Short Term Rentals on Gulf Coast

[Lindsay Broome]

My husband and I are interested in purchasing a condo or small home on the Gulf Coast to use as a vacation rental.  Looking from Gulf Shores to Panama City, we even would be interested in Clearwater/Tampa/St.Petersburg, I just don't know much about that area.

We have done airbnb in Nashville, so we know how to run them.  We are a little burned out on the Nashville area (where we currently) live and not interested in investing here.  My husband does remodeling for a living (on his own), so we are more than happy to find something dated and crappy and put the work in ourselves.  

a few questions....

Alabama vs Florida.....what states/cities have more favorable regulations/taxes for short term rentals? (does that even exist, ha!)

Condo fees......Some seem to be over the top, what is reasonable to expect?

Price......Is it realistic to think we could find a 3 bed 2 bath condo or home within a few blocks from the beach under $200K?

What areas do you think are great investments? Anyone doing well or terrible that way?  I'm open to all advice and opinions :)

[Valerie Rogers]

Hi Lindsay,

Nice to "meet" you!

I live in CO and our first STR is in the mountains about 1.5 hours from where we live. When we wanted to buy our 2nd STR we wanted to go south to warmer climates.

Never having been on the Gulf Coast of FL before, we took 2 trips. The first we flew into Tampa and drove all the way down the coast to Marco Island. There was a LOT that we saw that we loved. (My favorite was Sanibel Island.) However, we found that the housing prices were out of our budget and many of the cities had very strict rental restrictions for short term rentals (such as limit to one rental per year, at least 30 days in length.) Since our goal is to always have the property pay for itself those restrictions didn't work for us.

So our next trip was to Destin, FL, where the short term rental industry plays an important part in that region's economy. There were no restrictions there. We ended up purchasing a condo on Okaloosa Island, next door to Destin. Since then, we've purchased a 2nd unit in the same building and are currently under contract to purchase a 3rd. 

To answer your specific questions:

Alabama vs Florida.....what states/cities have more favorable regulations/taxes for short term rentals? (does that even exist, ha!) - I don't have any experience anywhere other than Destin/Fort Walton Beach area, and as I've mentioned there are no restrictions for STRs in that area.

Condo fees......Some seem to be over the top, what is reasonable to expect? - Our building's HOA fee is $540/month. That sounds like a lot, but when I compare it to the HOA fee we pay for the condo in CO ($390/month) it doesn't sound out of line, considering that the FL building has a pool, grounds and an elevator and the CO building has none of those.

Price......Is it realistic to think we could find a 3 bed 2 bath condo or home within a few blocks from the beach under $200K?

I cannot answer that question, I don't know enough about the market to make a guess. I suspect you can find properties for under $200K but not sure if they would have everything you are looking for. Best bet is to contact a realtor in the different areas you are interested in and pick their brains.

When we bought our 1st condo in FL, our budget was $350,000 and we wanted at least 2 BR, 2 BA, the building must be ON the beach and the condo must have an awesome view of the beach. (This was in 2014.) We found in Destin we could buy a 2 BR/2 BA condo within that budget, but we had to compromise on something (usually the great view). You could have a little bit of a view (or none) for that amount of money. That is why when we found the condo on Okaloosa Island (which is next door to Destin, but not IN Destin) we knew right away it was the one. It had everything we were looking for and was under our budget.

What areas do you think are great investments? Anyone doing well or terrible that way? I'm open to all advice and opinions :) - Our market is great. The FL condos are our best ROIs, followed closely by our condo in Summit County, CO.

My best advice is to decide what are your absolute "must-haves" and set a budget that will allow you to get as much of the must-haves as possible. For us, the non-negotiable items were the location (must be ON the beach) and the view (must be an awesome view of the beach.) We knew that was what guests are looking for and were willing to pay a higher rate for those amenities.

Best wishes to you!