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Investing in Naples Real Estate: A Guide for 2022 and 2023

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The real estate market in Naples, Florida, is hot, and the numbers tell it all. Statistics shared by the Naples Area Board of Realtors reveal that in November 2021, Naples home inventory declined by 76%, with approximately only 1,198 homes available compared to 5,006 in November 2020. 

Taking the leap to purchase property in Naples is exciting but can also be stressful. More and more people are moving to South Florida to experience the lifestyle and enjoy warm weather.

As a result, prospective homeowners have been making offers on multiple properties only for other buyers to outbid them. 

The growing interest in the Naples’ real estate market due to the growing population and attractive locations has created an ideal climate for investment opportunities. This guide provides practical tips to potential buyers, and you will know why everyone calls Naples “Paradise Coast.”

Why Invest in Naples Real Estate?

If you’re interested in investing in real estate, it’s essential to be intentional about where you invest your money. Not every US city has a robust real estate market, but Naples stands out for several key reasons. 

Read on to learn about Naples’ retirement value, low property taxes, walkability, and why this city is a vacation hot spot. 

Naples Is a Prime Vacation Destination

Naples has a population of only 21,812 people but had over 1.9 million visitors in 2019, and this popular vacation spot is expected to increase in popularity even more. Since the area is a prime vacation destination with growing numbers of yearly visitors, now is the time to invest in rental properties there. Some local favorites include the Naples Zoo at Caribbean Gardens, the open-air shopping at Tin City, and the Village Shops on Venetian Bay. 

Naples Has a High Average Income

The median household income in 2020 for Naples was $118,141, which is significantly higher than the US average income. Since the city’s population is primarily middle-upper class, you can expect to find tenants for high-end rental properties in Naples.

It’s also expected that Naples properties will continue to increase in value, as tourism continues to be strong in the shopping, dining, beach, and golf sectors. This will stabilize demand for short-term rentals throughout the year and provide a stable market of tenants for investment properties.

You Can Vacation in Your Own Rental Property

If you’re looking for your own vacation spot, owning a rental property in Naples has additional perks. You can use the property as a source of passive income throughout the majority of the year, then visit whenever the mood strikes.

Naples Property Taxes Are Relatively Low

The property tax rate for the city of Naples is 1.15%, which is only slightly higher than the national average. If you’re hoping to maximize your return on investment (“ROI”), taking taxes into consideration is always essential.

Consider Naples Your Retirement Location

The weather in Naples is warm and favorable for many seniors. If you’re looking to invest in property as part of your retirement plans, this South Florida city should be your first option. One benefit of retiring in Naples is the various tax benefits, including the homestead tax exemption

This exemption gives property owners aged 65 years and above permission to deduct part of their home value from property taxes. Florida’s law provides that retirees are exempt from paying 50% of the first $50,000 of assessed property value. 

In addition to the homestead provisions, Floridians enjoy no State income tax, no taxes on pension income, IRA 401Ks, no taxes on social security payments, and no inheritance or estate tax. These tax benefits make homes affordable and suitable investment options for retirees.

Investing in Naples Vacation Rentals

Buying vacation rentals is probably one of the best ways to tap into the real estate market in Naples. This region has always been a favorite for tourists because of its year-round warm weather and stunning beaches. This means the demand for short-term housing is high, with no real off-season. 

As a property investor, you can take advantage of this investment opportunity to generate passive income and build your personal wealth in the long term. There are several factors you’ll need to consider when investing in vacation properties.

The following is a list of tips an investor should consider prior to purchasing vacation rental properties in Naples, Florida:

Location


Location is an aspect you don’t want to overlook when investing in vacation homes. To get the best ROI, your rental property should be in a location where tourists visit. 

Some of Naples’ most popular locations are the pristine Gulf beaches, renowned golf courses, and Fifth Avenue shopping. Choosing rental properties near these spots is one of the wisest decisions to make as an investor.

Property Management


If you intend to invest in Naples vacation rentals but stay in another state or city, you’ll want to hire a property management professional. Hiring the right property manager to help you handle the day-to-day operations of your investment property is key to keeping them in good condition while you’re away. 

Besides keeping up with maintenance, property management experts share all the information you need to be a successful landlord. Your rental management company might also offer cross-platform marketing to promote your vacation homes. 

Keep in mind that professional property managers in Florida need to have their broker’s licenses. If you are personally managing your rental, you don’t need this state-regulated license. 

Does Walkability Matter in Naples?


The average commute time in Naples is 23 minutes. As a higher-income city, Naples is populated mostly by car owners. Nevertheless, walkability is a factor to consider when investing in Naples, as the area is continuously visited by tourists.

Luckily, Naples is considered a highly walkable area. Some of the most walkable spots in the city are Naples Beach, the pier, and the Fifth Avenue shopping and dining district. Building or buying around any of these areas could be a lucrative move.

As you’ve already learned, location is a major consideration for any prospective investment. If your property is 20 minutes from the nearest popular restaurant or attraction, it’s likely a sign that you’ve deviated from the heart of the city.

Considerations When Buying Any Real Estate Property

Now that you’re familiar with the different ways to invest in properties in Naples, there are factors you need to consider. These considerations will help you make the property investment process efficient, less stressful, and successful.

1. Define Investment Purpose

You need clarity on why you’re investing in real estate or risk facing many challenges throughout your investment journey, especially if you require a loan to purchase the property.

To understand your purpose for investing in real estate, decide what you want to do with your property based on the following categories. 

  • Buy and sell after a short duration

This option is ideal for investors who are targeting low to medium profits. In most cases, the investor purchases property under construction and sells it after completion.

  • Purchase and use the property as a permanent residence

Many people prefer buying and using the property themselves to save on rent. When you buy residential property, you also enjoy high-value appreciation. 

  • Buy and rent out

If you want to make a passive income, this is a perfect option for you. You’ll earn money every month and get long-term value appreciation. But to succeed, you must be ready to deal with common issues landlords face, such as handling conflicts, managing tenants, and resolving legal issues. 

  • Buy and sell after long-term value appreciation

This tactic entails buying and holding property for a long duration to attract high-value appreciation. As a property investor, you may choose this category to serve long-term goals like retirement. 

2. Mortgage Pre-Approval Matters

Whether you’re buying a permanent residential home or investment property, get a mortgage pre-approval first.

There are several benefits of loan pre-approval, like: 

  • Increases your probability of closing the deal
  • Sellers will accept your offer quicker and will likely sell the property at the asking price.
  • You don’t waste valuable time searching for homes that don’t fit your needs or budget. 

Typically, pre-approval helps you to set a budget, and you’ll be able to identify potential properties quickly. You’ll also know what your home loan payments look like every month. 

3. Older Buildings vs. New Constructions

Before anything, ask yourself whether buying existing units or building new constructions fit your investment plan. Remember, each option has benefits and disadvantages.

For example, new constructions present opportunities to customize and integrate modern amenities. However, you risk incurring extra expenses, delays, and underlying issues in a newly developed neighborhood or commercial hub. 

Some top new constructions in Naples include properties at:

  • Naples Square
  • The Four Seasons Hotel
  • Ritz Carlton Residences, Estero Bay
  • Isles of Collier Preserve
  • And villa developments from big names like Minto, Lennar, Toll Brothers, Pulte Homes, and more

Existing buildings guarantee convenience, accessibility, availability of utilities, amenities, and improvements such as landscaping. Not to mention the buying cost is lower than investing in new buildings. The downside is the need for renovations, which might add extra expenses.

Credit Score


It doesn’t matter if you’re buying existing vacation rentals or new construction homes; you will most likely need financing to purchase real estate properties. If you’ve been in the real estate market for some time, you know that qualifying for a conventional loan and refinancing is not simple. To secure loan approval, you need a good credit score. 

Lenders review credit scores to determine borrowers’ ability to repay loans in full within the set timeline. Your score will also determine the interest rate and terms of payment your lender will set.

Make sure you maintain a credit score of at least 720-800. A higher score translates to flexible repayment terms and a lower interest rate. 

If you have bad credit, take the necessary steps to improve your score. These steps include: 

  • Paying bills on time
  • Using credit cards wisely
  • Reviewing credit reports regularly and disputing errors
  • Avoiding applying for new credit 

Sweet Southwest Florida

Investing in Naples real estate can be lucrative, but the process isn’t without challenges. Besides finding the right property, you’ll need to locate a private mortgage lender like Vaster that understands your needs and provides flexible loan solutions to help you achieve your property investment goals.

Vaster has been an industry leader in South Florida real estate since its inception in 2017. Vaster is backed by two of Florida’s biggest real estate firms: Fortune International Realty and the Related Group. Known for high-end luxury properties and the finest in South Florida culture, these real estate giants are behind some of the best development projects in the Sunshine State.

At Vaster, you’ll get professional advice on securing conventional loans, qualifying for refinancing, and ensuring you close quickly and easily. 

Sources:

Insider Tips for Buying a Home in 2022 | Naples Daily News

Naples, FL | Data USA

Naples Florida Quick Facts | US Census Bureau

Tourism in Collier County breaks records in 2019 | Naples Daily News

How to Improve Your Credit Score | Investopedia

Property Tax Exemption Information | HCPAO

Naples, FL | C-SPAN.org

7 Best Things to Do in Naples | US News Travel

Become a Property Management (CAM) in Florida | SFPMA

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