Pros and Cons of Buying a New Beach Vacation Rental in FL

[Darren Koenenn]

I wasn't originally intending on going down the path of investing in weekly rentals nor new constructions, but I found a new development that my wife and I see a lot of potential of appreciation with the ability to cash flow. I was wondering if you more experienced investors could let me know what you think.

[Melissa Jolley]

@Darren Koenenn I think Inlet Beach is coming up. There are several developments that I know of but please always look into the builders ratings and local reputation. There is a common misconception that newly built homes will have less issues and I have noticed that it is not always the case. I have personal experience where that is concerned. West end is really coming into hits own- it is less developed than some parts of 30A. 

Buying a rental that has never actually been on the rental market can be difficult though- I have found rental projections to be all over the map. Cash flow potential is much greater since you will self-manage. 

I recommend shopping insurance through a broker and making sure you are covered well- that has been part of the issue here since Hurricane Michael. 

I run across a lot of investors that also plan to stay in the unit.....depending on the time of year and frequency, this can make or break the deal too.

As far as appreciation- in this area, newer builds certainly hold their own but I feel like they are long-term investments. I would not expect anything for at least 3 years. The comps that they are using to price the units for the market right now are likely on the higher side- prices are up here and have been for a little while. On a national scale- larger metro areas have seen prices coming down or staying flat. Again, I believe buying new is a long game. I like to have a few options so I would like to see what the unit/home would do as a long-term rental and short. 

I hope some of this helps- I enjoy knowing that people are looking to invest in my area.....it is beautiful here.