Bowling Green, KY · Member since 2017 · 9 posts · 5 votes
Hello,
I currently have 2 short term rentals in Nashville that are doing very well. I have them listed on all the vacation rental sites and they're both booked up through 2017. I'd like to get a property in Destin, FL and do the same thing. My family always vacations or Destin and I know it's a popular area. Can anyone give any insight on this market? A few questions I have: Should I look for house or condo? Are there any taxes/fees I should be aware of that are specific to Destin? Anybody else have any experience in this town? I don't need a full-service property manager, I will just need a company for cleanings/maintenance. I use Evolve Vacation Rentals and they are responsible for listings, marketing, payment, customer service, photography and they only take 10%.
Any advice would be appreciated!
Chris
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Chris Gerbig I'm with Justin Tahilramani on this one: you'll trade cash-flow in Nashville for a "free" vacation in Destin. The same can be said for most all of the Gulf Coast. The other challenge is that if you have a family and want to stay during a peak time (4th of July, etc.) you'll really hurt your ROI. Every Gulf Coast vacation (your short term focus may be different) rental I've looked at involves using peak revenues to cover low-occupancy losses. Now if you think Destin is: ripe for appreciation, a good geographic hedge, etc. that's a different story. But it's likely not a great analogue for a Nashville short-term rental.
Rental Property Investor · Fayetteville, NC · Member since 2014 · 884 posts · 670 votes
9y
@Chris Gerbig - Why not just continue investing in the place that you know and understand? You can still vacation in Destin - just rent a place! This is just my opinion, so I don't mean any offense, but the logic is a little flawed if you think you might be "saving" money by investing in a STR that is in one of your family vacation destinations.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Chris Gerbig I'm with Justin Tahilramani on this one: you'll trade cash-flow in Nashville for a "free" vacation in Destin. The same can be said for most all of the Gulf Coast. The other challenge is that if you have a family and want to stay during a peak time (4th of July, etc.) you'll really hurt your ROI. Every Gulf Coast vacation (your short term focus may be different) rental I've looked at involves using peak revenues to cover low-occupancy losses. Now if you think Destin is: ripe for appreciation, a good geographic hedge, etc. that's a different story. But it's likely not a great analogue for a Nashville short-term rental.
Rental Property Investor · Fort Walton Beach, FL · Member since 2017 · 14 posts · 3 votes
9y
Hey Chris,
I currently live in the Destin area. I also have three rental properties. the biggest thing of course with any real estate is location. As we both know Destin is hot right now great market, but the thing is to make the money worth the investment you best have a house or a condo in the right place in Destin. If you have the money you can really make a great profit.
Bowling Green, KY · Member since 2017 · 9 posts · 5 votes
9y
Thanks for the advice! Just to clarify - I'm not looking to purchase the unit in Destin just so I can have a place to stay. In reality I wouldn't even use the place for personal use at all. I was simply saying I've been to Destin enough to know that it's a hot market and I think I would see good results.
Nashville, TN · Member since 2016 · 28 posts · 10 votes
9y
I also have 2 vacation rentals in Nashville market and have also been researching other markets to invest in a short term rental property.
The concern I have with becoming too heavily weighted in Nashville (or any market) is the change in regulation. Nashville is already on the fence about a moratorium or banning of STRP and I hesitate to put all my eggs in that basket.
I've had a lot of difficulty finding long term rentals that cash flow in this market, so the vacation rentals have piqued my interest but I want to spread into other markets to diversify.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
Chris Gerbig Okay, try this out: find a property that's is currently being used through a PM for a short term rental. They will be able to provide the 2016 *actuals* in terms of occupancy, rates, etc. Along with that you can see cleaning costs, cable/wi-fi costs, 20% PM fee, etc. You'll even be able to see what time periods they can command a "full week" and when you have to settle for the Friday - Sunday occupancy (and have that mid-week dead period). Keep in mind the closer you are to the water the more sea air increases maintenance costs (small, nagging things) and insurance might be more than you think. Find one that works to make me jealous 😜
Real Estate Professional · Destin, FL · Member since 2015 · 16 posts · 8 votes
9y
Short term rental is the way to go here in Destin. There are a variety of different options from Condo thru vacation homes. I cover the area from Destin thru Panama City. Where you might purchase depends on where you would like to vacation. Definitely personality dependent.
Investor · Fort Walton Beach, FL · Member since 2015 · 568 posts · 966 votes
9y
@Chris Gerbig I specialize in fix and flips and wholesaling so I can't speak on the vacation rental side too much. But I do know there are full service vacation rental PMs here locally that charge as low as 18%. Might be a good tidbit of information.
In terms of condos vs SFRs, I would just make sure you know all the fees involved and what they cover. There are pretty hefty HOAs in some of the condos. I've seen as high as 900/month
Bowling Green, KY · Member since 2017 · 9 posts · 5 votes
9y
@Mark Hower I completely agree! However, the cash flow on my first townhouse in Nashville was so high I decided to buy another before they could pass any restrictions on the STRP qualifications. One of my units is booked up straight until 2018, and the other will go live this week! After these two I will focus my efforts on the gulf. I know there is a lot of demand in the Destin area right now. I'll be looking for a 3/2 condo or house
Bowling Green, KY · Member since 2017 · 9 posts · 5 votes
9y
@Peter Mohylsky are there any crazy laws or restrictions that make it difficult to list a STRP in Destin? I know a lot of homeowners are having difficulties right now with all the new regulations in certain areas.
Real Estate Professional · Destin, FL · Member since 2015 · 16 posts · 8 votes
9y
I am not exactly sure what problems they are experiencing. Can you give more details? There are issues with the numbers of cars and people staying at particular neighborhoods. it is a common sense thing,
Investor · Boerne, TX · Member since 2015 · 139 posts · 71 votes
9y
I also enjoy Destin and would love a place there. My strategy would be to make a little money now and have the renters pay for my retirement place on the beach :)
@Chris Gerbig, I would love to hear more about your units here if you would like to share. Also, you mentioned that you purchased a second before they possibly change the regulations, I am not sure I understand that. If there is a ban or moritoriam on STRP, wouldn't that put you in a precarious position?
Los Angeles, CA · Member since 2016 · 97 posts · 49 votes
9y
Chris Gerbig Peter Mohylsky Vincent Migliorino Andrew Johnson Steven Gillmer Hey everyone! I wanted to try and continue this conversation...especially in regards to potential restrictions on using STRPs in the Destin area. I saw an application on the city of Destin's webpage about applying to use a property as an STRP, and one of the requirements was that the owner/responsible part be within an hour of the property in case of emergencies, etc.
I'm also looking at a property in Destin, and being out of state, these types of requirements concern me. Maybe it varies for property type, part of town, etc? I'm looking at a condo by the way....
Thoughts anyone??
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Account Closed The property manager (and you'd want one) would be the responsible party that's less than an hour away. Self managing a vacation rental from afar is a pretty sure fire way to bad reviews, one star ratings, low occupancy, and a revenue killer. I'm sure someone is doing it and doing it well, but I can't imagine it works well for the majority (or close to it) of absentee owners.
Los Angeles, CA · Member since 2016 · 97 posts · 49 votes
9y
Andrew Johnson That totally make sense...although paying for property management would eat into my profits, I think it would overall be worth it. I may end up living in the area in a few years at which point I could cut off the service and do it myself.
Would a property management company clean, market, and handle bookings via VRBO? Especially with short term, I'd just want to make sure they are no kidding trying to minimize my vacancy. I could also bring back some profits by charging a cleaning fee via VRBO. Looks like cleaning fees are standard these days for the most part.
Maybe after I got the ball rolling I could manage bookings on my own and have an independent cleaning service. I think utilizing programmable code locks could be useful-I could provide each renter with a code that can be changed from anywhere. Some people like to just get into their unit without having to be briefed by the owners.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
9y
@Account Closed The following is a "for whatever it's worth" as I've looked at a ton of vacation rentals and never pulled the trigger. I've always found some multifamily commercial that has penciled out better and once you're beach-front the prices aren't as far apart as you'd think! The property management companies that I talked to do all of that, organized everything, optimized rental prices, etc. They will charge the tenants for a cleaning fee when they book so it ends up being a wash for you as an owner. The good part about an (experienced) management company is that they'll know what locks, etc. to use to make everyone's life easier.
You can manage your own bookings at some point but you'll likely get a fall-off the first year that you do that. In Gulf Coast markets you have a lot of family driving there for a week each summer. They find a home that they like and just keep going back year, after year, after year. They book through the same rental company and it (almost) becomes reflex action. If your property vanished from that vacation rental companies inventory you have to rely on them to find you again (VRBO, AirBnb, etc.) I'd imagine that there is fall off and that people just find another property. The last property I looked at sent over P/Ls and you could see a drop-off after they switched to owner managed. Now I have no idea how that owner was doing their marketing, bookings, if they had proper rents for the time of year, etc. Who knows, but there was a good sized drop-off. Sizable enough where it would have paid to have him use the property management company even at 20%-25% fees.
Anyway, after being there you'll be able to figure out the cadence.
Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes
9y
@Account Closed - your line of thinking is great as long as the numbers work out. Nothing wrong with having a business expense in running the VR business, and getting appreciation, and getting principal pay down. (IRS limits your personal use to 15 days but you can likely "stay" there to do general maintenance.
Los Angeles, CA · Member since 2016 · 97 posts · 49 votes
9y
@Nancy Bachety This specific HOA allows short term rentals as many of the units are used for vacation rentals
I spoke to a few PMs down there...best I found is 20%. That covers marketing on three booking sites, all interaction w/ renters, cleaning, on-call requests, and a few other things. Additionally, they only charge 10% if I bring a renter to them....that could be tricky up front though, especially since I'd be starting a VRBO site for the condo from scratch. I'm wondering if they delta of 10%-20% would be worth it if they could yield higher occupancy throughout the year. I will have to double check with them though to ensure that they don't have a bunch of those little fees that add up well over 20%...the way the PM made it sound was 20% for everything.
Real Estate Agent · Tampa, FL · Member since 2018 · 464 posts · 452 votes
6y
@Nidal Daraiseh - I'm an Investor and Realtor with 10 agents on my team in the Destin area. I flip and have two short term rentals, and the cash flow is solid. However, I self manage, which is definitely do-able, even from a distance.
Example of my first AirBnB: We bought it for $565K, and it grossed $73K for the year (cash flowed about $20K for the year). How's your research coming along?
Hi @Matt "Roar" Gardner. Many thanks for the reply! Appreciate it. Was that 565k place a 4 or 5 bed? I'm interested in a property in the 5 bed range within walking distance from the beach (without an HOA) and there is availability.
I'm just trying to determine nature of the returns (before considering management fees if I go that route). Since you are also from the area, it seems to me property prices were heavily hit and prices are now just getting back to pre-recession prices. Is this also your experience?