projections (there aren’t many), they will qualify the loans via AirDNA projections (I haven’t heard of another rental estimate service being used to qualify loans).

Robin Simon · Answer

I would highly recommend AirDNA - I think its certainly worth it if you are serious about jumping into the world of STRs

Peter Davis · Answer

I agree with what @Yvonne Gallegos said about Cape Coral's saturation of STR's, in particular the off-water homes. I recently spoke to a vacation rental PM that I refer clients to, and she said the best performers now are the gulf-access homes (meaning canal/waterfront homes with access to the Gulf of Mexico). They're more expensive than the off-water homes but we've seen a big jump in inventory over the last few months: as I write this post there are 665 gulf-access homes listed for sale in Cape Coral, that's a 65% increase from December 2022 to December 2023. With that increase in inventory, we're naturally seeing longer time on market, more price reductions and more motivated sellers.

Good luck @Joseph Kirk. I've worked with a lot of clients doing 1031 Exchanges, so if you need a good intermediary referral, let me know.

John Karg · Answer

Hi Joseph,

Short term rentals can be great for extra cashflow, but sometimes the financing can be tough as it generally considers long term rental income. There are DSCR loans however that use short term rental income to qualify, which can get you better terms. Feel free to reach out with any questions!

John

Looking to purchase first STR in Fort Myers, FL area - Any tips from other investors?

Most Popular Reply