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COVID impact to Vacation Rental Property Market
Posted on 4/3/20 at 9:51 am
Posted on 4/3/20 at 9:51 am
What does the board think about markets like 30A?
I figure in about 3-4 months there may be a flood of listings as rental income dries up + people need to dispose of luxury assets
I figure in about 3-4 months there may be a flood of listings as rental income dries up + people need to dispose of luxury assets
This post was edited on 4/3/20 at 9:53 am
4
Posted on 4/3/20 at 9:55 am to GenesChin
In 2009 I bought a foreclosure in Sandestin for 300k cash. Rented it out for 6 yrs and then sold it for 650K. It is now listed for 750K. I'm hoping it drops back to the 400k level and I'll buy it back 
Posted on 4/3/20 at 10:07 am to GenesChin
The AL coast is dead in the water right now..as to fire sales, that will depend upon how long the beach is closed. We need to open by mid-May.
Posted on 4/3/20 at 10:21 am to SalE
quote:
We need to open by mid-May.
If beaches are closed until June then rentals don't rebound to typical summer, what do you expect?
I was thinking about looking in the winter time
This post was edited on 4/3/20 at 10:22 am
Posted on 4/3/20 at 10:23 am to LSUregit
quote:
I bought a foreclosure in Sandestin for 300k cash
Posted on 4/3/20 at 10:44 am to lnomm34
I’m waiting to pull the trigger on a beach property as well but haven’t seen any movement on prices yet at least here in NC.
Posted on 4/3/20 at 10:52 am to tide06
Too soon to see current effects. It may take up to a year to see bottom prices.
Posted on 4/3/20 at 11:06 am to LSUregit
Something like 80% are bought with cash. Stock market is down bigly, realistically if the beaches open sometime early to mid summer the vacation rentals will still likely be in the black for the year though likely barely.
There will definitely be some stuff that is fire sold just because owners need the money. By and large though I don't expect a huge drop in prices at this point.
There will definitely be some stuff that is fire sold just because owners need the money. By and large though I don't expect a huge drop in prices at this point.
Posted on 4/3/20 at 11:27 am to baldona
quote:
Something like 80% are bought with cash.
Can’t imagine that’s true.
Posted on 4/3/20 at 11:47 am to GenesChin
I don't know..the BP oil spill was not this bad. In the past few years the majority of condos were cash sales so there is not a lot of leverage unlike when we crashed in '07-'08.
Posted on 4/3/20 at 12:45 pm to Mr.Perfect
quote:
Can’t imagine that’s true.
Why? OP said 30A, not a lot for sale under $500k on 30A. Most people don't get a mortgage on a $3 mil vacation home.
I'm not a title attorney so I don't know, but I've heard 80-90% many times.
Posted on 4/3/20 at 10:38 pm to baldona
(no message)
This post was edited on 11/5/21 at 2:28 pm
Posted on 4/4/20 at 9:17 am to Mr.Perfect
quote:
Can’t imagine that’s true.
A lot of “cash sales” still involve borrowed money. They just don’t involve a mortgage on the property being purchased.
Posted on 4/4/20 at 9:40 am to Jag_Warrior
Id imagine people are often taking cash out of their primary and rolling it into the second home.
I doubt many people are rolling $2M in cash on a property on Alys Beach or whatever.
Some, but not 80%.
I doubt many people are rolling $2M in cash on a property on Alys Beach or whatever.
Some, but not 80%.
Posted on 4/4/20 at 9:48 am to tide06
Again I don’t know, but I live locally and naturally know a lot of realtors. Anytime it comes up, it’s always mostly cash. If you are over $1 mil second home, a vast majority of those are cash buys. Asset diversification, etc.
Depending on the neighborhood and area, if you are talking sub $500k homes sure I bet a lot of those have mortgages. But there’s some areas of 30a where $1 mil buys you 500 sq ft studio apt.
Depending on the neighborhood and area, if you are talking sub $500k homes sure I bet a lot of those have mortgages. But there’s some areas of 30a where $1 mil buys you 500 sq ft studio apt.
Posted on 4/4/20 at 9:49 am to tide06
quote:
doubt many people are rolling $2M in cash on a property on Alys Beach or whatever.
Some, but not 80%.
I think you are underestimating the net worth of most vacation rental home owners on 30a. If you are buying a $2 mil vacation property, I’d bet it’s closer to 95% cash.
Posted on 4/4/20 at 10:01 am to LSUregit
quote:
In 2009 I bought a foreclosure in Sandestin for 300k cash. Rented it out for 6 yrs and then sold it for 650K. It is now listed for 750K. I'm hoping it drops back to the 400k level and I'll buy it back
My mom bought a foreclosed house on 30A 2010 for $350k. Houses around hers now sell for $900k. She lives in it now though so she is not selling.
I’ve always told people who are looking to buy in that market not to count on rentals to cover your mortgage. Don’t buy it u less you could afford it without rentals and Buy it because it’s a place you enjoy. Use the rentals to subsidize your costs. The money is in the equity return.
If people cNt afford the homes now with no rentals then they shouldn’t have bought them.
Posted on 4/4/20 at 10:33 am to mule74
In the past, we looked for the Rule of 10..that is, a condo costing $500K doing $50K per annum on rentals...
Posted on 4/4/20 at 10:41 am to baldona
quote:
I think you are underestimating the net worth of most vacation rental home owners on 30a. If you are buying a $2 mil vacation property, I’d bet it’s closer to 95% cash.
Entirely possible I'm wrong, not a market segment I'm familiar with.
Statistically in the SE the percentage of people in that wealth demo is exceptionally small, but with the recent stock market growth pre-covid its certainly possible.
Posted on 4/4/20 at 1:04 pm to tide06
quote:
I doubt many people are rolling $2M in cash on a property on Alys Beach or whatever. Some, but not 80%.
Not sure where you all are, but down here it's absolutely true.
When the real estate market is booming, owners list properties trying to lock in profits and pay cash for a bigger house. When it crashes, they simply keep what they have and listings dry up. There was very little foreclosure activity down here after 08.
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