Buying My First Home in Florida: Second Home or Investment Property?
Member since 2022 · 1 post · 2 votes
Buying My First Home in Florida: Second Home or Investment Property?
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votesQuote from @Jay Hurst:
Quote from @Anna Bravo:
I've been listening to your podcast and have already learned so much from just a few episodes—thank you for all the valuable information!
I'm not sure if you've covered this already, but I have a question. When buying a property out of state, do most people purchase it as a second/vacation home (with around 10% down) or as an investment property (typically requiring 20% down)?
I'm getting very close to buying my first home, which will likely be in Florida, and I'd really appreciate any guidance. My goal is to purchase something that can generate rental income. I've been considering a multifamily property, although I've also looked at townhomes. The challenge is that many of the townhomes have HOA fees that make the numbers less appealing.
I'd love to hear your thoughts or any advice you have for someone buying their first out-of-state property. Thank you!
If you call it a second home you will sign at affidavid at closing that you will use the property at least two weeks out of the year. That obvously does not work if you plan on renting with a long term lease. also, if you call it a seocnd home you cannot use projected rental income to help qualify for the purchase mortgage.
I believe you have it backwards.
FNMA/FHLMC only allows you to rent it out for up to 2 weeks for the first 12 months of ownership.
Fannie Mae allows you to rent out a second home occasionally, but you cannot use rental income to qualify for the mortgage, and you must maintain exclusive personal control over the property under the Fannie Mae Selling Guide. [1, 2, 3]Core Rental Restrictions
- No Qualification Income: You cannot use projected or actual rental income from platforms like Airbnb or traditional leases to qualify for the mortgage. [1, 2]
- Exclusive Control: You must keep exclusive control over the property; you cannot enter a mandatory rental pool, revenue-sharing agreement, or an arrangement that gives a management firm control over occupancy. [1]
- Personal Use Priority: The home must be for your personal use and enjoyment for a portion of the year, specifically during the first year of the loan agreement. [1, 2]
- One-Year Clause: The strict rider restricting management control and requiring primary personal use applies during the first 12 months. After one year, renting guidelines loosen, though it must still function genuinely as a secondary residence rather than a full-time commercial enterprise. [1, 2, 3]
Logical Property Management4.9450 Reviews
12 Replies
- 1moArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 904 votes
Quote from @Anna Bravo:
I've been listening to your podcast and have already learned so much from just a few episodes—thank you for all the valuable information!
I'm not sure if you've covered this already, but I have a question. When buying a property out of state, do most people purchase it as a second/vacation home (with around 10% down) or as an investment property (typically requiring 20% down)?
I'm getting very close to buying my first home, which will likely be in Florida, and I'd really appreciate any guidance. My goal is to purchase something that can generate rental income. I've been considering a multifamily property, although I've also looked at townhomes. The challenge is that many of the townhomes have HOA fees that make the numbers less appealing.
I'd love to hear your thoughts or any advice you have for someone buying their first out-of-state property. Thank you!
If the plan from day one is to use it as a rental, it's usually better to underwrite and finance it as an investment property rather than trying to make it fit a second-home loan. Focus on finding a deal that works with realistic rents, expenses, and reserves. Since you're already open to buying out of state, it may also be worth comparing Midwest markets, where lower acquisition costs and fewer HOA-heavy properties can make cash-flow opportunities easier to find. The right market and the right numbers will matter far more than the address. - 1moJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Anna Bravo:
I've been listening to your podcast and have already learned so much from just a few episodes—thank you for all the valuable information!
I'm not sure if you've covered this already, but I have a question. When buying a property out of state, do most people purchase it as a second/vacation home (with around 10% down) or as an investment property (typically requiring 20% down)?
I'm getting very close to buying my first home, which will likely be in Florida, and I'd really appreciate any guidance. My goal is to purchase something that can generate rental income. I've been considering a multifamily property, although I've also looked at townhomes. The challenge is that many of the townhomes have HOA fees that make the numbers less appealing.
I'd love to hear your thoughts or any advice you have for someone buying their first out-of-state property. Thank you!
If you call it a second home you will sign at affidavid at closing that you will use the property at least two weeks out of the year. That obvously does not work if you plan on renting with a long term lease. also, if you call it a seocnd home you cannot use projected rental income to help qualify for the purchase mortgage.
Hurst Real Estate, INC4.987 Reviews- 1moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Quote from @Jay Hurst:
Quote from @Anna Bravo:
I've been listening to your podcast and have already learned so much from just a few episodes—thank you for all the valuable information!
I'm not sure if you've covered this already, but I have a question. When buying a property out of state, do most people purchase it as a second/vacation home (with around 10% down) or as an investment property (typically requiring 20% down)?
I'm getting very close to buying my first home, which will likely be in Florida, and I'd really appreciate any guidance. My goal is to purchase something that can generate rental income. I've been considering a multifamily property, although I've also looked at townhomes. The challenge is that many of the townhomes have HOA fees that make the numbers less appealing.
I'd love to hear your thoughts or any advice you have for someone buying their first out-of-state property. Thank you!
If you call it a second home you will sign at affidavid at closing that you will use the property at least two weeks out of the year. That obvously does not work if you plan on renting with a long term lease. also, if you call it a seocnd home you cannot use projected rental income to help qualify for the purchase mortgage.
I believe you have it backwards.
FNMA/FHLMC only allows you to rent it out for up to 2 weeks for the first 12 months of ownership.
Fannie Mae allows you to rent out a second home occasionally, but you cannot use rental income to qualify for the mortgage, and you must maintain exclusive personal control over the property under the Fannie Mae Selling Guide. [1, 2, 3]Core Rental Restrictions
- No Qualification Income: You cannot use projected or actual rental income from platforms like Airbnb or traditional leases to qualify for the mortgage. [1, 2]
- Exclusive Control: You must keep exclusive control over the property; you cannot enter a mandatory rental pool, revenue-sharing agreement, or an arrangement that gives a management firm control over occupancy. [1]
- Personal Use Priority: The home must be for your personal use and enjoyment for a portion of the year, specifically during the first year of the loan agreement. [1, 2]
- One-Year Clause: The strict rider restricting management control and requiring primary personal use applies during the first 12 months. After one year, renting guidelines loosen, though it must still function genuinely as a secondary residence rather than a full-time commercial enterprise. [1, 2, 3]
Logical Property Management4.9450 Reviews - 1moJay HurstBusiness MemberLender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
Quote from @Drew Sygit:
Quote from @Jay Hurst:
Quote from @Anna Bravo:
I've been listening to your podcast and have already learned so much from just a few episodes—thank you for all the valuable information!
I'm not sure if you've covered this already, but I have a question. When buying a property out of state, do most people purchase it as a second/vacation home (with around 10% down) or as an investment property (typically requiring 20% down)?
I'm getting very close to buying my first home, which will likely be in Florida, and I'd really appreciate any guidance. My goal is to purchase something that can generate rental income. I've been considering a multifamily property, although I've also looked at townhomes. The challenge is that many of the townhomes have HOA fees that make the numbers less appealing.
I'd love to hear your thoughts or any advice you have for someone buying their first out-of-state property. Thank you!
If you call it a second home you will sign at affidavid at closing that you will use the property at least two weeks out of the year. That obvously does not work if you plan on renting with a long term lease. also, if you call it a seocnd home you cannot use projected rental income to help qualify for the purchase mortgage.
I believe you have it backwards.
FNMA/FHLMC only allows you to rent it out for up to 2 weeks for the first 12 months of ownership.
Fannie Mae allows you to rent out a second home occasionally, but you cannot use rental income to qualify for the mortgage, and you must maintain exclusive personal control over the property under the Fannie Mae Selling Guide. [1, 2, 3]Core Rental Restrictions
- No Qualification Income: You cannot use projected or actual rental income from platforms like Airbnb or traditional leases to qualify for the mortgage. [1, 2]
- Exclusive Control: You must keep exclusive control over the property; you cannot enter a mandatory rental pool, revenue-sharing agreement, or an arrangement that gives a management firm control over occupancy. [1]
- Personal Use Priority: The home must be for your personal use and enjoyment for a portion of the year, specifically during the first year of the loan agreement. [1, 2]
- One-Year Clause: The strict rider restricting management control and requiring primary personal use applies during the first 12 months. After one year, renting guidelines loosen, though it must still function genuinely as a secondary residence rather than a full-time commercial enterprise. [1, 2, 3]
Yeah, that is what I was trying to say: if you call it a second home it really has to be used as a second home and you will NOT be able to use any rental income to qualify for the purchase mortgage. I would add the second home rates are no better then an investment property at least with a program being sold to Fannie/Freddie.
Hurst Real Estate, INC4.987 Reviews
- 1moRaymond J. RodriguesBusiness MemberLender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
@Anna Bravo I finance a lot of investment properties whether they be short term rentals or long term rentals. Long term rentals require 15-20% down, and unless you get creative with the financing or buy in a good area, cash flow is hard to come by. I have a lot of investors that buy short term rentals with 10% down, that do cash flow, but you need to buy right. Feel free to reach out to me and I can connect you with a few professionals that I work with depending on the area that you are looking to buy in!
Helm Mortgage Corp.5123 Reviews - 1moDenise SuppleeBusiness MemberRealtor · Willow Grove, PA · Member since 2017 · 962 posts · 636 votes
How you finance the property really depends on how you plan to use it and your lender's requirements. If you're planning to use it as a rental, I'd have that conversation with your lender early so you understand your options. If you're buying out of state, I'd also make sure you have a trusted local team in place. A good Realtor, inspector, and, if needed, a reliable property manager can make a big difference.
Spark Rental Co-Investing Club576 Reviews - 1moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Quote from @Anna Bravo:
I've been listening to your podcast and have already learned so much from just a few episodes—thank you for all the valuable information!
I'm not sure if you've covered this already, but I have a question. When buying a property out of state, do most people purchase it as a second/vacation home (with around 10% down) or as an investment property (typically requiring 20% down)?
I'm getting very close to buying my first home, which will likely be in Florida, and I'd really appreciate any guidance. My goal is to purchase something that can generate rental income. I've been considering a multifamily property, although I've also looked at townhomes. The challenge is that many of the townhomes have HOA fees that make the numbers less appealing.
I'd love to hear your thoughts or any advice you have for someone buying their first out-of-state property. Thank you!
Many borrowers violate the terms of their 2nd-home mortgages.
See FNMA Guideline excerpt below:
https://selling-guide.fanniemae.com/sel/b2-1.1-01/occupancy-...
Second Home PropertiesThe table below provides the requirements for second home properties.
Logical Property Management4.9450 Reviews - Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes1mo
Hey Anna,
On your question, it really comes down to how you plan to use the property. If your intention is to buy it mainly as a rental, it's generally going to be treated as an investment property. If it's a true second home that you'll use personally for part of the year, that's a different conversation. It's always best to be upfront with your lender about your plans since they'll determine which loan program fits.
I also wouldn't get too hung up on multifamily vs. townhome just yet. I'd buy whichever one makes the most sense financially. I've seen townhomes with HOA fees that completely kill the deal, and I've seen others where the HOA covers enough that it actually works out. Every property is different.
Since you're investing from out of state, I'd probably put just as much effort into finding a great local team as finding the property itself. A good agent, lender, property manager, and contractor can save you a lot of headaches down the road.
Feel free to reach out if you have any more questions - my DMs are always open!
- 1moWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
In the case that earning rental income is your goal, it would typically have to be financed as an investment rather than a second home. In the event you are going to be purchasing a vacation home out of state, I would ensure the economics work based on conservative rents and have a solid local team in place.
Good luck!
NETWORTH BUILDERS5236 Reviews - Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 356 posts · 148 votes1mo
@Anna Bravo Great question. It really comes down to your intended use of the property because that determines how it should be financed.
If your primary intent is to use it as a true 2nd home meaning you'll vacation there yourself and only rent it occasionally within 2nd home guidelines - a 2nd home loan with as little as 10% down may be a good fit.
If your primary intent is to purchase the property as a rental and generate income, then it would typically be financed as an investment property. For a single family investment property, there are programs available with as little as 15% down, while multifamily properties have different down payment requirements depending on the number of units and loan program.
I'd also encourage you to look beyond just the down payment. Things like insurance costs, property taxes, HOA fees, expected rental income, and your long term investment goals can have a much bigger impact on which option makes the most sense.
I'm a lender who works with real estate investors here in Florida, so if you'd like, I'd be happy to walk through your goals and help you compare the different financing options. Feel free to send me a message, happy to help.
- 1moJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votesWelcome to BP, Anna! The biggest factor isn't whether the property is out of state—it's how you intend to use it. If you're buying it primarily as a rental from day one, lenders will generally treat it as an investment property, which usually comes with a higher down payment requirement than a primary or second home. A true second home has to meet specific occupancy requirements, so it's generally not something you want to structure as if your plan is to rent it out full time. I'd also spend as much time vetting your local team as you do analyzing the property. Having a great property manager, inspector, contractor, and lender in the market can make or break an out-of-state investment. Since you're still deciding on a market, I'd compare Florida with a few Midwest markets too. I moved from Portland to Columbus in 2020 and have built a portfolio there because I found the combination of strong job and population growth, landlord-friendly laws, and more affordable price points made the numbers work better. There are still opportunities in the $120K–$180K range that can produce solid cash flow, and I've even seen properties purchased around $120K renting for about $1,550 per month. Whatever market you choose, I'd focus on buying one property that cash flows well rather than stretching for something that only works if appreciation bails you out. Happy to connect and answer any questions you have!
Quote from @Anna Bravo:
I've been listening to your podcast and have already learned so much from just a few episodes—thank you for all the valuable information!
I'm not sure if you've covered this already, but I have a question. When buying a property out of state, do most people purchase it as a second/vacation home (with around 10% down) or as an investment property (typically requiring 20% down)?
I'm getting very close to buying my first home, which will likely be in Florida, and I'd really appreciate any guidance. My goal is to purchase something that can generate rental income. I've been considering a multifamily property, although I've also looked at townhomes. The challenge is that many of the townhomes have HOA fees that make the numbers less appealing.
I'd love to hear your thoughts or any advice you have for someone buying their first out-of-state property. Thank you!
Jimmy Lieu, Red 1 Realty4.9119 Reviews - Lender · Miami, FL · Member since 2025 · 121 posts · 33 votes8h
Hi @Anna Bravo
Since you plan on renting the new property out, keep in mind 2nd home loans expect you to use the property for part of the year. Meaning you can only do short to mid term rentals. If you are interested in long term rentals, you would need to go with a conventional investment loan or a DSCR loan (investment loan focused only on the subject property's debt service coverage ratio).When getting approved for 2nd home loans (usually 10%), you'll need to qualify purely based on your personal income and liabilities. This means you need to be able to afford your primary and 2nd home mortgages based on your income alone.
When getting approved for conventional investment loans (usually 15%), you'll be able to qualify based on your personal income and liabilities plus the rental income. This is why most buyers can qualify for conventional investment loans and not always 2nd home loans.
When getting approved for DSCR loans (usually 20-25% depending on credit and experience), you'll be able to qualify purely based on the property cash flow. That is rental income minus monthly payment (principal, interest, taxes, insurance, HOA if applicable). No review of income or debts needed. Credit score/report is still part of the review. This is oftentimes the easiest way to qualify when income is not enough or monthly debt payments are too high.
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