Looking at Florida Beach Vacation Rental

[Joe Marcum]

Hi,

I am looking at purchasing a 3/3 house in the 30A area around Rosemary Beach in Florida. Property is about $800,000 and looks like daily rate in summer is about $500 a night.

Anyone have experience in this area? I’m estimating 16 weeks at $500 a night should almost cover the cost at 10% down 30 year mortgage.

Looking at this as long term ownership and also as a second home that I will rent out via a vacation rental management company.

Any and all help and thoughts appreciated.

[David A Lisowski]

@Joe Marcum

@Joe Marcum

Hey, Joe, I live here full time. We had a vacation rental for about a year and a half, but have moved into the property. We purchased a different investment property for long-term leases.

There is plenty of competition (obviously) for vacation rentals, but there is also high demand. Charging $500 per night in peak season is probably doable.

The property management company will make or break you. Most rental companies know that owners are not as attentive, and probably not readily available to access the property. They usually charge 15 to 25%, and will throw in random (often fake) charges for things like "lock maintenance" or other non-tangible things. They aren't all bad, but if you want to make money, the selection of the property management company should be a top priority.

You should request the rental history for the property to give you more accurate numbers.

The setup you gave is "too good to be true," or "if it was that easy, everyone would do it."

I've found that in most places, you will either need to buy early or put a bunch down. Typically the larger houses (a 3/3 isn't large down here) barely make rent to cover RE taxes. 10% down on an $800,000 purchase means you're running very tight margins if you are looking to make any money. If all you want to do is cover some expenses, then you can definitely do that.

There are others who market their properties well, and have made some good returns. But they are not the "set and forget" type of owners.

I hope this helps! Happy to give more insights.