All Forum Posts by: Account Closed

@Account Closed Regarding insurance quotes on a STR property, you're going to want to specify to your insurance agent/broker whether the property will be rented on just a weekly basis or less than weekly. It can make a small difference in the price of the quote, but can definitely make a major difference on the backend. I was speaking with an insurance agent recently, and they have seen coverage denied because the policy only covered weekly rentals on an incident with a 3-day weekend rental. They insisted that it should be clarified when requesting the quote.

Also, as @Jennifer Wilson said, within the proper city limits of Destin some ordinances have recently been passed regarding short term rental homes in residential areas. Be sure to pay attention to the number of parking spaces, the max occupancy limit is now 24 but it is dictated by the total number of bedrooms, etc. Your current agent should be aware of the details. There is a grandfather clause that lets properties stay at their current occupancy limit for the next 5 years, but as of the second reading at the last city council meeting 2 weeks ago, it wasn't clear whether that grandfathering conveys with the sale of the property.

Be sure to reach out to the Property management companies directly and request your own projections, ask your own questions, etc. Cross reference projections and ask the management companies to explain the differences. It will help you gain some perspective on which one is more realistic and they can also tell you the positive and negative aspects of a property from their perspective as well. The startup costs for linens and other things can be a big surprise to many first time investors, so it would behoove you to do your due diligence on all the associated costs before submitting an offer on a property. Get stuff in writing, keep good records, etc.

Feel free to reach out if you have any other questions. 

@Account Closed, Lenders will usually charge more for investment properties, as they assume in a default situation you will pay your personal home mortgage first. I own a long term rental in Destin, but the market seems to be trending towards investors getting into the vacation rental business. I know several investors who make great returns, but they've built strong systems, and the type of property they run requires very large amounts of capital. Another note on Hurricane insurance, the time of year that you can get that type of insurance is important, as they don't like to write or renew policies during hurricane season (late summer through fall). And they absolutely won't write policies while a real storm is out over the ocean. I recommend talking to a Florida insurance agent about the specifics before making any decisions. Also important in Destin are the flood zones, as some higher risk zones are spread all over Destin, and they require that you carry extra flood insurance. @Jennifer Wilson (my wife, realtor) is an expert on these, and she's been my agent for all 29 units I've purchased in the area! Hope this helps, good luck!

Hi @Account Closed,

That's very exciting to hear that you're looking in our area to invest!  As Share and Matthias said, Destin is a great area to invest and there are still opportunities for great returns.  I do want to add a couple notes to piggy-back on what other people have said though!

I'm sure your agent is aware, but if you're looking for a STR, the property will need to be located South of Hwy 98. I'm sure that most of the STRs you're looking at are already located there, but in case you saw a couple other options sprinkled throughout Destin that are further North, I wanted to make you aware that recent city ordinances have put a stop to STRs in neighborhoods North of 98 (for the most part). If you find one further North, it would be worth diving deeper into HOA rules and city rules.

Secondly, when you're talking to your insurance agent, ask if there are different prices on premiums based on fluctuating your deductible for the "all other perils" deductible.  Although you only have one premium, there are technically two deductibles; one for hurricane damage which is usually 2%, and one for all other perils.  I have seen some companies be able to lower the yearly premium if you opt for a higher deductible, and vice versa.  It may be worth asking in case it makes a significant difference in your numbers and/or comfort level!  

Finally, if you're on the ground level, I always recommend flood insurance, even if the property technically doesn't need it! (Flood zone X)  It is well worth the $450/year for peace of mind, and if something does happen, you'll be glad you have it!  (Speaking from experience).

If there's anything else I can help with, please don't hesitate to ask!

Good luck and happy investing!! :)