Florida Panhandle Rental - where is best location?

Question

I have been visiting the Florida Panhandle (Destin, Sandestin, 30A, etc.) my whole life as we have family there and it is a good driveable distance for us to travel.  Recently I've been thinking that if I'm going to invest in RE, why not aspire to own a beach condo that I could rent out and use a few times a year!?  I would be looking for a good deal (under $200k) on the beach with good rental income potential.  Does anyone suggest a certain area to look in or areas to avoid?  I wouldn't be looking for a super high ROI., just hopefully be able to cover the bills and get a free vacation out of it a few times a year.  I'm open to hearing any pros and cons of short-term rentals as well.  This would be brand new to me!  Thanks in advance!

Daniel Walker · Answer

Heather,

I'd like to chime in if that is OK.

In terms of location, it depends on what you're looking for.   As for your price point though, you'll probably want to get your feet wet in Panama City Beach.   The other locations are just over that price.   In fact, there are only 3 condos in Destin under 200k and they are all 1 bedrooms built in the mid 70's.   While some of these do have fixer upper potential, age brings with it assessments for repairs and upgrades as well as slower appreciation rates.

In Panama City Beach, you have the chance to be in a relatively newer building.   You would still be looking at a one bedroom (sometimes with bunk room) that can sleep 6 with the sleeper sofa.    The average income for 150 days is the mid 20's gross, yet I have seen some do much better.   Even have seen a select few push 40k.   But this all depends on the quality of the condo and how good it looks in your online advertising, how much you use it, and if you're using a good management company or not.   Management companies will charge 20-30% management fees.   I would suggest going into it with the plan to manage it yourself (VRBO) in a couple years or immediately if you're comfortable doing so.  All you need is a GOOD cleaning crew and a handyman.

On the HOA's, as a previous poster said, you'll be in that $200-$500 a month range.  In most cases, especially in newer buildings, most of your bills are included.  What you can count on paying for is property taxes, inside insurance (HO6) and power bill.   Water sewer, trash, cable and internet are often times included in the HOA.

In Panama City Beach, the best 3 options available ( all one bedrooms) for rental income IMO will be Seychelles on the east end, Tidewater Beach on the west end and Emerald Beach Resort in the middle.   On Emerald Beach Resort financing can be difficult (50% down) because half of the building is Wyndham time shares.    Regency Towers (built in the 70's) has a 2 bedroom gulf front but this building was built in the late 70's.   HOA is healthy and lots of repeat renters but there is currently an assessment levied for resurfacing and painting of the exterior.

I hope this helps some.

Peter Mohylsky · Answer

I work in both markets with condo's being my specialty.  It all depends on what you want because all of these areas have different personalities.  PCB can be less expensive but there are downsides there as well.  Lots of neon in PCB.  30A is more upscale and quieter.  Moving to the west Miramar has lots of activities, dining, golf and of course the beaches.  Destin gets back into the tourist activities again with water parks and of course goofy golf.

Peter Mohylsky · Answer

The 100 days of summer from Memorial Day to Labor Day are near 95% occupancy for the short term vacation rentals.  These are the days that typically schools are out.  The shoulder seasons are starting to become greater in demand as well.  The days and water are still warm.  The crowds are definitely smaller.  The Destin market is short term focused but there are condo's that do not do short term rental at all.  Not really sure what your exact questions are but feel free to call me anytime I love talking business

Chad C. · Answer

@Peter Mohylsky @Daniel Walker Great info! what would be a good range of rental nights per year that yall are seeing in your area? I imagine May to September is 85% booked. And, are there restrictions within these complexes that forbid short term rentals? I imagine not being a vacationing area.

Heather Horton · Answer

Thank you all for your replies!

@John Thedford, that is a good point!  I know there are limitations to how much you are allowed to use it for personal use, but will need to look deeper into that.

@Jon Latorre Yes, I have noticed PCB is a lot cheaper and not sure if that's where we'd want to be or not.  That's part of what spurred my question about the best area!  Might be a good starting place!

@Arianne L. Good to know!  I would be quite happy with 5-10% and a place to stay a few times a year!

Looking forward to more comments as well.

Arianne L. · Answer

@Heather Horton If your goal is to cover the bills and get a free vacation out of it a few times a year, yes, that is definitely doable in the Destin area. One of my friends owns a vacation rental company and he said that a good amount of their client base make 5-10% returns annualized and that's with a 120-180 day/year occupancy. There are also people who just break even but they use it for personal use for a chunk of the peak rental season. When looking at potential properties, make sure you really understand the HOA fees. In this area, it can range from 100-800 a month and covers anywhere from just landscaping to all utilities.

Regarding @John Thedford's point. You do want to consult with your accountant. If you are buying with cash or bank financing, for the most part the depreciation is the same but you will have more complicated bookkeeping. And you may have more capital expenditure items and furnishing costs. If you are going to use a retirement account like a self directed IRA/401k to buy this, there are rules about you using it (I believe you cannot).

Like @Jon Latorre said, real estate is cheaper in panama city beach.

Jon Latorre · Answer

Much of the Panhandle performs very well renting short term rentals (STR's). However there are so many STR units within a 100 mile radius, it's all about being in the right condo building or neighborhood in my opinion.

The right unit in Panama City Beach can gross as much as a high end Destin unit but real estate is cheaper in PCB so I guess it just depends on what you are looking for.

John Thedford · Answer

I am not sure but suspect there are certain regs if you use your rental for yourself. Not sure. The entire area you mention is a hot spot for rentals. If you want to do vacation rentals be sure and check on local regs as well as condo regs. Good luck.

Florida Panhandle Rental - where is best location?

Most Popular Reply