Why can't I find a STR rental in SE florida that makes $ sense?

Question

I am an experienced landlord hoping to 1031 out of one property into a STR in SE Florida that I can occasionally use. My budget is 450K and I would prefer a single-family residence, but am definitely open to a condo as long as the numbers make sense. I have done some looking at VRBO rates and calendars and have tried mashvisor. I don't need to get rich off this deal but do want the income to have a decent chance of at least covering my expenses. I am looking at Vero Beach area and south. I know to be careful about minimum length stay regulations.

I am having a very hard time finding ads for properties that "pencil out". Yet, I know from here that plenty of folks are making money on STRs in Florida. What's the secret? How can I find current vacation rentals that are for sale (that would presumably have income statements, established clientelle, reviews or all of the above?)

Michael Kiley · Answer

@Terri Donovan

You may want to solicit to Airbnb hosts in the areas you would like to buy. Knowing last years proforma can help you arrive at your offer price. You might also be able to purchase the house furnished, saving you the hassle and extra expense of furnishing it yourself. Best of luck!

Joe Garvin · Answer

Terri,

Having lived in South Florida, specifically Broward County the purchases prices got to expensive so we started buying in St. Lucie county. I see a few folks mentioned Vero Beach. Just be very careful because their Code Enforcement office is very strict on STR, especially on Hutchinson Island. What I can tell you is there is a high demand on the island for STR travel, pretty much year round but stay in St. Lucie county and be careful with anything in Indian River County, specifically Vero Beach. I meet with the Chamber if Commerce in Sebastian (one town north of Vero) and they said demand is very high and even are willing to refer business. Maybe look there.

Russell Brazil · Answer

You can see what people charge, and you can see what people pay for the property. Adjust expectations to the numbers the other investors in yoir target area are paying.

Eric P. · Answer

I went on Zillow and searched for 2+ BR SFH with an asking price between $100-$150k that are East of I-95 between North Miami / Broward & Vero Beach. There are 427 for sale. Literally red dots up & down my entire screen.

Some may be in restricted communities that have banned STR but I’d bet there’s quite a few in there that you can buy, spruce up a little bit and Airbnb out at quite a profit

Ariadne Latorre · Answer

Here in Polk County the STR market is very active. There are a few new developments that are being built with the STR permit and that will never change. It is always my recommendation for investors that want to buy cash and get around a 5 to 7% return with full management including booking fees. Disney is adding many attractions and the good communities with STR permit are on waiting list to have the lots released. Some management companies are claiming 15% and up to 25% on ROI but I have yet to see the numbers show for that. If investors do their own booking then the return could be close to 10%. Orange county is implementing restrictions at County level, not just HOA restrictions. Any County can actually change their regulations and that is a risk.

Account Closed · Answer

We have sold many homes & condos to investors and still manage 25 annual & short term rentals in Vero Beach Florida. The best ROI in this area and probably most Florida resort towns, is a home or condo rented on an annual basis. Many of our clients started with the idea of using their rental occasionally only to find seasonal rentals net less than annual rentals and are occupied during the most desirable time in winter! They have transitioned to annual rentals until the time when they can retire and occupy the home or condo for 6+ months and get the no state income tax & homestead exemption benefits!

Jeremy Buckley · Answer

I own a renovated condo on Hutchinson Island that we rent Jan-Mar for $4000 per month and it pays all the expenses so we can use the rest of the year. It's a break-even and we use it VERY often so we don't rent it out more than that. H.I. is mostly condos with minimum rental time requirements. My building is a one month minimum so it's fairly easy to fill with 3 separate tenants, usually elderly couples from Canada, NY tri-state area, and cold midwest states. Most condo buildings on H.I. are 3 month minimum and some are 2 month. Long-term owners have repeat tenants that have been visiting the island for years. I believe the average oceanfront 2 BR would rent on an annual basis for about $1700 per month, depending on condition. I have a friend that owns a few units at a condo/hotel which doesn't have the minimum rental time restrictions that he claims makes 6 to 7k per month in STR. I cannot verify these numbers. They seem high but not impossible. They live in the area and do their own property management, including keys, cleaning, repairs, reservations etc. It's a lot of work but they seem to love it. It's the Island Beach Resort in Jensen Beach. Shucker's, the beach bar/restaurant attached is a local favorite. My friends bought real low, like in the 100-$200k range per unit but have told me that a certain company is snapping up every unit that comes available and own a dozen or so now and the prices are much higher now. The numbers still might work though. Ask me and questions about the area and I'll try my best to answer. Heading there next weekend and the one after that. It's an unspoiled beach town. Really lovely.

Terri Donovan · Answer

Etic....thank young for the reply. Yes, I can easily see what's for sale, but when I cross referenc e potential properties with Airbnb rental and occupancy rates in the same neighborhood, the numbers never seen to work.....I can't seem to find one whose income would cover mortgage, taxes, insurance and airbnb/vrbo fees, especially considering occupancy rates seem to be around 50-65%. I understand there will likely be a loss the first year based on start up expenses, but even after that, I am not seeing break even or better potential. (Fyi....in a 450k/338k mortgage property with taxes, insurance, utilities and fees, I'm estimating 4200ish/month expenses.....)

Alan, I live in a no income tax state already, so that isn't an incentive. I have no desire to live in Fl for more than a couple months/year, but I do need the option of fleeing the pnw weather often enough that neither a LTR or paying for 8 or 10 weeks of vacation rental rent (as opposed to staying in a place I own) make sense either.

other ideas? Anyone know of a way to locate current STRs that are for sale?

Why can't I find a STR rental in SE florida that makes $ sense?

Why can't I find a STR rental in SE florida that makes $ sense?

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