Next income property a vacation VRBO?

[AndyS]

Quote:

Originally Posted by brucethebroker Weather is everything. The panhandle is too cold for many snowbirds plus you will not get the premium South FL rental rates. .

I'm perfectly fine with panhandle winter weather, we get a little cold snap two or three times in the winter where we might see 30's occasionally, or even mid-high 20's at night ..... but it generally lasts only a few days & we're back up to 60's & 70's. (gonna be hitting near 80 every day this week) We have our share of snowbirds .... just not covered up with them like some places.

The hot/sticky in the summer starts to wear thin pretty quick, but I wouldn't trade the "Emerald Coast" for anywhere in that zoo they call South Florida (where the hot/sticky is even worse ... to say nothing of the crowds) Besides ... we have far better beaches (they call it "sugar sand" ... it's white quartz sand that has come down the rivers from the Appalachian mountains for thousands of years to Appalachicola area and then the ocean currents spread it onto the beaches from there all the way up to Mobile bay. The fishing is fantastic and traffic doesn't suck ( except on Hwy 90 in the mornings and afternoon.) Also .... being close to I-10 puts us closer for driving trips out to Texas, Tennessee, Colorado, and other places we frequent.

[courtjustshan]

Quote:

Originally Posted by Scuba Yes, I think it would be VERY hard to get 6 month renters. People wanting to rent long-term will want a year and will want to bring in their own stuff. I’m curious what type of person you think will want to rent for 6 months when it’s not high season. That would be like April-Oct - the worst of the heat, humidity, and hurricane season. I’d be very surprised if there is a market for that.

I was able to get 6 month renters in my case on 2 separate occasions. Both were temporary workers. In my county in Florida, there are many travelling nurse and other medical service people. They typically sign up for 6 month stints tied to a local hospital. There are many in the medical field that take advantage of the demand for their services and leverage it be able to see different parts of the country and travel.

The second time was a local power plant person who was on temporary assignment with his company.

I was lucky that my property manager had many relationships with hospitals and the local power plant.

[2018]

I see many good responses, so I think you need to talk to a local real estate agent and vacation rental management company to get a better handle on this.

We own long-term rentals in my local market last 10 years and have a Hilton Head villa rented as a vacation rental for last 4 years. My rental properties are part of my retirement portfolio.

I can tell you vacation rentals less than 3 bedroom are VERY hard to cash flow due to the abundance of condo's competing with each other. Check for yourself by going to airbnb or vrbo and looking for a 1 or 2 bedroom unit to rent. Then compare that to 3 or 4+ bedroom offerings. For HHI rates go up significantly as do number of weeks rented.

Once you factor mortgage, HOA, management fees, capital improvements, repairs, utilities, and taxes most people can't cash flow a property.

We cash flow, but primarily because
1. we paid cash for villa and capital improvements
2. we own a 4 bedroom villa and I do 99% of all weekly rentals myself (airbnb and VRBO) and pay a small management fee to vacation property mgt firm.
3. I rent an average of 27 weeks a year and shut down in the offseason to minimize wear on the proprty.

I ran numerous models on 2 bedroom villas for years and could never find a way to generate positive $.

BTW, FL may have 6mo rental market but HHI only sees seasonal summer workers who wear the place out. And, snowbird rentals don't cover the nut for me, evemn with no mortgage.

If you're going to buy a vacation property be realistic with your cost, number of weeks it will really be rented, or be prepared to lose money.

my humble 2 cents...

[kgtest]

Quote:

Originally Posted by 2018 I see many good responses, so I think you need to talk to a local real estate agent and vacation rental management company to get a better handle on this. We own long-term rentals in my local market last 10 years and have a Hilton Head villa rented as a vacation rental for last 4 years. My rental properties are part of my retirement portfolio. I can tell you vacation rentals less than 3 bedroom are VERY hard to cash flow due to the abundance of condo's competing with each other. Check for yourself by going to airbnb or vrbo and looking for a 1 or 2 bedroom unit to rent. Then compare that to 3 or 4+ bedroom offerings. For HHI rates go up significantly as do number of weeks rented. Once you factor mortgage, HOA, management fees, capital improvements, repairs, utilities, and taxes most people can't cash flow a property. We cash flow, but primarily because 1. we paid cash for villa and capital improvements 2. we own a 4 bedroom villa and I do 99% of all weekly rentals myself (airbnb and VRBO) and pay a small management fee to vacation property mgt firm. 3. I rent an average of 27 weeks a year and shut down in the offseason to minimize wear on the proprty. I ran numerous models on 2 bedroom villas for years and could never find a way to generate positive $. BTW, FL may have 6mo rental market but HHI only sees seasonal summer workers who wear the place out. And, snowbird rentals don't cover the nut for me, evemn with no mortgage. If you're going to buy a vacation property be realistic with your cost, number of weeks it will really be rented, or be prepared to lose money. my humble 2 cents...

Thank you for the thoughtful reply. That's a great point about demand for 3br. Cashflow is honestly the biggest concern of mine. It's a business so if its not net positive, there is no point, I don't really need another write-off just for that sake.


When I get a little more serious I do plan to start calling on agents and management firms.

[BeachOrCity]

Quote:

Originally Posted by kgtest Thank you for the thoughtful reply. That's a great point about demand for 3br. Cashflow is honestly the biggest concern of mine. It's a business so if its not net positive, there is no point, I don't really need another write-off just for that sake. When I get a little more serious I do plan to start calling on agents and management firms.

If cashflow is your number one criteria, the scenerio you outlined doesnt look good. Plan on 50%+ expenses for a weekly or short term rental.
With 100-150 days rented at $200 that is 10-15k net income after expenses or cap rate of 5-7.5%. The lower end is probably not a good investment and the higher end while ok, doesnt compensate you adequately for the risk.

Imho, you need to have gross rents of close to 40k on a 200 k property to adequately compensate you for risk adjusted return. This has been doable in the past, not so sure today.