Short Term Vacation Rental

[Jacob Hinchman]

Hello,

I am looking at buying a vacation rental condo in Navarre, FL. My plan is to list it on AirBnB, etc. I have been using AIRDNA to get occupancy and rental amounts.  Is there a better way to do this for short term rentals?  This will be a long distance rental.  Does anyone have a good cleaning and maintenance service in Navarre? Also, are there things I need to be careful about like prohibited short term rentals?  Finally here are the numbers I have been using. Does this seem like a sounds deal?

3500 rental income, 

renter pays sales taxes and cleaning fee

1550 mortgage, 550 HOA, 250 prop tax, 100 insurance, 100 electricity, water and trash included, 200 Capx/repairs,

2750 total expenses

month cash = 750

Thanks

Jake

[Julie McCoy]

Hi @Jake Hinchman,

The first thing you should look into is whether there are any restrictions on STRs in the area - both on the government level and in the HOA of the building you're looking at. You should be able to find out from the local zoning commission what, if any, restrictions there are - and see if any might be in the works.

AirDNA is a useful resource for looking at market patterns/demand, but their rental projections can skew high because of the way they gather their data.  You can get an overview of a market from them, but make sure you do your own nuts-and-bolts research on AirBNB/VRBO to see what comparable properties are renting for, how full their calendars are, etc. 

Have a plan for the snowbird season.  Is $3500/mo your average income when factoring in the low season?  Is that a conservative number?

I'm concerned that your expenses are estimated low.  $100/mo electricity in Florida seems extremely low - especially because guests have no respect for your power bill.  They'll leave doors/windows open, blast the A/C, etc. Is there any gas utility?  

$100/mo insurance strikes me as quite low.  Is that a policy that covers short-term rental activity?  Wind/water damage if a hurricane hits?  

$200/mo capex and maintenance also seems low to me.  A short-term rental needs to be kept in top shape, and guests break thing, stain sheets, scuff up pots and pans, lose beach towels, etc. etc. etc.  $200/mo doesn't give you a lot of margin for those little things, much less allow you to save up a nest egg for capex (which should really be its own line item).  Presumably this is a condo so your capex will be limited, but you'll still need to think about occasionally replacing appliances or furniture, or cosmetic upgrades as time marches on.

Overall your margins on this are pretty slim - there's a lot of variables in STRs and while they can be amazing investments, you've got to pencil out things for the worst case scenario so you don't end up losing money.  

Best of luck as you explore this - feel free to head over to the Short Term Rental forum and there's a bunch of us who will help you out, and tons of threads you can read about the pros/cons of it all.