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Blog Post: Islamorada or Marathon? Which is best for your vacation rental investments

Close-up image of group of rainbow wooden model holiday cottages

Florida has, for years, been one of the top destinations for vacation rental investments. Due to its stunning coastal beauty and robust economic growth, many home buyers and investors are flocking to the southern state for their next big purchase. In fact, Florida has recently become the second most valuable real estate market, overtaking New York.

The surge in investor interest due to the population boom and thriving tourism industry is the driver behind rising home values in both Islamorada and Marathon, two popular destinations in the Florida Keys. These areas offer not only scenic views, a relaxing lifestyle, and a wonderful tropical climate but also promise high returns on investment, making them prime choices for property buyers.

The ongoing influx of tourists to both Marathon and Islamorada is making their respective real estate markets more competitive and lucrative. Driving this growth and interest are 250,000 overseas migrants, as well as affluent families and individuals from New York, California, and New Jersey who are moving to the state or purchasing second homes to use for their vacation getaways.

Marathon and Islamorada also boast a whole range of properties that could meet any buyer’s real estate goals, including residential properties, commercial properties, and vacation homes. While many are seeking single-family homes which are great to use either as vacation homes or rentals for families, there is also growing interest in condos and other properties for investment or commercial use like office spaces and spaces for dining and retail endeavors.

With these in mind, this article will thresh out the many facets of Islamorada and Marathon to help you make the best choice for your vacation rental investment in the Florida Keys.

COMPARING MARKETS

The real estate markets of Islamorada and Marathon offer a diverse assortment of properties, ranging from grand mansions and expansive waterfront homes to luxury condos, townhomes, and high-end apartment complexes. Both are filled with exciting destinations and activities that drive interest among tourists, home buyers, and investors looking for the next lucrative asset to add to their respective financial portfolios.

Below is a detailed comparison of Islamorada and Marathon to find out which of these two Florida Keys headliners fits your real estate investment goals to a tee.

Islamorada

IslaMorada, Florida keys marina at dusk

WHAT YOU NEED TO KNOW

Islamorada is situated just 90 minutes south of Miami and, together with Key Largo, Tavernier, and Isla Mujeres, comprise the Upper Keys. Also known as the Village of Six Islands, Islamorada comprises Plantation Key, Windley Key, Upper Matecumbe Key, Lower Matecumbe Key, Indian Key, and Lignumvitae Key. While separated by water, these islands remain bound together by the strong sense of community among their residents. Islamorada is also known as the sport fishing capital of the world as its waters play host to game fish like sailfish, bonefish, and tarpon.

Islamorada’s strategic position near the Florida mainland (around 15 to 20 miles from Plantation Key) enhances its appeal as a residential and investment hotspot. With a small population of almost 7,000 (2023 US Census), the village maintains a close-knit community atmosphere while offering numerous fun and family-friendly experiences.

WHY YOU SHOULD INVEST IN ISLAMORADA NOW

Islamorada offers a stunning community with abundant beaches, crystal-clear waters, and thriving marine life. This tropical paradise continues to attract an ever-increasing flow of visitors each year. The revenues from tourist bookings and the consistent rental income that peaks every summer are testaments to the fact that Islamorada is ripe for real estate investment.

Investing now ensures that you take advantage of significant property appreciation faster, achieving your return on investment (ROI) more quickly, on top of earning passive income that comes with every new booking for your rental. Plus, over the past five years, the area has experienced strong population growth of about 20% – further fueling the demand for housing.

Additionally, investors reap substantial tax benefits. This gives them more money in their pockets to use for more investments or personal pursuits.

Islamorada’s relative proximity to the mainland also offers residents and visitors the chance to enjoy the best of both worlds – sun, sand, and surf on its islands and easy access to all the conveniences and recreation opportunities on Key Largo, its nearest neighbor and the largest of the Florida Keys, and the mainland itself.

Moreover, Islamorada is considered one of the safest places to live in the United States, largely due to the sheer number of gated communities here, many of which are found by the waterfront. Investing in this paradise ensures safety and privacy amid a tranquil beach setting for both homeowners and visitors.

PROPERTY VALUES

Realtor.com reveals that homes in Islamorada were sold at a median price of $1.32 million in April, stepping up from the previous month’s $1.28 million and the past year’s $1.43 million. Generally, the market has been playing around the $1 million benchmark, never going below $812,000 in the past three years.

According to WalletInvestor, in the next five years, owners of Islamorada properties could expect a 12.75% increase in their property’s value. This forecast suggests promising long-term profitability for the real estate in the area as it’s poised for even more growth.

RENTAL DEMAND

The demand for vacation rentals in Islamorada, FL is robust, driven by the area’s popularity as a prime tourist destination. The range of available options provides guests with the features and amenities that spark luxury while also presenting some of the most spectacular ocean and landscape views. Waterfront properties are the stars of the real estate show in Islamorada as they rarely stay on the market for long due to their high desirability and exceptional views. These properties command exceptionally high prices, reflecting their premium status.

Many high-net-worth tourists visiting Islamorada are willing to pay premium rates for accommodation, recognizing the unique beauty and exclusive experience the area offers. To illustrate, a three-bedroom vacation rental in Islamorada, especially one with desirable features and a prime location, may easily be rented out for $400 up to $700 a night. This high rental rate underscores the strong demand and the potential for substantial revenue generation.

In addition, investors have other real estate options like commercial properties that may be leased to businesses to support the growing local economy.

The combination of high occupancy rates, premium rental prices, and the area’s growing appeal ensures that property investors achieve significant returns on their investments.

TOURISM

Investors, home buyers, tourists, and travelers have much to look forward to in Islamorada, especially with its many local attractions that focus on the tropical beach setting, upscale vibe, and the region’s art and culture.

Check them out here.

  • Robbie’s Marina. This lively spot offers boat rentals, fishing charters, and the popular activity of hand-feeding tarpon.

  • Theater of the Sea. The marine mammal park invites visitors to swim with dolphins, sea lions, and stingrays.

  • Florida Keys History and Discovery Center. The museum showcases the rich history and culture of the Florida Keys through engaging exhibits and artifacts.

  • Morada Way Arts and Culture District. This vibrant area features galleries, studios, and monthly art walks, celebrating local arts and culture.

  • History of Diving Museum. This fascinating museum is dedicated to the history and evolution of underwater diving.

  • The Secret Sandbar. A hidden gem, this destination is ideal for relaxing, sunbathing, and enjoying the crystal-clear waters of the Florida Keys.

  • Windley Key Fossil Reef Geological State Park. This unique park allows visitors to explore fossilized coral reefs and learn about the geological history of the area.

Marathon

Homes in Florida Keys

WHY YOU SHOULD INVEST IN MARATHON NOW

The city of Marathon sits in the Middle Keys and is located roughly 30 miles west of Islamorada. This area, stretching over 10 miles and comprising 13 islands, offers marine adventures and a host of activities that appeal to a wider set of people from families to nature enthusiasts. With a population of less than 10,000 (2023 US Census estimate), Marathon is a vibrant area with many opportunities for indulging in many casual, family-friendly activities and dining options.

Marathon is renowned as a boating and sailing paradise, drawing enthusiasts from around the world. In addition, its pristine waters and favorable weather conditions make it an ideal location for snorkeling and scuba diving which are major drivers of local tourism. The high demand for these activities translates into a thriving rental market, particularly during peak tourist seasons.

PROPERTY VALUES

Considered one of the top vacation destinations in the Florida Keys, Marathon is seen as a venue for finding highly sought-after waterfront properties. Realtor.com’s April median price for sold homes in Marathon is $1.2 million but could go as high as almost $25 million.

Home values in the area have going on a steady incline in the past three years, owing to Marathon’s high desirability among those who seek a tropical vacation getaway, those who want a new home for their remote work amid wonderful ocean views and the lovely weather, and those who want to capitalize on the thriving tourism industry in the city.

RENTAL DEMAND

The median rent for all types of vacation rentals in Marathon, FL stands at $3,200 in May. Among the property types, single-family houses provide the highest profits with an average rent of $5,550 – a 37% jump from the previous month, given that this is among the peak months for travel to the area. Condo units, meanwhile, are enjoying an average rent of $4,250 – 42% higher than figures from last year. But the most notable performers are apartment units which have soared by a whopping 71% from the previous month to its May average at $1,599.

Investing in Marathon now ensures that investors could take advantage of rising property values and remarkably high rental yields, setting the stage for substantial property appreciation, a constant passive income, and a solid ROI in the coming years.

– 42% higher than figures from last year. But the most notable performers are apartment units which have soared by a whopping 71% from the previous month to its May average at $1,599.

Investing in Marathon now ensures that investors could take advantage of rising property values and remarkably high rental yields, setting the stage for substantial property appreciation, a constant passive income, and a solid ROI in the coming years.

TOURISM

What is to be expected from this beautiful paradise? Check out Marathon’s top tourist destinations.

  • Curry Hammock State Park. Explore the largest uninhabited piece of land between Key Largo and Big Pine Key, perfect for kayaking, hiking, and bird-watching.

  • Old Seven-Mile Bridge. Walk or bike along this historic bridge offering stunning views and a connection from Knight’s Key to Key West and the Lower Keys.

  • Sombrero Beach. A favorite for snorkeling and diving, this hotspot offers clear waters and vibrant marine life.

  • Dolphin Research Center. Interact with dolphins and learn about marine conservation at this renowned research facility.

  • Turtle Hospital. Visit this unique facility dedicated to rehabilitating injured sea turtles and educating the public about marine life conservation.

  • The Lagoon on Grassy Key. Engage in various water sports in this man-made lake, including paddle boarding, windsurfing, and kayaking.

VACATION RENTAL INVESTMENTS: RISKS AND CONSIDERATIONS

Search and purchase of real estate

Investing in rental vacation homes in Islamorada and Marathon offers attractive returns, but it is important to consider the associated risks to ensure a well-rounded and well-prepared investment strategy.

Here’s what you need to know.

Hefty price tags

Owning properties in the Keys, especially in popular spots like Islamorada and Marathon, comes with a hefty price tag. Additionally, you may need to set aside funds for repairs and renovations on your purchased property.

Prone to tropical cyclones

Islamorada and Marathon, located in the Florida Keys, are susceptible to tropical cyclones. These Extreme weather events and the overall exposure of properties to the elements tend to cause damage. That’s why property investors should budget for regular repairs and maintenance, and should always check the structural integrity of their properties. Upgrading homes with hurricane-resistant features and conducting regular inspections could mitigate some of these risks.

Maintenance and management

If you’re considering buying property to be used for short-term or long-term rental, this may require some level of property management. Hiring reliable property managers and providing cleaning/ upkeep services are critical to maintaining the property.

Greater need for home insurance coverage

Due to Florida’s susceptibility to the forces of nature, securing comprehensive home insurance is crucial. This should include coverage for hurricanes, flooding, and other potential damages. While insurance premiums in these areas may be higher than average, investing in comprehensive coverage ensures that your investment is protected from any kind of natural or man-made calamity.

Population growth and tourism boom

The growing population and booming tourism in Islamorada and Marathon could be seen as a double-edged sword. While they contribute to high rental demand and increased property values, they also result in crowded areas and increased noise levels. For those looking to buy a home as a permanent residence or retirement property, this growth could impact the quality of life. It’s important to consider the specific location and community dynamics when selecting a property to ensure it meets your long-term living preferences.

Overall, while the risks associated with investing in vacation rental homes in Islamorada and Marathon are significant, they could be managed with careful planning and proactive measures.

ISLAMORADA OR MARATHON: WHICH IS THE BEST VENUE FOR YOUR INVESTMENT

Why not both?

Investing in either Islamorada or Marathon is a smart choice, particularly if you aim to diversify your investment portfolio and increase your vacation rental income. Both destinations offer a range of properties, from grand estates to luxury condos, that could be converted into vacation rentals, whether on a seasonal or permanent basis.

One major financial advantage of investing in these locations is that Florida doesn’t impose a state income tax, making it easier to maximize your returns. Moreover, the state is business-friendly with favorable regulations, a strong economy, and a growing population, all of which contribute to a robust real estate market. The combination of tax benefits and a supportive business environment makes Florida an attractive destination for investors seeking long-term growth and stability.

Whether you choose the upscale, community-focused atmosphere of Islamorada or the picturesque boating paradise of Marathon, both destinations promise strong investment potential and an appealing lifestyle.

MAKE YOUR INVESTMENT BID IN THE FLORIDA KEYS A SUCCESSFUL ONE

Looking to expand your asset portfolio with a real estate investment in the Florida Keys? Then, work with the best and most trusted Realtor in the region: Angel DiGiorgio. A luxury property specialist and a proud Florida Keys resident for over 25 years, Angel and her team of experts are equipped with knowledge of the area and the places with the highest potential for growth. Plus, with their incomparable services, you’re guaranteed a seamless and stress-free home-buying journey.

Don’t hesitate to work with Angel to fulfill your vacation rental investment goals today! Call her at 305.509.0971 or send her an email.