Florida STR investors - What are you seeing with insurance?

Question

Florida STR investors, what has been your biggest challenge over the past 12 months?

Insurance? Regulations? Property taxes? Occupancy? Finding reliable property management?

It seems like every market has shifted a bit, and I'm curious what's had the biggest impact on your business.

Igor Ganapolsky · Answer

Jared's point about reinsurance costs down 15-25% is encouraging, and I'm seeing the same softening in Broward County. But here's the thing — even with rates coming down from peaks, the baseline is still way above where it was pre-2022. Amber's $6K to $11K jump is the reality most FL investors are living with.

For me, the insurance conversation has fundamentally changed how I think about acquisition strategy, not just underwriting. I've shifted heavily toward tax deed properties in Broward (Auction #113 coming up in October) because the 30-50% acquisition discount is what absorbs the higher insurance costs and still leaves margin. When you're buying at county auction prices instead of MLS prices, even an $8-10K/year insurance bill doesn't kill the deal.

Melissa's point about the gap between average and exceptional properties is also relevant — the tax deed list tends to have properties with deferred maintenance, which means you can force the "exceptional" category through rehab rather than paying a premium for it on the MLS.

Christopher's inflation-driven revenue observation is interesting from a different angle too: if vacation financing is propping up STR revenue, the correction he predicts means investors need more cushion, not less. That makes the acquisition price even more important than the revenue projection.

Amber — curious if you're seeing the insurance softening apply equally to vacant property and builder's risk policies, or is that segment still tight?

Melissa Haworth · Answer

Insurance has definitely been one of the biggest pressure points, especially along the Gulf Coast. Premiums have climbed enough that they can completely change the numbers on a deal if you're not underwriting conservatively.

That said, I'm also seeing a bigger gap between average properties and exceptional ones. Occupancy hasn't disappeared, but guests are being much more selective. Well-maintained homes with a strong location, updated interiors, and a clear marketing strategy are still performing, while properties that were able to coast a few years ago are feeling the slowdown.

The other shift I've noticed is that local regulations can change quickly, so investors who stay on top of city and county policies seem to be in a much stronger position than those who assume last year's rules still apply.

Amber Stout · Answer

@Jared Townsend Thanks for sharing those insights. That's very helpful to know and I feel optimistic that pricing will soften.

Jared Townsend · Answer

I spoke with a number of FL insurance carrier execs a few weeks ago and they all confirmed that their reinsurance costs are down 15-25% and litigation costs are also diminishing. This signals that rates (already have) and will continue to soften in the next 12-24 months.

Pricing won't go back to where it was (what has in the last 5 years?!), but we should experience some relief at least.

Amber Stout · Answer

@Aaron Spatz That's a great point. Thanks for sharing this as this is very interesting to see the net migration is still positive to FL. Also, interesting in general to see which states are coming here.

Aaron Spatz · Answer

I think you're also going to see a wild flux of rates thanks to the massive migration into the state. Insurance is so frustrating on so many levels, but I imagine between hurricane season, an increased amount of rooftops in general, as well as a lot of new people in the state, it's going to cause insurance rates to climb.

Amber Stout · Answer

@Michael Koeplin Completely agree that insurance volatility has become a much bigger deal than a lot of investors expected. I've personally has insurance policies increase from 6k/year to 11k/year. That's a massive increase. Since peaks, I have seen it come down a bit but still a challenge for myself and for some of my STR clients.

Michael Koeplin · Answer

I’d say insurance volatility has become a much bigger deal than a lot of investors expected. Premium increases are one thing, but tightening underwriting, higher wind deductibles, and carriers becoming more selective have changed the math on some deals pretty quickly.

Christopher Woodward · Answer

I don't currently own any units, but I extensively research tourism economies, especially in the Florida Panhandle, and right now the biggest issue is inflation driving revenue. There are quite a few monocultures in the Panhandle totally dependent on tourism, while a big junk of the money is just inflation dollars rather than real activity.

Even the more stable markets like Destin, Florida are experiencing extreme seasonality and inflation-driven revenue. I wrote about it recently: Here is the blog on my profile.

Basically more and more people are financing their vacations. Since they aren't handing over cash, and instead they have "free money" to spend, they are driving up prices in areas and then leaving. This makes markets look healthier than they actually are and creates risk for people who scale their lifestyles up this inflated revenue, when inevitably it will correct leaving people with costs higher than their incomes. That is where insurance, management, and other costs are going to start hurting.

Short-term rentals are first-principle businesses, meaning the income statement matters more than vanity metrics. I think the shift you are talking about is the shift towards first principles as people are seeing margins getting squeezed due to tourism spending. Revenue does not equal growth.

Amber Stout · Answer

@Christopher Woodward I agree with you that revenue does not equal growth and can simply be due to inflation. Great analysis! The connection to rising consumer debt is interesting. One thing I'd love to understand better is the Panhandle conclusion. What data are you using to support the idea that those markets are disproportionately dependent on tourism? Is that based on employment data, STR revenue, local GDP, or something else?

Florida STR investors - What are you seeing with insurance?

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