Best STR returns in the Destin and 30A area-Homes or Condos?

Question

As I am starting to become frustrated with inventory availability of STR's in the Gatlinburg/Pidgeon Forge area, I have turned my sights toward the the Panhandle area for investment. I haven't been, although I will travel there soon hopefully, so I am trying to figure out the area.

Am I better off for investment purposes with a house or a condo? I was thinking of a condo, but after looking at the HOA fees of many of them I am a bit jaded. I was thinking ease of care and oceanview with a condo, but then I noticed many homes don't require much upkeep outdoors.

Between HOA fees and higher taxes down there compared to Tennessee, I can see there is a bigger bite coming out of profits. I have become spoiled looking at returns in Sevier County!

So, where would I find the best returns, in homes or condos? And in what areas?

Thanks!

Villy Ellinger · Answer

@Nancy Bender So excited for you that you're considering a vacation rental! I am super partial, lol, so will stick to what I know. I'm in Fort Walton Beach/Destin, FL. I live here, own here, sell here and manage vacation rentals here. I like it because: this area is one of he few beaches that people from the southern and mid-western states can drive to. For a family of four or more flying can be unaffordable. Prices here are not low, but are still more accessible than other beach areas like Hawaii or California or other areas of Florida. I find it a bit odd comparing the Smokey Mountains to the Gulf Coast, lol. I'm sure the Smokey Mountains are a great area to invest. But... if you like the beach, well... It's like trying to decide between cake or steak, lol... Two completely different items.

Yes, you can find investments with good returns here, but you have to do some more in depth research. Yes, come down to the area (same applies to any other areas like Tennessee). Drive around with a knowledgeable agent or property manager, see some properties you like and some you don't, keep an open mind, crunch some numbers, sleep on it, get away from the cliches, etc. Sometimes the properties with the highest ROIs are more unassuming, not "right" on the beach, but a the right price, the right marketing strategy and a targeted clientele, can produce great returns.

My two cents :-)

Matt "Roar" Gardner · Answer

I'll echo what @Avery Carl said - "It depends."  What's your price point? Are you looking to use this as a second home at all? If so, that would dictate location, size, beds, baths, etc.   If it's a pure investment, are you planning on self managing or using a local PM?

As a gross generalization, the more heads-in-beds you can get, the better, so that would generally lead you to a SFR (as most condos max out at 3 bedrooms).  If you can tap into the 5-7 bedroom market, you'll be battling less competition and can generally command a higher ROI.

I own a 2BR condo on Okaloosa Island and 5BR SFR in Destin, and they both perform well. The SFR has the largest potential in terms of ROI as well as equity build, but I got the condo at an awesome discount, so the returns are solid there as well.

I've helped plenty of people find a solid SFR or condo from BP, and both avenues are viable. Best of luck!!

Avery Carl · Answer

The answer to that is "it depends." Many condo fees include some utilities or cable/internet, that you would be paying whether you have an HOA fee or not. So you have to look at each one individually. There aren't any particularly "bad" areas as long as it's on or walkable to the beach. PCB is going to have the highest returns across the board because the purchase prices across the board are cheaper. But there are deals to be had in both Destin and along 30a (if you stay out of Seaside and Grayton Beach which are more trophy buys).

Clint Shelley · Answer

Gulf county will be awhile before it's back. You'll get more traffic figuratively and literally over in PCB and Destin. Seaside and Grayton will hurt your feelings while letting you know you don't have enough money. The prices are just too high for me. I was looking on the west end of PCB and was seeing the same things I saw in 2008 pre meltdown. When I buy I'm definitely using an agent. You gotta have that local deal knowledge. It's a great area through.

Clint

Clint Shelley · Answer

@Brian Gerlach

Prices are out of control imo for dumps. Hours on market, properties selling multiple times in a year for margins, the amount of mortgage surveys that some of my buddies are doing. Many new flippers. Things like that remind me of 2006.

John Underwood · Answer

@Luke Carl can help you with both areas as he has property in Destin and PF.

Luke Carl · Answer

@Nancy Bender I personally am not a fan of Condos but doesn’t mean you can’t be successful. I’ve got a 4/5 in Destin and could not be happier.

Sofia Sharkey · Answer

@Nancy Bender what I would do is call vacation rental management companies and ask for the gross revenue on homes X size, then condos X size in a specific area/ neighborhood you’re interested in so you can compare apples to apples.

Clint Shelley · Answer

I just like the west end of PCB better than the East. On the east I'd try to be around Lagoon Drive. Sure don't want to be in the middle. This is in terms of me personally staying at the place. West is pricey right now.

Clint

Avery Carl · Answer

Fannie Mae has made some significant changes to what constitutes a warrantable and non-warrantable condo since this was posted. It's much more difficult to get conventional financing for condos in these markets now.

Best STR returns in the Destin and 30A area-Homes or Condos?

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