Sandestin, STR Condo, is a 1 bedroom worth it?

[Kimberly Bunch]

Hi. What thoughts/experience do you have with studio/1 bedroom in Destin. Newer investor and looking for an entry level STR as my first rental. I am looking at a studio/1 bedroom in the Sandestin area. Based on history it seems like the studios I've seen cash flow really well but it seems like the property may sit for awhile when trying to sell in 10 years. Specifically looking on the bayside communities of Grand Sandestin.

[Villy Ellinger]

@Kimberly Bunch studios and one bedrooms actually do better in rent per sq ft than larger units and offer better returns in my experience. I have two studios and a one bedroom townhouse on Okaloosa Island as well as a 3/3 beachfront condo. In absolute terms the large units bring in more, but as far as % return, my experience has been that small units do better and are also more versatile when it comes to the off season, when people are not travelling in large family groups. So studios and one bedrooms can offer a more steady occupancy and rental income.

Sandestin if very popular and also well known. In a way buying there allows you to buy the "brand". People look for Sandestin by name. HOA fees are pretty high, but these days they are actually very comparable to other complexes. With insurance so high for single family homes and REALLY difficult to get for STR houses, HOA fees don't seem so scary any more, lol. Also, the amenities are a big appeal to guests.

Used to be that Sandestin was difficult to self-manage or to have other mgmt company outside of the in-house Sandestin management. That is no longer the case. Yes, there are some small discounts that guests get on renting bikes or carts if the owner uses the in-house management, but that does not seem to impact whether or not guests book with you. So you can self-manage or use whichever company you choose just fine.

I would suggest you look into Luau on the beach/south side of the Sandestin resort. It's newer, very nice and there are great studios there. Depending on your budget, the lock-out units (two bedroom unit that splits into a one bedroom and a studio and can be rented either way) are a great option. You are basically buying two condos and only paying one HOA fee. I currently have a client who is trying to buy one of these units. Amazing views too and walking distance to the beach (super plus).

If you are looking on the Bay side of Sandestin, there are some more cost effective options there. The studios/one bedrooms there also benefit from some conference and conventions traffic in off-season. Gross rent will probably not be as high as on the beach side, but considering the prices (many are in the mid $250K and under $300K with rental projections over $30K). In Sandestin on the Bay side, some of the buildings I like are Bayside Condo (incredible water views of the bay), Bahia and Lasata (studios are bigger here and can do in the high $30K or more).

I've always been a huge fan of small units (you will probably find numerous posts from me about that, lol). I used to not be that big of a fan of Sandestin, but with the shift of prices on the market (many areas being really high and somewhat oversaturated in rentals) and with the flexibility of managing in Sandestin now, I'm spending a lot of time with clients there. I am also considering buying something (studio) there myself. One great thing about Sandestin is that locals go there as well for weekend staycations :-).

Good luck on your property search. If you have any questions about studios/small unit STR or Sandestin and the area around, definitely let me know. I'll be happy to answer. I try to be as objective and straightforward as possible.