STR/Vacation rental NW Flordia

[Justin Aldred]

I was having a discussion the other day with someone who said that Northwest Florida (especially more of the luxury areas around 30a) are more of a "capital appreciation" play and that It's impossible to get good cashflow in the luxury areas. Is this true? My thought is even with high and low season there has to be a way to generate good cash flow in this market and that maybe the houses are over-priced and have not been re-priced for the current interest rate environment.

My question: Are homes just overpriced or is it normal to have crappy cash flow in this area?

(for example the area we're looking at a house producing 100k in income asking 1.2million) when you factor in taxes, maintenance, cleaning, etc that barely breaks even or even looses a bit.

[Lake Lutes]

For 30A, Destin, Panama City Beach, etc - your "on the water" price points are going to vary greatly. For 30A specifically, there are luxury rentals that do hundreds of thousands of dollars a year. Once you hit a certain price point, it is true that it is tough to have a true logical investment. Obviously, money down, rates, purchase price, etc are going to impact your CoCR and cash flow.

To directly answer your question - the $1.2M house is probably going to lose money at 20% with an 8% interest rate. A large amount of the luxury owners on 30A are going to have much more servicable/cheaper debt than that, and have a much smaller note being carried than $900K+ - so it would make sense for them.

Happy to run some numbers on specific examples if you need any help, Justing! Just let me know - this is my primary investment market.

@Justin Aldredundefined