Florida or Arizona for BRRRR Airbnb?

Question

I am trying to identify a warm weather, preferably coastal market that would be (1) someplace I would like to have a winter home, and (2) is a good market for cash-flowing BRRRR traditional rentals and Airbnbs. So far, I would be interested in having a winter home in Tampa, St Pete, Sarasota, or Naples. Scottsdale, AZ has also crossed my mind, but the distance from my primary home in Baltimore, MD makes it less attractive. Does anyone have any insights on any of those markets, or someplace else I should be considering?

Melanie Johnston · Answer

@Jamie Mason Scottsdale has long been a favored tourist destination. As the host of the Phoenix Open, the best attended golf tournament in the world, and home to Major League Spring Training, there are a lot of magnets that draw visitors. From here people can take a day trip to Sedona or the Grand Canyon. Scottsdale is a mecca for dining and shopping and soaking up the sun.

When COVID cancelled everyone's travel plans starting mid-March, our Airbnbs felt the pain just like everyone else. Some owners cashed out and sold their properties, not knowing how long the effects of the pandemic would last. I helped one owner sell 4 Airbnbs. Two of those were purchased by current Airbnb owners who wanted to expand their portfolio.

As I write this, vacation rental activity has picked back up, and reservations for high season (December through March) are filling up. It appears we are out of the woods and there is pent up demand to vacation where golf is such a major draw that courses here are considered essential services.

Scottsdale officially required minimum rentals of 30 days until just a few years ago when the governor said cities can't mandate lengths of stay. But Homeowners Associations can, and many have a 30-day minimum, although there are some well-located condo associations that allow nightly rentals.

So most people buy Scottsdale vacation rentals in zip codes such as 85257, 85251 and 85250. Here you find older homes that have been nicely remodeled, featuring sparkling swimming pools, with no HOAs. Price points are $450,000 to $700,000. I know operators who have grossed $100,000+ annually because of their operational efficiencies and managing their properties themselves, even from out of state. That would be for a 4-bedroom home with a great pool and backyard.

What else can I tell you about Scottsdale? There is opportunity in North Scottsdale, which is in the midst of major golf courses and shopping areas like Scottsdale Quarter and Kierland Commons. You just have to know where to look.

Hope this helps a bit. I'm here if anyone has any questions!

Melanie

Jed Haslam-Walker · Answer

Hi @Jamie Mason,

Sarasota is a popular destination with the wealthy retiree and family demographic because it offers such a diverse range of recreation and leisure activities together with the stunning landscapes and wildlife it is a genuine gem. It's also the Arts capital of Florida, if I were to list all of the attractions I would turn myself into the Tourist Board! So to name but a few of my favourites:

The Opera: https://www.sarasotaopera.org/ we have our own dedicated Opera House and the company is more than proficient..I had my own seat at The Royal Opera ( well I believed it was my own seat....) and Glyndebourne and I'm a terrible snob when it comes to Opera ( mainly because I'm passionate about it) and the Sarasota company certainly perform.

The ballet: https://www.sarasotaballet.org... we have Iain Webb, who, if you are an aficionado you will know is truly excellent and has transformed the company - I have to say they are superb and I try to see everything they produce.

Sarasota Orchestra: https://www.sarasotaorchestra....very talented bunch, some world class musicians with a passionate and driven management company trying to establish, amongst some obstacles, their own home here...they offer a variety of performances and have a rich programme of participation with the community - I support them from one of the Boards that I am on and they change the lives of people who have always wanted to play with their programmes, it's something else to see a 75 year old woman perform her first violin solo in public...

Foodies and Sarasota: I couldn't even begin..a very vibrant scene here..https://www.sarasotamagazine.c... this will give you a taste

Best restaurants: https://www.sarasotamagazine.c... we have a slew of glorious eateries

Wine: We have 4 Wine Spectator Award of Excellence restaurants, and many restaurants with excellent lists, tons of tasting events and festivals, we also have a cute restaurant that runs a programme to help you curate your own wine and make it yourself:https://www.goodfellassarasota...

Festivals : again too numerous to list but we have a mix of national exhibitions that tour down here and local artists and artisans that perform, exhibit, here's a taste: https://www.visitsarasota.com/.....we also host the Internationally renowned Siesta Key Crystal classic Sand Sculpting Festival which is - I must say - a spectacular event - incredibly beautiful sculptures that exist for a brief moment and then are swept away by the ocean..it's exquisite..especially at night when everyone has gone home and it' s just the moonlight on the beach and the sound of the ocean and you're staring at Neptune himself...https://www.siestakeycrystalcl...

We have a Polo club, large sports stadium, Orlando down the road...I could seriously go on and on...

Needless to say it's gorgeous...

Dennis K. · Answer

I would start with checking if you're allowed to use Airbnb where you want to have a vacation home.  I own properties in Miami-Dade and they have various rules & regulations that dont allow short term rentals.  Most recently entire city of Sunny Isles Beach put their own restrictions not allowing short term rentals due to COVID.  You have to worry with state / county / city / HOA regulations.  With condos there are very few buildings that are reasonable (ie. not $5M beachfront building on Collins Avenue) that allow short term rentals and some private home HOA put restrictions as well.  My parents are retired there and across from canal of their condo there is an old crappy private house that seems to be on AirBNB since my mom constantly sees new people occupying it and owner gone.  This is all within gated community and this house neighbors better houses & 12 townhouses which might be sharing one HOA.  I mention this because my parents know some owners of the townhouses, including one right next to AirnBNB rental and a lot are complaining about constant flow of strangers.  Their HOA can change their rules and not allow short term rentals and follow what many others already done.  They care about quality of life of the owners that are primary residents and don't want area to turn into hotel.

You should consider all current and future regulations that you might have to face with short term rentals.  If you rent it out once a year to snowbird for 6 months and use it yourself during 6 other months its doable but I feel you would want to enjoy the property yourself when its cold.

PS. My parents originally looked at Sarasota area when their friend gave them keys to her condo.  They ended up settling in Miami Dade county instead because there is just more things to do.  In Miami there close to everything versus in Sarasota things were further apart.  They said that in some areas where they looked it would be 10+ mins to get to supermarket versus where they are its a 2 min drive or 10 min walk of few blocks.

Astrid Lorenz · Answer

Naples Collier County  .... has not enacted any short term rental restriction ! No changes !

Collier County tried to install a         6 month minimum rental restriction .

Naples has a very unique rental & Real Estate Situation , never comparable to SWFL or Cape Coral . Demand on Naples Home & Rentals is very high, very low inventory. Some Naples communities dictate strikt rental rules or do not allow to rent at all! Collier County rental rule is 30 days minimum .                                 Naples City has no restriction, which is easy to work with. We do have such a massive demand for short terms and very low rental inventory ! Annually rental prices are high and with low inventory, many locals move into Bonita or Estero areas.

Since 2-3 years many home buyers turn their new home into their first residence and do not consider to rent. Fact:  specially beautiful short term vacation rentals in desired locations can generate any  highest price . Tendency higher  rents ...

The typical Naples winter tenant is booking 3 months ... and turns easily into a returning tenant if satisfied! Most home owners do not rent under 3 months !

High Season is extending to 5-6 months since 3 years , plus more  summer tenants from Europe.Naples City/ Downtown Homes can rent daily/weekly. Condos do have rental restriction,  some min. 7 days or 30 days .  Check AirBnB !

It’s all about 15 miles of Gulf of Mexico tropical beach with easy access wherever you live or rent that  draws people to our attractive beach town .

Investment plans work well here , in a higher price range compared to other SWFL areas , even with older  properties but in desired locations.

You need to work with a Naples full time Realtor to understand the uniqueness of this RE Market.

Dane Peterson · Answer

@Jamie Mason Hi Jamie you mention both regular rentals and airbnb. As mentioned by a few others the short-term rental restrictions is something to pay attention to. Obviously the numbers for those 2 types of rentals are calculated differently.

I've lived all over South Florida and the East/West coasts are 2 different worlds in terms of the people, living and overall feel. I think both can easily offer what you seek. Good luck on your journey. Do you currently have rentals?

Jamie Mason · Answer

Thanks so much to everyone who has chimed in! I and new, but I love this community!

For those who asked, I do not currently own any rentals, but I'm not a complete novice. I worked for an apartment complex when I was in college where I got a pretty good idea of all of the pain that can be involved in property management, and as a Realtor over the past 21 years, I've acted as a leasing agent and consultant to many of my landlord clients. I've stopped shy of true property management with my clients, though.

The reason I ask about both traditional rentals and Airbnbs is that my preference would be to Airbnb my winter home when I'm not there, but ideally, it will cash flow as a traditional rental if the Airbnb regulations change and I decide not to winter there any longer. I just want to make sure I have multiple exit strategies.

I appreciate all of the links and info and will drill down on those soon -- thank you!

Stetson Miller · Answer

Hi @Jamie Mason,

The city of Naples has enacted a short term rental ban, so this would essentially limit your options to areas outside the city jurisdiction, which are areas that are not going to have nearly as high rental demand. Yes, you can find properties advertised on VRBO, AirBNB, etc, but these are technically illegal. I would highly caution you against doing this because at any point in time, your rental income in the property could completely be shut off.

However, there is another market where STR's are currently thriving, and that's Cape Coral, which is about 45 minutes to an hour North of Naples. Here, prices are drastically lower than Naples, and ever better, STR's are actually encouraged by the city to strengthen their economic growth from tourism! The city has been mentioned several times in recent BiggerPockets blogs as being one of the best performing cities in the state of Florida across several metrics. Feel free to send me a message or an email and I would be happy to talk more about the market, price ranges of these properties, and types of properties that you should focus on in the area to maximize income potential!

Jed Haslam-Walker · Answer

Hi Jamie,

I am biased towards Sarasota because I live here and it's an amazing place to live but you may prefer other locations for your own home but as far as BRRRR-ing traditional rentals Tampa and Sarasota/Bradenton are better than Naples - depending on your budget, Naples is very expensive - can't speak for Scottsdale as I don't know the market..

Melanie Johnston · Answer

@Jamie Mason I am happy to share my insights on Scottsdale. I have an Airbnb arbitrage here and I've helped several BP members who have bought and sold Scottsdale Airbnbs. I'm leaving to meet some buyers in North Scottsdale now and then go over an inspection report with another buyer, but I will pop back on tonight and share my personal experience and the experiences of several investors I know. So much to tell you! Be back later.

Melanie

Myka Artis · Answer

Following. I've been doing my BRRRR Airbnb strategy in smaller rural areas but I'd be interested to know if Florida and Arizona have opportunities for the strategy. I use the arbitrage method in both Florida & Arizona but haven't considered buying there. I know the Kissimmee market is really hot right now.

Florida or Arizona for BRRRR Airbnb?

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