An area becoming more and more popular both with visitors and investors is Rotonda, Florida on the Gulf Coast of Mexico. Rotonda is between Venice and Naples and is one of the very few areas on the Gulf Coast to be able to offer short term rentals. Because of its proximity to Naples  capital growth is forecast to be spectacular with most owners in the area achieving in excess of 80% occupancy.

The typical investment in Florida is to buy a place as close to Disney as possible, rent it out for 35 weeks to break even and hope to make a gain on the value of the property. Rotunda is a bit different because as some of you will know not all visitors to Florida want to be near a theme park. You also have to remind yourself that most visitors to Florida are from America, not the UK.

Rotonda is a 90 minute drive from Tampa airport and two hours from Miami.

Because very few villas are available to rent on a short term basis in the Gulf area $1,000 per week is easily achievable and often more. Existing owners tend to rent their Villas on a week by week basis from Easter to September and on a longer basis to snowbirds for the winter months. For smaller three or four bed villas $1,000 per week is achievable with the rate dropping to $800 for longer periods in the winter. There really is little completion for villa rentals in the area. Think about when you went on a two centre holiday to Florida. Did you or any of your friends ever stay in a villa when you visited the Gulf of Mexico?

Total annual income should be in the region of $41,000 with monthly management costs of $1,200 and mortgage costs on a $300,000 villa also $1,200 leaving an annual profit of approximately $12,000

These figures are based on the smaller villas which are typically 2,200 square feet with larger villas of 3,300 giving a greater return on investment.

Rotunda has two more features which make it different from anything else in Florida.

Firstly you choose your plot of land which could be a golf view, water view or woodland view and you then choose from one of seven villa types. Plots are from $50,000 with villas from $240,000. Build time is then around nine months. Plot sizes are 80’ x 120’, almost one quarter of an acre.

The second aspect, which we personally liked, is the ability to purchase a showhome and lease it back to the developer for up to three years. The developer will pay 100% of your mortgage and management costs. You will not have to find paying guests for three years and at the end of the leaseback period your villa will have grown substantially in value. These leaseback villas are also fully furnished and include many upgrades.

Payment profile is typical of US investments with 20% deposit and balance on completion via a mortgage.

There really never has been a better time to buy in the USA. Take this example.

• Today, £200,000 buys a $400,000 property
• 5 years growth at a conservative compounded 5% per annum turns $400,000 into $510,512
• Taking into account the cyclical nature of the exchange rate you sell your property when the rate is $1.5 / £ giving you a sell price of £340,000 and a profit of £140,000
• If you bought a UK property today for £200,000 and it grew by 5% over 5 years your profit would be just £55,000

We recognise there are a few ifs and buts to this calculation but now is the best time in 25 years to buy at a high rate and sell at a low rate. You will recognise that this development offer the best combination of leverage, other people’s money, capital gain and foreign exchange rate fluctuations.

Finally, the financial illustrations we have made have assumed purchasers will be obtaining an 80% mortgage or possibly 75% on a self cert basis. We can also introduce you to a bank who will lend you the remaining 20% for this development. This 20% will be at a higher rate so your monthly cash flow will be impacted but is does mean you can buy with no money down.