Atlanta, GA · Member since 2017 · 54 posts · 8 votes
Hey BP Family,
I’m looking at a vacation rental in Daytona Beach. 1/1 condo. Looks to be in great shape, great location, seems lucrative on the surface. Never done vacation rentals, so this would be my first one. I’m looking at it for the AirBnB/VRBO potential. There are a couple of things that make me nervous about taking this step:
1. I live in Atlanta, property is in Daytona Beach. Anybody own vacation rentals in other states? What tips do you have? Is it difficult? Easy? Do you have a team in place to take care of this for you, or do you do it yourself just fine?
2. How do you survive outside of the peak season? Looks like the peak season is only 6-7 months out of the year. How do you survive the other 5 months out of the year?
@Rush Wall Yeah, I'm a little nervous about it being out of state trying to pick up a VR. It's priced very well so I'm not too worried about the down payment, but it has HOA fees, plus if there's a maintenance/management fee, plus insurance, that will need to be paid even during the slow months. So I'm trying to figure out how people keep themselves afloat outside of peak seasons. I would be purchasing this basically at the end of the peak so I'm nervous about the purchase putting me in a rough spot financially if I can't float the expenses during the off season.
I do Airbnb’s, some long distance. Peak season should cover your costs year round, off months are the profit. Look at listings in the area you want to buy, check how many reviews they get per month in the off season. Determine how comfortable you are with your revenue based on that assumption.
@Myles Cardenas I’ve been looking into vacation rentals as well. I’ve been told that financing and cash flow can be difficult due to the high down payment. Also, insurance will be higher than normal as well.
@Rush Wall Yeah, I'm a little nervous about it being out of state trying to pick up a VR. It's priced very well so I'm not too worried about the down payment, but it has HOA fees, plus if there's a maintenance/management fee, plus insurance, that will need to be paid even during the slow months. So I'm trying to figure out how people keep themselves afloat outside of peak seasons. I would be purchasing this basically at the end of the peak so I'm nervous about the purchase putting me in a rough spot financially if I can't float the expenses during the off season.
@Myles Cardenas maybe you could try reaching out to an agent/property manager in Daytona and get some numbers from the Agent, that would help you firm up your budget and target price
I am in the same situation that your are. I live in West TN and am looking at vacation rentals in the Smoky Mountains on the other side of the state 6 hours away. I am writing this as a newbie to the VR game as well so please do not take this as an expert answer. With the vacation season only being 6-7 months long and you are buying at the end of the season I think it would be best to have at least 3 months expenses on hand to cover you in the off season. You will learn very quickly how much you will need to set aside in the peak season to cover the next off season. Good luck. Hope it goes well for you.
@Rush Wall Yeah, I'm a little nervous about it being out of state trying to pick up a VR. It's priced very well so I'm not too worried about the down payment, but it has HOA fees, plus if there's a maintenance/management fee, plus insurance, that will need to be paid even during the slow months. So I'm trying to figure out how people keep themselves afloat outside of peak seasons. I would be purchasing this basically at the end of the peak so I'm nervous about the purchase putting me in a rough spot financially if I can't float the expenses during the off season.
I do Airbnb’s, some long distance. Peak season should cover your costs year round, off months are the profit. Look at listings in the area you want to buy, check how many reviews they get per month in the off season. Determine how comfortable you are with your revenue based on that assumption.
@Myles Cardenas I would try posting in Daytona beach forum or whatever forum BP has that's closest to there, and look for people in that area that are doing STR's. You can find people in an area as a BP Pro member.
@Kimberly Jones Great question. I didn’t think about that when I bought my first personal residence, but I learned by lesson after that. They do allow vacation rentals and owners can occupy the unit for a allotted amount of time through the year.
The next thing you want to do is check on the rules for str's in Daytona. I have heard they are trying to outlaw them. Here is what I know from experience....you absolutely have to make sure you can make the property work as a long term rental because short term is not guaranteed. It has been a rocky road here in New Orleans. We were all flying high for a good number of years, then the number of str's grew so large that the locals lost their minds and started fighting tooth and nail against us. The City decided to regulate us and that seemed to work for the first year BUT the haters didn't let up. A few months ago the City came back and slapped a moratorium on all whole home str's. Those of us who did not live on site and have a homestead exemption were not allowed to renew our licenses. Now we are waiting to see where things go from here as the City has given a time period of 9 months while they work on new rules. So, even if str's are allowed today, they might not be tomorrow.
As for Daytona specifically, I know a little bit because my Daughter lives there and she owns a business on Main Street, right off the boardwalk. Even though it is on the beach it is still a pretty rough area. They are trying to revitalize but it isn't an easy task, and the homeless population is EXTREME. You would be wise to do your homework on the area, take a couple of days to scope it out personally.
As far as running str's from afar, you will need someone local to help you. There are many things that can happen that will require a physical presence. Could be as small as a dead battery in a smoke detector in the middle of the night (no guest wants to hear beeping while they are trying to sleep), guests can get rowdy and disturb neighbors, I have even had guests that insisted upon having someone meet them face to face when they arrive. Some guests can be real live ******** and you are at their mercy because it is all about the reviews. It also helps to have someone local that knows people that can handle the cleaning and maintenance/repairs. I used a Realtor myself, even though I was local. It was well worth the 20% I paid him to handle everything.
@Kimberly Jones You’re awesome Ms. Kimberly. Thank you for the thorough advice. I agree with everything you said. I’m trying to do a little more research on Daytona outside of just looking at property values. I’m trying to get some locals to help me understand more of what you told me, the boots on the ground assessment of that area. Thank you again.
You are most welcome Myles. By the way, I came to New Orleans by way of Atlanta, lived there 23 years. My Daughter was raised there as well. If you do make it down to Daytona let me know, she LOVES showing people around ;)
@Myles Cardenas
To keep unit fIlled in off months, pricing is key. We use dynamic pricing. Lower your average nightly but increase slightly on weekends. Managing from out of state is not that difficult. My wife and i manage 2 vacation rentals in NC from Florida. The key is getting systems in place. We set up our lock, lights and thermostat all to be controlled via Wifi. We also have an incredible house keeper and handyman( this is most important).
@Myles Cardenas
I actually just purchased my first property (home) ever and it is a vacation rental in an area my wife’s family has had homes in for decades. That gave me confidence to do the deal. Lot of local contacts
A lIttle background: The numbers are very different that a regular rental. Your expenses are much higher, but so are the rents during peak season. The way I ran my numbers was to cover all my costs durIng peak months with some profit and then extra profIt durIng the off season.
Few Example expenses:
Cleaning- needs to get done before every new renter. The rate is slightly higher because it is a top to bottom clean in a narrow window of time.
VRBO- Takes a cut of every rental 3%
You also need to outfit the home for someone to live in, which means the upfront cost is higher as you need everything someone living there would have (furniture, pots, pans, plungers, etc). Think hotel plus home.
Another thing to keep in mind is week vs weekend rentals. You want the week long renters. They wash the costs out better (such as cleaning) for higher overall gross rent
To answer your actual questions: I live in the northeast, property is in the Midwest, so I use a manager who focuses on this specific area I am in. She takes a 20% cut which is high but does everything. She does all the bookings, conversations, acts as a concierge, will repair and purchase items (billed to me) marketing for the property, manages cleaning crews, etc. For me this has been invaluable. She also knows the local area and markets the house herself. She has a client base and has gotten me renters outside of VRBO.
For off season there has to be a reason for people to rent during those times. Daytona Beach you could grab snowbirds from other areas of the country, so feasible. But you need to change the marketing accordingly. For me its wine tours apple picking and people wanting to leave a major metropolitan area for a weekend away. My rates currently are 15% less in the off season, and I’m hoping for 2 weekends a month until December. Remember costs remain relatively the same (cleaning, etc) so the profits are far less.
Anything else I can do to help, or questIons let me know!
Anthony
@Anthony Galbo Thank you for the detailed advice. That’s awesome. I like the portion about the property manager and how they take care of everything. I’m sure you offset those costs by increasing rents during peak seasons and still staying busy in the down season so that it all balances out. Great advice!