Anyone have experience in beach rental properties? | TigerDroppings.com

Posted byMessage
LSUAlum2001
LSU Fan
Tier BP
Member since Aug 2003
26938 posts

Anyone have experience in beach rental properties?


I am considering buying something in the FWB/Destin area and wondering if the rental income is worth the investment. It would be great to block off a week here and there throughout the year for myself, and rent it out the rest of the year.

Is it worth it or are the monthly fees and % payment to the rental agencies too high to bother with it?




This post was edited on 4/3 at 7:51 pm



Back to top
Share:
TyOconner
Troy Fan
NOLA
Member since Nov 2009
10014 posts

re: Anyone have experience in beach rental properties?


Better have the entire cost of the house in liquid capital. They likely wont finance a dime on it.





Back to top
jso0003
Auburn Fan
Birmingham/Atlanta
Member since Jun 2009
4689 posts

re: Anyone have experience in beach rental properties?


quote:

Better have the entire cost of the house in liquid capital. They likely wont finance a dime on it.


I can't speak to the Destin/Gulf coast market, but this is not true for the Hilton Head, SC area.






Back to top
I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
31318 posts

re: Anyone have experience in beach rental properties?


Generally speaking, you need to put about 50 percent down for it to cash flow. My friend is a broker in Panama City and talked me out if it.





Back to top
Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
14387 posts

re: Anyone have experience in beach rental properties?


I have had more than one client lose significant money as absentee owners of beach rentals.





Back to top
LSUAlum2001
LSU Fan
Tier BP
Member since Aug 2003
26938 posts

re: Anyone have experience in beach rental properties?


quote:

I have had more than one client lose significant money as absentee owners of beach rentals.


What was the cause?

Maintenance? Fees/Cleaning? Was it sitting empty more often than not?






Back to top
I Love Bama
Alabama Fan
Alabama
Member since Nov 2007
31318 posts

re: Anyone have experience in beach rental properties?


Management companies will rape you and they are a necessary evil unless you live in town. HOA fees at these condos are through the freaking roof. Your mortgage is the least of your expenses when owning these things.





Back to top
LSUcam
LSU Fan
Destin FL
Member since Dec 2011
381 posts

re: Anyone have experience in beach rental properties?


I'm from Destin. The prices are a great time to buy in the area. If you are able to manage it during the year, then I'd say yes (and some property mgmt companies are very fair and allow enough income for you to cover most mortgage costs).

If you can get the financing and manage the upkeep whether through a property management company then I'd say YOLO.

The big questions you should be asking is who is your target tenant. Destin get's pretty sparce in the off-season, and if you have mid-term off season leases, then your in good shape.



This post was edited on 4/3 at 11:22 pm


Back to top
LSUAlum2001
LSU Fan
Tier BP
Member since Aug 2003
26938 posts

re: Anyone have experience in beach rental properties?


quote:

I'm from Destin. The prices are a great time to buy in the area. If you are able to manage it during the year, then I'd say yes. The big questions you should be asking is who is your target tenant.


I was looking at some places not far from where 98 crosses onto Okaloosa Island in FWB.

2BR/2BA going for ~$205K. The unit was just renovated and looks nicer than 99% of most homes. I'd like to keep it out of the hands of anyone less than 25 or so.






Back to top
Dead Mike
LSU Fan
Cell Block 4
Member since Mar 2010
1736 posts

re: Anyone have experience in beach rental properties?


quote:

I'm from Destin. The prices are a great time to buy in the area.


Why do you think the prices are so low?






Back to top
Chris4x4gill2
Alabama Fan
North Alabama
Member since Nov 2008
1851 posts

re: Anyone have experience in beach rental properties?


I know you will have a ton of new "friends" wanting to "rent" it for next to nothing. Family is even worse.

We looked into it pretty hard several times and the numbers just never worked. Only way we could begin to justify it was if we personally wanted to use it several times a summer.






Back to top
JohnnyKilroy
New Orleans Pelicans Fan
Member since Oct 2012
7526 posts

re: Anyone have experience in beach rental properties?


quote:

Only way we could begin to justify it was if we personally wanted to use it several times a summer.


Wut?

You'd take your rental off the market during peak season?






Back to top
wiltznucs
South Florida Fan
Apollo Beach, FL
Member since Sep 2005
7033 posts

re: Anyone have experience in beach rental properties?


A gal friend of mine bought a place in Destin back in 2004ish to use as a rental property. She lost her shirt on the place and finally offloaded it last year. She's a pretty savvy businesswoman and says she'll never do it again.


This post was edited on 4/4 at 9:07 am


Back to top
Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
14387 posts

re: Anyone have experience in beach rental properties?


Unanticipated repairs made by the HOAs were sometimes more than the annual cash from rents after paying operating expenses. And the repairs were more frequent than anticipated as well. Fees and cleaning were never a real problem, but vacancy increased after Katrina and did not return to pre-Katrina levels when the economy tanked and demand decreased.

One of my clients who still owns one is optimistic that his unit will be rented more frequently this year based on inquiries to his management company. I'm not sold yet.






Back to top
notiger1997
Member since May 2009
21334 posts
 Online 

re: Anyone have experience in beach rental properties?


quote:

She's a pretty savvy businesswoman and says she'll never do it again.


This is what I have heard from several people.

Unless you just get very lucky and buy at the right time for the perfect price, don't plan on a condo rental deal to be a money maker.
If you want to buy one to have a place to stay throughout the year, yeah it is good. As an investment took, not many people I know have had positive results.






Back to top
nogoodjr
Member since Feb 2006
275 posts

re: Anyone have experience in beach rental properties?


Most times your rental income should cover HOA fees for the year. Any expected profits will come from appreciation of the property over time. This means purchase price is the most important aspect of the deal. Even if property values increase 30% the next 2-3 years, seems like a lot of work/trouble to make 10-15% on your capital. Especially if 200k is a large portion of your portfolio. Significant risk also.

Now, if you can purchase for 30-40% below market value, there is great money to be made. Those deals are hard to find for outsiders. Start by requesting the rental history for last 5 years, and profit/ loss statement from management company.






Back to top
Fat Bastard
New Orleans Saints Fan
Paradise
Member since Mar 2009
15622 posts

re: Anyone have experience in beach rental properties?


quote:

Management companies will rape you


not all


quote:

nd they are a necessary evil unless you live in town.


without a doubt






Back to top
LSUAlum2001
LSU Fan
Tier BP
Member since Aug 2003
26938 posts

re: Anyone have experience in beach rental properties?


quote:

Start by requesting the rental history for last 5 years, and profit/ loss statement from management company.


That is my first step.

I would also review management fees as well to see what would I receive, on average, each month to see if it is worth the risk

Maybe I could work out a deal with Chicken for free advertising if I give him a free weekend?






Back to top
SippyCup
New Orleans Saints Fan
Member since Sep 2008
1112 posts

re: Anyone have experience in beach rental properties?


My family and I have been investing in Okaloosa & Walton for over 30 years now (about 10 myself).

One thing I can guarantee, you WILL NOT profit from rental income. Consider yourself fortunate if you find a property that just covers your costs.

If you have the cash flow to hold on to properties for several years, there is money to be made, but it wont happen on rental income.






Back to top
Chris4x4gill2
Alabama Fan
North Alabama
Member since Nov 2008
1851 posts

re: Anyone have experience in beach rental properties?


quote:

quote:


Only way we could begin to justify it was if we personally wanted to use it several times a summer.




Wut?

You'd take your rental off the market during peak season?


Meaning it was not going to give a ROI any time soon so the only way to "justify" the cost of ownership was that we just wanted to go to the beach.






Back to top



Back to top