Any STR investors in Destin FL?

Question

Hello hello BP! Currently thinking about 1031 exchange to buy STR in Destin, FL. I was curious on some details:

- occupancy%

- cleaning fees

- Average daily rate

I would appreciate any help. Merry Christmas!

Luke Carl · Answer

Hey brother. Occupancy doesn’t matter in short term. It’s gross annual income you care about. Destin has very high gross vs occupancy. Which means more money for less work. I have 4 1mm+ homes in the panhandle. The one in Destin is 4 bedroom 5 bath 3 blocks from the beach and it brought in 160k++ this year. Occupancy was probably 70%. Winter will be empty unless it’s small and you get a snow bird. City of Destin is externally short term friendly. But not the easiest to deal with. Point of entry is high. I would plan to bring at least a million bucks to the closing table. It will make (lots of) money IF you self manage which, as we always preach here on this group, is easy and possible from a distance. what else do you want to know?

Matt "Roar" Gardner · Answer

@Tucker Kincaid - Congrats on the impending 10031-exchange! I know they can be stressful but massive tax savers! (at least for the time being, lol)Just like Luke said, in a seasonal market like Destin, you really need to look at annual revenue numbers versus just an occupancy and ADR mentality. It's a thought process that a lot of investors struggle with! As an investor and realtor in the local area, I can tell the classic answer to all of your questions, "It depends." -- Occupancy - Varies greatly. A 2-bedroom condo on the beach may see higher occupancy than a 7 bedroom off the beach; however, the 7-bedroom may produce better ROI and cashflow. Cleaning Fees - Again, varies greatly. Some cleaners provide a full service (i.e. maintenance, bring the towels/linens, shampoos, cleaning supplies, etc.), while others just bring their two hands. Obviously, that will cause a variation in price as well. Average Daily Rate - Varies a ton as well. I'll have nearly 10x swings from the high season to the low season my daily rates, which again is based on the property type and location. Best of luck to you!!!

Villy Ellinger · Answer

@Tucker Kincaid, I agree with a few of the above comments that occupancy in the "off season" months is not critical. In fact you may choose to use that time to remodel, re-invest in the property rather than add wear and tear at low prices. To the questions about "daily rates" -- also agree with the above -- extremely seasonal. To give you an example, the same property might have rates of $100 per night in the winter (in the case of "snow bird" monthly rates even less than that) and $600 to $800 or more per night in the summer. So, yes, you need to have close to 100% occupancy in the summer to capture the real revenue opportunities. So another way to look at occupancy is also on a seasonal level. If you average 75% annual occupancy, but you are getting close to 100% in the peak seasons, you will be making more than if you have higher occupancy overall, but have occupancy gaps in June and July. To your question about cleaning fees: yes they do vary. I do want to point out that the labor market tightness is affecting that business very much and good cleaners are very precious. Complaints about cleanliness can be very harmful to an STR performance. So being "cheap" with cleaners is not a good idea. On the other hand, guests tend to frown upon what they perceive as high cleaning fees (because they've never cleaned a 3 bedroom condo in 2 hours, lol). Also, VRBO now and Airbnb (possibly soon) have implemented rules that cleaning fees cannot be higher than the nightly rates. It's a balancing act :-) To a comment above @Luke Carl about vacation homes in Destin grossing at $160K, definitely great and not unreasonable for others to do those numbers. That said, in the current market those houses are priced significantly higher than when Luke might have bought his. So cash-on-cash return will be tighter. Also, managing beach house properties correctly is key to the gross revenue they achieve. There are a whole bunch of vacation rental houses at Crystal Beach Village in Destin and around, that would be grossing way more than what they are, but are "reporting" rental histories of $60K to $70K. How or who manages is key :-).

Tucker Kincaid · Answer

@Lyndsey GarzaThanks! I may reach out to you when this deal goes through. Appreciate the feedback

Account Closed · Answer

Hey, have you checked AirDNA?

Tucker Kincaid · Answer

@Kim BanksHey! Yes I have. I’ve done the “Enemy Method” from the BP short-term rental long-term wealth book.

Tucker Kincaid · Answer

@Matt "Roar" GardnerThanks Big Roar 🤙🏼Very helpful info. The biggest hurdle right now is the loan. We lost the other property this week so it’s action time

Tucker Kincaid · Answer

@Luke CarlAppreciate the feedback! I was trying to gage the gross income and the occupancy rate was one of the slots in my AirBnB calculator. For this property I’d say finding my team (cleaners, handyman, and contractor) is the next biggest step.Appreciate the looks

Luke Carl · Answer

This is not the place for drumming up referral business

Lyndsey Garza · Answer

@Tucker Kincaid, Although I am not a property manager in Destin, I can help guide you through where to find that data and information. I also have two colleagues in the area that specialize in this type of investment that I would definitely put you in touch with, of course only if you’re not already with a realtor. I do have access to national data and I would be more than happy to provide you the stats you need easily. Also, asking for as well is this your first 1031 exchange experience?