1031 Exchanges: Orange Beach vs. Gulf Highlands | Gulf Coast Real Estate
I recently had a great conversation with a client preparing to sell her out of state rental property and reinvest in the Gulf Coast using a 1031 tax-deferred exchange. She and her husband have multiple homes and are now looking for something coastal—private, peaceful, and profitable.
She told me she loved the look and feel of Gulf Highlands, Florida, where the homes sit on larger lots and you’re not staring directly into your neighbor’s window. She’s also open to Navarre and Perdido Key, but kept circling back to Orange Beach, Alabama as a possible “sleeper” market with upside potential. And I couldn’t agree more.
Florida vs. Alabama: Where Should You Invest?
She asked the big question I hear often:
“Is Florida better than Alabama for real estate investors?”
Here’s how I helped her weigh the pros and cons:
| Category | Florida (Gulf Highlands, Navarre, Perdido Key) | Alabama (Orange Beach) |
|---|---|---|
| State Income Tax | None | Yes (~5%), but often offset by lower cost of ownership |
| Property Taxes | Typically higher | Lower—especially in Baldwin County |
| Insurance Premiums | Can be high; more wind exposure | Often lower with favorable underwriting |
| Lot Size & Privacy | Gulf Highlands offers large lots and quiet spacing | Orange Beach has a mix of private enclaves and investment zones |
| Short-Term Rental Demand | Strong near Pensacola/Navarre | Very strong in Orange Beach—especially in approved zones |
| Tourism Investment | Strong statewide | Orange Beach has a well-funded tourism department supporting year-round visibility |
| Airport Access | Destin & Pensacola nearby | Gulf Shores airport now offering commercial flights—a major game-changer |
What Makes Gulf Highlands Appealing?
Gulf Highlands offers a beautiful stretch of coastal living between Panama City and 30A. It has a peaceful, uncrowded feel with oversized lots—which my client loved. It's an attractive option for someone seeking space and privacy, away from the intensity of 30A or the tourism-driven chaos of Destin.
However, as a Florida-based property, you’ll typically face higher insurance costs, stricter permitting, and fluctuating state taxes on items like insurance surcharges and closing costs. While the lots are appealing and homes can perform well as rentals, buyers need to weigh that against the long-term expenses and maintenance burdens.
Why I Lean Toward Orange Beach
I shared with my client that Orange Beach offers a rare mix of charm, value, and opportunity. It’s still under the radar for many national investors but growing fast in all the right ways.
I also mentioned Ono Island, one of the most private waterfront communities on the Alabama coast. While short-term rentals are not allowed on Ono Island, the privacy, estate-sized lots, and peaceful lifestyle make it ideal for a second home or long-term rental approach.
For investors looking to maximize short-term rental income, Orange Beach has multiple zones that allow vacation rentals, and I can help pinpoint exactly where those are. The consistent tourism traffic, strong rental demand, and lower property taxes make Orange Beach especially attractive from an investment perspective.
Add to that the new commercial flights coming to the Gulf Shores airport, and you’re looking at appreciation potential that hasn’t been fully priced in yet.
Her 1031 Exchange Questions
“Can I buy two properties instead of one?”
Yes. IRS guidelines allow you to identify up to three replacement properties in a 1031 exchange. If you sell your current home for $1.2M, you can split that across two properties (say $600K each), as long as the total meets or exceeds the sale price.
“What if I buy one property for less than I sell for?”
To fully defer capital gains taxes, you’ll want to reinvest the full amount. Buying for less could trigger taxes on the leftover funds unless used on another qualifying purchase.
“What’s the timeline?”
Once your California home closes, you have 45 days to identify your replacement properties and 180 days to close. These are firm deadlines, so advance planning is key.
Bottom Line: Why Orange Beach May Be the Best Choice
With large lots available, strong rental returns in permitted zones, and a city that’s quietly preparing for its next chapter, Orange Beach offers the rare mix of lifestyle and investment. It’s not overbuilt, it’s not overhyped, and it’s on the rise.
If you’re considering a 1031 exchange and want privacy, rental income, and long-term value, Orange Beach deserves a serious look. I’d be honored to guide you through it.
— Meredith Amon
Gulf Coast Expert Real Estate Advisor
Licensed in Alabama and Florida
#searchthegulf #meredithamon #becausewelivehere
SEARCH ORANGE BEACH REAL ESTATE LISTINGS FOR SALE
- All Listings
.gif){kind=logo}
Ono Island Boathouses: Old River & Bayou St. John vs. Canal Rules | Meredith Folger
Building a Boathouse on Ono Island: My Owner’s Guide to “Big Water” vs. Canal Rules
I’m Meredith Amon, a homeowner on Ono Island — https://www.searchthegulf.com/ono-island/ and a Gulf Coast real estate advisor licensed in Alabama and Florida. I work with owners, architects, and builders to design…
Ask A Question or Sign Up To See New Real Estate Listings Before Your Competition
When it comes to finding the home of your dreams in a fast-paced market, knowing about new listings as soon as they are available is part of our competitive advantage.Sign up to see new listings in an area or specific community. Contact Meredith with any questions you may have.