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Looking for average annual rental income on a 4-bedroom gulf front condo or house in…
Posted on 7/16/24 at 11:17 pm
Posted on 7/16/24 at 11:17 pm
Gulf Shores/Orange Beach/Perdido area. I have found some resources that say some of the places can gross $70-100k+. I am looking at a couple of places that a realtor is supposed to be trying to find some historical data about, but wondering if anyone here has some good insight. Always prefer impartial feedback.
This post was edited on 7/16/24 at 11:18 pm
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Posted on 7/16/24 at 11:35 pm to auwaterfowler
Contact a property mgmt co.
Try beach ball properties.
They will give you comps.
Try beach ball properties.
They will give you comps.
Posted on 7/17/24 at 4:32 am to auwaterfowler
My 3 bed gulf front condo is $12500 for the HOA insurance (I have separate condo fees, but that is the yearly insurance cost). Also pay $2500 HO-6 insurance
Posted on 7/17/24 at 6:47 am to auwaterfowler
Use an expert, a good realtor, for this analysis. The answer to your question is property dependant…location, location , location. That’s the factor that controls both entry cost and gross income.Good luck.
This post was edited on 7/17/24 at 9:53 am
Posted on 7/17/24 at 6:53 am to AndyJ
quote:
My 3 bed gulf front condo is $12500 for the HOA insurance (I have separate condo fees, but that is the yearly insurance cost). Also pay $2500 HO-6 insurance
I’ve never heard of this, are you saying your HOA has line itemed insurance to each member? That’s incredibly high fwiw, most of the condos I’ve seen have had their insurance costs go from $1500-2000 each to $5000-7000 for about 2000 square ft. It basically tripled since 2020. I’m talking rough HOA insurance, the HO-6 policy number you stated is roughly what I’ve seen also.
OP you should ask for some rental projections and then I’d ask for some real time rental numbers also from similar units. Units can vary greatly depending on building location, floor number, interior condition (dated vs nice), building number, etc.
Floors 1-5 usually rent best and floor one depends on the building, some rent well and some don’t. Once you go up above 5 the numbers usually drop. End units, rare units, penthouses, etc can really change numbers.
This post was edited on 7/17/24 at 6:55 am
Posted on 7/17/24 at 7:25 am to baldona
Listen to what Baldona said about location. When I my condo I was happy I bought beachside because the simple act of crossing the street can cost you thousands in rentals per year. Don't underestimate the need of some woman needing to have a balcony and a view
Posted on 7/17/24 at 9:03 am to baldona
quote:
Floors 1-5 usually rent best and floor one depends on the building, some rent well and some don’t. Once you go up above 5 the numbers usually drop.
Out of curiosity why is that? I would think that for a beachfront unit, going up a bit higher would "increase" the view and would be more in demand.
Posted on 7/17/24 at 9:35 am to WG_Dawg
In a large property like a Phoenix waiting on an elevator can suck
Posted on 7/17/24 at 9:59 am to WG_Dawg
quote:
Out of curiosity why is that? I would think that for a beachfront unit, going up a bit higher would "increase" the view and would be more in demand.
Multitude of reasons but its pretty much a well known fact, if a realtor tells you different they are lying or just don't know and are wrong.
Its not necessarily 5th, but generally about there.
Many don't like heights especially with kids being on the balcony, some don't want to wait on the elevator as said. Some people do love being high, don't get me wrong. But generally that's much less of a percentage as than the ones that don't.
Vacation rentals are really not much different than long term rentals, in that the key to a good investment is finding the compromise between purchase demand and rental price. There's plenty of units that sell well that may not rent well, and there's some places that rent really well but just don't appeal to a lot of buyers for various reasons.
Realtors love to show flashy expensive units that have wow factors but that doesn't mean their rents are going to coordinate.
Posted on 7/17/24 at 11:27 am to auwaterfowler
My buddy owns 2 off fort morgan road. Both are 2 years old, super nice 4BR/4BA. Once has a pool, the other has a pool and hot tub. No clue if its the layout difference or the hot tub but that one has averaged 92k a year the last 2 years. the one without a hot tub has averaged 81k. 
Posted on 7/17/24 at 2:35 pm to auwaterfowler
My wife and I have owned a short term rental property for several years. It grosses enough on average to pay the mortgage note including taxes and insurance. It doesn’t make enough to pay all of the other expenses like cleaning, maintenance and repairs. I think this is probably typical of most good rental property. The rent pays a lot of it but it is still going to cost you. We do have a cheap place to stay in a nice area when we choose to go so you should figure that in too.
Posted on 7/17/24 at 5:40 pm to auwaterfowler
Here is what Brett Robinson rep told me. This 4BR/4BA property (it’s actually two adjoining 2BR/2BA) is for sale for $1.12MM:
“I spoke with the listing agent and it has roughly $85K on the books for 2024. Potentially it could do a little more. Through Brett Robinson vacations, the units rent both individually and as a combined 4 bedroom unit. Full management is the $85,000 minus 18%. So right around $70K is what the owner will gross with what’s on the books for this year.”
So, off the cuff, it looks like you could cash buy this property and net around 5% off of it in rental income, plus what I’m guessing is an average of 3-5% value appreciation annually. Seems to me like a pretty decent way to diversify retirement income. Thoughts?
“I spoke with the listing agent and it has roughly $85K on the books for 2024. Potentially it could do a little more. Through Brett Robinson vacations, the units rent both individually and as a combined 4 bedroom unit. Full management is the $85,000 minus 18%. So right around $70K is what the owner will gross with what’s on the books for this year.”
So, off the cuff, it looks like you could cash buy this property and net around 5% off of it in rental income, plus what I’m guessing is an average of 3-5% value appreciation annually. Seems to me like a pretty decent way to diversify retirement income. Thoughts?
This post was edited on 7/17/24 at 5:43 pm
Posted on 7/17/24 at 9:05 pm to auwaterfowler
quote:May I ask why? Seems better to look for rental properties that meet your specs without starting with a top down geography.
Looking for average annual rental income on a 4-bedroom gulf front condo or house in…
auwaterfowler
Gulf Shores/Orange Beach/Perdido area.
Posted on 7/17/24 at 10:02 pm to Big Scrub TX
A beachfront 4-bedroom house or condo is what we are looking for, but we won’t use it more than a few times per year, so I want to pick something that has good rental income potential.
Posted on 7/17/24 at 10:09 pm to auwaterfowler
quote:
have found some resources that say some of the places can gross $70-100k+
Be very careful about who you believe. And do not count on the 20 through 22 numbers as representative of 24 or 25 revenues.
I see a lot of investors near where I live in Florida who are getting out cause the math doesn't math.
Posted on 7/17/24 at 10:11 pm to auwaterfowler
quote:Ah, you want to use it yourself also, got it.
A beachfront 4-bedroom house or condo is what we are looking for, but we won’t use it more than a few times per year, so I want to pick something that has good rental income potential.
I find VRBO stuff to be hard to evaluate. Like, it seems on the one hand that the market would be pretty efficient and it would be hard to be actually all that cashflow positive. But then I know people in places like Scottsdale that gross annual revs that are truly eyepopping (and certainly out of phase with the market values of the properties).
Posted on 7/18/24 at 8:44 am to auwaterfowler
quote:
Here is what Brett Robinson rep told me. This 4BR/4BA property (it’s actually two adjoining 2BR/2BA) is for sale for $1.12MM:
“I spoke with the listing agent and it has roughly $85K on the books for 2024. Potentially it could do a little more. Through Brett Robinson vacations, the units rent both individually and as a combined 4 bedroom unit. Full management is the $85,000 minus 18%. So right around $70K is what the owner will gross with what’s on the books for this year.”
So, off the cuff, it looks like you could cash buy this property and net around 5% off of it in rental income, plus what I’m guessing is an average of 3-5% value appreciation annually. Seems to me like a pretty decent way to diversify retirement income. Thoughts?
I'm not sure why you are being downvoted, that looks average. Not fantastic, but fairly average I'd say. 10-12% grossing properties are not easy to find, especially now, but are occasionally still available. Like I mentioned before, its a rental property. The problem with finding the better rentals is that often times its not a property a wife gets excited to vacation to, so the selling price is down for one reason or another. But the rents are still there for the ROI.
ETA: You need to be very careful on long term value, or mid term value really in 3-5 years. Everyone buys expecting to own forever and that's just not the case at all.
Where people get absolutely burned is the market shits the bed and they lose 10-15% in value, then the rentals are not great for a year or so and they just get tired of the property. They sell and lose their arse.
You gotta be patient to buy but also make sure you play the long game in owning. When is it reasonable this property is worth $1.2-1.3? IDK, you gotta answer that yourself. I don't think a 5-10% appreciation is reliable in the next 1-2 years personally.
This post was edited on 7/18/24 at 8:49 am
Posted on 7/19/24 at 8:57 am to baldona
quote:
I'm not sure why you are being downvoted, that looks average. Not fantastic, but fairly average I'd say.
No clue either. In my mind, I would never take more than 4-5% out of a retirement account annually, so being able to make 4-5% of the purchase price in rental income off of a property, plus the long-term appreciation of the property, seems ok to me. If I’m thinking about it incorrectly, I’d appreciate feedback instead of downvotes.
I have to imagine there is some sort of price/rental income equilibrium on most rental properties such that you will usually see something similar to what I am seeing with this particular property. A higher average rental income would likely push the sales price up and vice versa.
This post was edited on 7/19/24 at 9:05 am
Posted on 7/19/24 at 9:15 am to Big Scrub TX
Location, location, location.
We have a couple. Good investment if in a good location. I will say that actual profit seems to be slightly less than what you project due to small expenses that are often overlooked.
We are using ours as part time vacation homes, and did it to diversify money seperate from stock market. No regrets.
We have a couple. Good investment if in a good location. I will say that actual profit seems to be slightly less than what you project due to small expenses that are often overlooked.
We are using ours as part time vacation homes, and did it to diversify money seperate from stock market. No regrets.
Posted on 7/19/24 at 9:37 am to auwaterfowler
quote:
I have to imagine there is some sort of price/rental income equilibrium on most rental properties such that you will usually see something similar to what I am seeing with this particular property. A higher average rental income would likely push the sales price up and vice versa.
Correct. Look, here's the reality that most people don't want to understand. I'm still young, but I've been in enough financial planning meetings to understand how older folks minds are working.
If you can get 2-5% ROI on rent and then get 2-3% appreciation, all the while owning a diversified "asset" that is not generally tied to the stock market then it makes a lot of people pretty comfortable. Oh, and your wife gets to use it and for many people show it off with her friends and family.
Hell I can tell you a lot of guys are happy just breaking even there to keep their wife happy and help justify their argument for their sportfisher or hunting land.
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