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Started By
Message
Anyone have experience in beach rental properties?
Posted on 4/3/13 at 7:50 pm
Posted on 4/3/13 at 7:50 pm
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?
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 4/3/13 at 7:51 pm
6
Posted on 4/3/13 at 9:23 pm to LSUAlum2001
Better have the entire cost of the house in liquid capital. They likely wont finance a dime on it.
Posted on 4/3/13 at 9:30 pm to TyOconner
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.
Posted on 4/3/13 at 9:53 pm to LSUAlum2001
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.
Posted on 4/3/13 at 10:48 pm to LSUAlum2001
I have had more than one client lose significant money as absentee owners of beach rentals.
Posted on 4/3/13 at 10:54 pm to Poodlebrain
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?
Posted on 4/3/13 at 11:13 pm to LSUAlum2001
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.
Posted on 4/3/13 at 11:19 pm to LSUAlum2001
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.
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 4/3/13 at 11:22 pm
Posted on 4/3/13 at 11:26 pm to LSUcam
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.
Posted on 4/3/13 at 11:44 pm to LSUcam
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?
Posted on 4/4/13 at 6:45 am to Dead Mike
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.
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.
Posted on 4/4/13 at 8:53 am to Chris4x4gill2
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?
Posted on 4/4/13 at 9:06 am to LSUAlum2001
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 4/4/13 at 9:07 am
Posted on 4/4/13 at 9:15 am to LSUAlum2001
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.
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.
Posted on 4/4/13 at 9:16 am to wiltznucs
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.
Posted on 4/4/13 at 9:43 am to notiger1997
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.
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.
Posted on 4/4/13 at 11:44 am to I Love Bama
quote:
Management companies will rape you
not all
quote:
nd they are a necessary evil unless you live in town.
without a doubt
Posted on 4/4/13 at 12:33 pm to nogoodjr
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?
Posted on 4/4/13 at 1:25 pm to LSUAlum2001
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.
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.
Posted on 4/4/13 at 3:12 pm to JohnnyKilroy
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.
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