How to Invest in Real Estate in Key West in 2023

How to Invest in Real Estate in Key West in 2023

Key West is well-loved for its beautiful waters, historic properties, and great year-round weather. Residents here enjoy outdoor amenities in a singular luxurious setting. Before investing in any area, it’s essential to know what type of investment you’re making, then plan accordingly by researching the real estate market and surrounding location. 

A property search can be equal parts tedious, challenging, and exciting. In any case, it’s best to ground your financial decisions in numbers and facts. Follow the below tips when searching for homes for sale in Key West in 2023.

Know your purpose

Before searching for Key West houses for sale, take the time to decide what you’ll be using the property for. You may be looking for a vacation property you can use, then rent out when vacant. Renting can be a great way to generate revenue for payments like utilities and a mortgage; however, those financing with a mortgage should be aware of loan limitations. Additionally, not all neighborhoods allow homeowners to rent out their property. Searching for a property you intend to rent out comes with mortgage complications and may require decision-making independent of personal preferences.

Investors may also be interested in buying a property to sell, either short-term or long-term. Short-term sales are usually completed on properties still under construction, then sold when finished. Long-term investment property sales require knowledge of the area's appreciation rates and are often pursued with other long-term goals in mind, like retirement. Key West properties enjoy high rates of appreciation and weather difficult economic conditions.

Research the market

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Another factor to monitor before investing in Key West real estate in 2023 is the local real estate market. Generally, it’s best to buy when home prices are low, then sell when prices are high. With your agent, keep looking for market conditions favorable to buyers — a surplus of inventory or decreased demand. Together, you can research market trends and navigate markets defined by increasing sales, a low number of days on the market, and rising home prices.

The real estate market in Key West is still experiencing seller’s market trends, although buyers will benefit from an increasing number of days on the market. 

The median sale price for properties in the area increased by 22.56% from November 2021 to November 2022. The median sales price exceeded $1 million as we entered 2023. However, sold listings dropped 30% compared to last year, implying a relatively low level of competition for buyers. Meanwhile, the median days on the market have increased from 29 to 39 days, so buyers have more time to decide.

The subtlety of the Key West real estate market is subject to factors like mortgage rates and hyperlocal trends. Be sure to partner with a quality agent as we progress into the uncharted territory of 2023. 

Prioritize location

Location can make or break a real estate investment, so it’s important to research an area before purchasing a property. Look for nearby amenities such as scenic views, outdoor spaces, and great shopping, dining, and entertainment opportunities. Conveniences like grocery stores, hospitals, or workplaces can also increase the property’s desirability. For long-term investment, use data to visualize the area’s future via zoning and urban planning.

Areas like Key West make great candidates for investment. The surrounding oceanside views provide beautiful backdrops for properties and access to outdoor recreation like swimming, fishing, boating, and more. For example, the Key West Bight Marina provides dockage in a historical setting, as well as amenities for visitors. Residents can also enjoy the sea turtle nesting season between March and October or find great shopping along Duval Street.

Another way to understand an area’s short-term prognosis, especially if you’re searching from out of state, is to work with a Key West real estate agent at Ocean Sotheby’s International Realty. Our local agents thoroughly understand market trends and can save you time and money on any luxury purchase. We can tell you what differentiates each Key West community. Having a professional resource can save investors a lot of time researching an area themselves.

Manage expectations

Initial excitement about a property can lead to artificial or unrealistic expectations. Even seasoned investors are vulnerable to unfounded hype about the prospects of a particular area. Carried away by a tide of positive emotion, it’s easy to choose a property for the wrong reasons or pay more than its market value. Work with an experienced agent to ensure you see the whole picture.

Conversely, buyers sometimes rule out intriguing homes at the first sign of an obstacle. Maybe the home inspection uncovers intractable issues. Or perhaps the seller’s agent takes a few extra days to get back to you. Any time negotiations about a particular house drag out, it can be tempting to leave the table. However, when you work with a tenacious agent, they can keep tabs on multiple properties. That way, you can focus on what makes a property valuable and tailor your pursuit accordingly.

Crunch the numbers

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To estimate if an investment will be worth it, run calculations. Alongside factors like appreciation rates, research the impact of mortgages or home loans against cash flow. If a home needs repairs or renovations, be sure to factor in the expenses and budget for any accidents or surprise problems on the road ahead. This ensures that you’re making an investment that’s profitable in the long run.

Ready to invest in Key West?

When investing in Key West properties in 2023, it’s vital to keep market trends in perspective. Slowing trends will benefit buyers in the long run, as they can buy with less competition and benefit from high appreciation rates. Key West will remain a desirable location in 2023 due to its exclusivity, natural beauty, and scenic views. 

When you’re ready to search for investment properties in the area, contact one of the experienced agents at Ocean SIR to guide you through the process. We leverage the Sotheby’s International Realty brand to represent buyers and sellers daily. Investors treasure our insights into the local market, and our clients often maintain personal ties. Find out what the buzz is about, and contact us today.

*Header photo courtesy of Ocean SIR

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