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re: Those that have vacay rentals: how do you truly make money off them?
Posted on 7/18/23 at 2:47 pm to notiger1997
Posted on 7/18/23 at 2:47 pm to notiger1997
I know someone that bought a condo in orange beach, 3/2, in one of the Phoenix towers for like 700k or so. It's absolutely worth well over 1 mil now, especially since they upgraded it some.
0
Posted on 7/18/23 at 3:36 pm to Fun Bunch
I don’t … just try to get someone else to pay for me to play !
Posted on 7/18/23 at 7:48 pm to Fun Bunch
My 2 cents based off my current experience.
I bought in Destin in May 2020. The purpose of my purchase was to predominantly rent it out but eventually (6-8 years from purchase) move into it full time (with maybe renting it out in the summer).
If I looked at it solely as a cash flowing investment, the projected math was pervasive and I would not have done the purchase. My driver was not solely economic return.
We bought basically 90:10 mortgage cash (mortgage sub 4) and put about $80K into it to fully renovate year one.
My complex has onsite rental (and you have to use them - no Airbnb option). When we made the purchase, my hope was gross revenue of $60K (that would be negative cash flow but acceptable to my budget and goals). 80K gross would be a winner. Comps that that time suggested the middle ground of $70K was more the norm.
Well three years into it, we got lucky. Last year gross revenue was over 100K (and we used it several times as a family) and this year, if all bookings hold, will be likely a few K higher. Rentals have exploded the last few years in terms of daily rates.
On the appreciation side, other units (all the same) are selling for about $500K more then we paid so we are in good shape. Yes we got hit with a dreaded special assessment ($10K) but we are well ahead of the game.
That being said, if I did the math on one of the comp units right now, it would absolutely not cash flow in any way, particularly with mortgage rates where they are.
So long story short, I do not think in the current market you will see math that works. To me it seems a lot of places (in Destin atleast) seem to list for about 12 times gross annula rent (me just doing math based off small anecdotal sample). Tough to make that work with mortgage.
I bought in Destin in May 2020. The purpose of my purchase was to predominantly rent it out but eventually (6-8 years from purchase) move into it full time (with maybe renting it out in the summer).
If I looked at it solely as a cash flowing investment, the projected math was pervasive and I would not have done the purchase. My driver was not solely economic return.
We bought basically 90:10 mortgage cash (mortgage sub 4) and put about $80K into it to fully renovate year one.
My complex has onsite rental (and you have to use them - no Airbnb option). When we made the purchase, my hope was gross revenue of $60K (that would be negative cash flow but acceptable to my budget and goals). 80K gross would be a winner. Comps that that time suggested the middle ground of $70K was more the norm.
Well three years into it, we got lucky. Last year gross revenue was over 100K (and we used it several times as a family) and this year, if all bookings hold, will be likely a few K higher. Rentals have exploded the last few years in terms of daily rates.
On the appreciation side, other units (all the same) are selling for about $500K more then we paid so we are in good shape. Yes we got hit with a dreaded special assessment ($10K) but we are well ahead of the game.
That being said, if I did the math on one of the comp units right now, it would absolutely not cash flow in any way, particularly with mortgage rates where they are.
So long story short, I do not think in the current market you will see math that works. To me it seems a lot of places (in Destin atleast) seem to list for about 12 times gross annula rent (me just doing math based off small anecdotal sample). Tough to make that work with mortgage.
Posted on 7/18/23 at 9:03 pm to igoringa
quote:
To me it seems a lot of places (in Destin atleast) seem to list for about 12 times gross annula rent
Don’t think you are far off on this. About what I’m seeing as well passively looking down there (in a mindset similar to yours when you bought)
Posted on 7/18/23 at 11:51 pm to Fun Bunch
Of course it takes a lot of money up front, but I’ve always been told that the 4+ BR beach houses that are suitable for large families or multiple families are how you make real money in the vacation rental game. Takes money to make money.
Posted on 7/19/23 at 6:45 am to Fun Bunch
Large corporate buyers have come into the AirBnB market essentially started building /buying properties that are basically hotels in the guise of AirBnB.
They price them cheaper than you can because they have the ability to buy lower than you, and run with lower overhead.
This is happening in the larger tourist markets so if you want to do it, avoid those markets.
They price them cheaper than you can because they have the ability to buy lower than you, and run with lower overhead.
This is happening in the larger tourist markets so if you want to do it, avoid those markets.
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