Where STRs work (legally) in Florida
Florida is generally STR-friendly at the state level — there's a state law preempting many local STR bans. But cities and counties still have meaningful regulatory power, and the picture varies widely:
- Strongly STR-friendly: Destin, Panama City Beach, Orlando area (Kissimmee, Davenport — many "vacation rental" subdivisions), Cocoa Beach, parts of Miami Beach.
- STR-allowed but regulated: Naples, Sarasota, Tampa, Jacksonville Beach. Registration, occupancy taxes, sometimes minimum-stay requirements.
- Restricted: Some HOA-controlled communities ban STRs entirely regardless of city policy. Single-family in deed-restricted neighborhoods is the highest-risk category.
- Highly restricted: Some Miami neighborhoods have strict zoning making STR difficult or impossible. Some Anna Maria Island and Longboat Key areas have minimum-stay requirements that effectively prohibit short-term.
The first question on any STR investment isn't financing — it's: can you legally STR this specific property? Always verify with the city, county, AND the HOA before going under contract.
How lenders treat STR income
This is the financing question that determines whether the deal works. Lenders fall into three camps:
- STR income at 100% — uses AirDNA projections or 12 months of actual STR booking history. Best for deals where STR economics dominate. Pricing typically slightly higher than long-term-rental DSCR.
- STR income discounted — uses 65-75% of projected STR income to account for vacancy, management costs, seasonality. Some lenders sit here.
- LTR-only — won't use STR projections, requires the property's long-term-rental comps to support DSCR. Most conventional investment lenders fall here, plus some traditional DSCR lenders.
For a vacation-area property, the STR-income lender choice changes everything. A Destin condo might have $7,000/month STR income but only $3,000/month LTR comps. A 1.4 DSCR on STR vs. a 0.6 DSCR on LTR — same property, totally different lending outcomes. Picking the right lender is the deal.
Two financing structures: DSCR vs. second-home
Two paths most STR-investors-financing a Florida vacation rental consider:
Path 1: Investment-property DSCR loan
- 20-25% down, no personal income required, qualifies on STR or LTR projection.
- Higher rate than primary-residence financing (1-2% above conventional).
- Property is clearly rental — IRS treats as such, full depreciation deduction available.
- Common for true investors not personally using the property much.
Path 2: Second-home loan with limited rental
- 10-20% down, primary-buyer-style qualification on personal income.
- Better rates than investment property (closer to primary residence).
- Tax treatment: must use personally 14+ days or 10% of rental days, otherwise it's reclassified as rental.
- Lender expectations: primarily personal use, occasional rental — not full-time STR.
The misuse to avoid: taking a second-home loan with the secret intent to STR it 40+ weeks/year. That's mortgage fraud — the application asks specifically about intended use. We have the conversation upfront about your real plans and structure the loan correctly. More on second-home →
STR-specific operational costs (not in the brochure)
Florida STR operating costs are higher than long-term rental for several reasons. Build them into your underwriting before you offer:
- Property management: 20-30% of revenue for full-service, 10-15% for booking-only. Self-management is possible but is a real time commitment.
- Cleaning fees: Pass-through to guest typically, but you have to coordinate.
- Furnishing: $25K-$50K+ of upfront furnishing for a 2-3 bedroom STR to be competitive. Replace damaged items several times a year.
- Higher insurance: STR coverage is more expensive than landlord coverage. Some carriers won't write STR policies in coastal Florida.
- Florida tourist development tax: County-level, typically 5-6%. Plus state sales tax. You collect from guests and remit to the state and county.
- HOA approvals: Some communities allow STR but require a fee per booking, or limit total rental nights per year.
- STR utilities/internet: You're paying utilities and high-speed internet year-round, not the tenant.
- Hurricane preparation costs: Boarding up, evacuation refunds, and lost revenue from outages.
Realistic Florida STR markets in 2026
The market has matured. Easy returns from 2020-2022 are gone in most areas. Where things still pencil:
- Destin / 30A / Panama City Beach — the gulf STR corridor. Strong year-round demand, mature market, returns require operational discipline.
- Orlando vacation home subdivisions (Kissimmee, Davenport, Reunion, ChampionsGate) — purpose-built STR communities with theme park demand. Stable but increasingly competitive.
- Naples / Marco Island — high-end seasonal STR. Strong winter season, slower summers. Higher price points, higher revenue per booking.
- Sarasota / Siesta Key / Anna Maria area — premium beach STR, but minimum-stay rules in some submarkets effectively block daily rental.
- Cocoa Beach / Cape Canaveral — cruise traveler demand plus space-tourism upside. Less mainstream than panhandle.
- South Beach / Miami — strong year-round but dense regulation. Specific buildings allow STR; many don't.
FAQ
Can I use AirDNA projections for financing?
Some DSCR lenders accept AirDNA Rentalizer reports as the rental income basis. Others require actual STR history, the property's market rent analysis (LTR), or a mix. We pick the lender to match what data you have available.
Are STR loans more expensive than other DSCR loans?
Slightly — typically 0.25-0.5% higher than LTR-DSCR for the same property. The premium reflects STR's higher volatility and operational complexity. The extra cash flow from STR usually more than offsets.
What if STR rules change after I buy?
Real risk. The defense is to underwrite the deal so it pencils as an LTR too — even at break-even. Buying STRs that only work as STRs is concentrated risk. Underwriting the worst case (LTR-only at lower rent) is conservative discipline.
Do I need a separate STR insurance policy?
Yes — homeowners insurance excludes business use, and STR is business use. You need a STR-specific policy or a landlord-with-STR-rider. Premiums typically 30-50% higher than standard homeowners.
Can I 1031 exchange into an STR property?
Yes, treated as investment property for 1031 purposes. Coordinate timing with your QI. Watch the personal-use restriction during the exchange holding period — using your replacement STR personally too much can disqualify the exchange.