STR in Panama Beach City - Deal Analysis and questions

[Majid Tahir]

Hi everyone,

I'm evaluating a condo in Panama Beach City Florida for a short term rental.  Here are the numbers:

Purchase Price: 290k

ARV: 285k - 300k

No major renovation is required.  Here are the monthly expenses as I've researched so far:

Supplies $100.00
Electricity $400.00
Gas $50.00
Water/Sewer $50.00
Cable/Internet/Netflix $50.00
Pest Control $50.00
HOA $1,100.00
Property Tax $200.00
Insurance $100.00
Repairs $239.63
CapEx $239.63
Property Management $0.00
Booking Fee $143.78
Total Monthly Operating Expenses $2,723.03

A few questions arise for me:

1. $1100 in monthly HOA fees are A LOT. Is that common in Florida vacation condos? Is it wise to purchase a vacation rental condo with such high HOA fees? It seems that it would add significant additional pressure when the home is not rented. With such high HOA fees, I feel it would make it difficult to sell the home as well. I'm trying to think of a contingency plan in case the short term rental model does not work with this property.

2. Should I still plan for 5% capex and 5% maintenance with this property or condos in general? I supposed I'll need to research more closely what the HOA covers first?

3. @Avery Carl has some charts on her site with average occupancy rates, and average daily rates for this area.  Her figures indicate an average daily rate of $215/night and an occupancy rate of 70% for a 2 bed/2bath in PBC area over a full year.  Assuming these numbers are fairly accurate and acquiring a loan with 25% down, I'm looking at a monthly cashflow of around $600/month.  Do these numbers seem reasonable?  Am I being over optimistic here?  Any guidance would be greatly appreciated.  

Anything else that I'm missing. Would love any other feedback on this deal or STR in general.

Thanks in advance.

Majid