Looking at short term rentals for the first time. Need advice

Homeowner · Hendersonville, TN · Member since 2008 · 68 posts · 7 votes

I have have had 2 long term rental properties for about 10 years. Now I am considering a short term rental in an area like Florida or Gulf Shores, AL. I would like to be able to use it when it is not rented. I was a bit turned off when looking at condominium fees and other expenses, but then remembered I may be able to deduct these on my taxes.

I would be living in Tennessee and would need the property managed. Are there property managers who specialize in handling short term rentals like this? I would like to know what I would be getting myself in to. What costs to expect.

I am sorry for such a newbie question. Even if you just had a link to where I could read about this it would be appreciated.

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Travis TimmonsPro Member

Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes

It's tough out there. We invest in a market that is a couple years behind the rest of the country (Downeast Maine), and even there, it's hard to make anything on the MLS pencil out unless you want to take on a renovation project.

I can't speak for Florida Gulf Coast or Gulf Shores, but my guess is that it would be very difficult get more than a meager cash on cash return if self managing. If you are hiring a property manager, I don't see a path to profitability for the first few years. I may be missing something bc I don't invest in those markets.

You need to decide if you want a vacation home or an investment. Every situation is different, and subsidizing your family vacations would be a very worthwhile use of your money if you have a good income and don't care if you lose $10-30k a year to hold on to a $500k-1M asset that will appreciate over time. I'm making those numbers up for example's sake, but you get the idea.

We've launched short term rentals from 2000+ miles away (and self manage). Feel free to send me a DM if you think that I can be helpful. We've all been there. I'd be happy to answer any questions and have nothing to sell.

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Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
2y
When considering short-term rentals in Florida and Gulf Shores, AL, it's crucial to account for various costs, including property management fees (typically 20-30% of rental income), marketing, insurance, taxes, and utilities. Choose an experienced property manager well-versed in the local market and ask key questions. Remember that short-term rentals demand hands-on involvement and may be subject to local regulations. Explore resources like Airbnb Help Center, Vrbo Help Center, and the National Association of Residential Property Managers for further guidance. Make sure to research thoroughly and consider all expenses before diving into this investment.
[email protected]832-889-5607
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Candace PfabBusiness Member
Realtor · Orange Beach AL · Member since 2018 · 150 posts · 125 votes
2y
I can help you explore the Gulf Shores/Orange Beach AL market. We started investing in STRs here in 2009. Property management fees here average about 20%. Condos offer a good option for first timers at a lower entry point price and maintenance concerns, but can be more challenging in financing and understanding any potential assessments with insurance being on the rise right now. Single family STR owners are facing similar challenges on insurance with higher renewal rates, so it is important to be prepared for that possibility. If you can get into a new construction single family home, that can be a great option to mitigate the insurance expense.
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Steve Maye
OP
Homeowner · Hendersonville, TN · Member since 2008 · 68 posts · 7 votes
2y
Quote from @Candace Pfab:

Property management fees here average about 20%.
What does that 20% cover exactly? The property manager for my long term lease rentals charges 8%. They handle everything including repairs. No additional charges for managing a repair. Just the cost of the repair itself.

I am not second guessing the 20%. I am sure being short term rentals there is a lot more work involved.  I just want to know what that is.
0 Reply
Candace PfabBusiness Member
Realtor · Orange Beach AL · Member since 2018 · 150 posts · 125 votes
2y
Exactly. STRs require more management - 1 to 2 new guests per week which involves managing 50-100 guests per year, marketing the property, managing bookings, guest communication, scheduling cleaners, higher level of maintenance (think lightbulb changes, battery changes, comforter changes, parking passes), etc. A good property manager is worth their weight in gold, but we also have about half of our clients self-managing for bigger tax advantages like cost segregation and those who enjoy the process. There are also some co-host models here where someone might handle part of the process for you at a reduced fee. You just have to find the best fit for you.
1 Reply
Steve Maye
OP
Homeowner · Hendersonville, TN · Member since 2008 · 68 posts · 7 votes
2y
Assume I know absolutely nothing about STR management. You would be exactly right. Is the property manager responsible for advertising and finding renters? If so, is the an additional fee for that? Do they arrange for cleaning between renters?
I know those are some rudimentary questions. It might better if I could find a link to something where it is explained for simpletons. STR 101
0 Reply
Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
2y
There are certainly property managers for this, but not a great solution for when just starting out because they will take up typically around 20-25% of revenue which makes the economics very challenging unless you have a truly scaled portfolio / very low leverage
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Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
2y
For a new person everything involving a STR can be a bit overwhelming! At this time, I can't really think of an article that would be a good read for everything STR. You may have just given me an idea for my next blog post! But a good STR company takes care of everything, and you receive rent money just like a LTR.

I know a good bit about Destin to PCB in FL, so if you would like to chat about that area or anything STR feel free to reach out to me. I also have a contact that does STR in Gulf Shores, if you're interested send me a DM and I'll pass his email to you.
[email protected]330-557-3021
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Steve Maye
OP
Homeowner · Hendersonville, TN · Member since 2008 · 68 posts · 7 votes
2y
Quote from @Sarah Kensinger:

But a good STR company takes care of everything, and you receive rent money just like a LTR.

That helps a lot. Thank you.
1 Reply
Chad McMahan
Residential Real Estate Broker · Sedona, AZ · Member since 2017 · 754 posts · 504 votes
2y
Quote from @Steve Maye:

Quote from @Sarah Kensinger:

But a good STR company takes care of everything, and you receive rent money just like a LTR.

That helps a lot. Thank you.
Tons of great STR strategy advice on BP- lots of savvy folks here.
To avoid analysis paralysis, I'd highly recommend you start seeking STR specialized and STR highly experienced realtors in market areas you would consider, and talk numbers. Tell them you are inexperienced, so they can help with the road map and resources you need to get going ASAP. Once you feel great about working with an agent, I'd suggest you focus on that agent and their market and you should be able to proceed. That agent should line you up with a full, experienced supportive team to protect and guide you through the process.
A great STR realtor is the most critical part of your team, a bit like a coach, ref and a team captain. Of course you're the boss- the team owner.
1 Reply
Raymond J. RodriguesBusiness Member
Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
2y
@Steve Maye, based on the areas that you're looking at, I would recommend reaching out to @January Johnson.
[email protected]619-456-8311
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Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
2y
It's tough out there. We invest in a market that is a couple years behind the rest of the country (Downeast Maine), and even there, it's hard to make anything on the MLS pencil out unless you want to take on a renovation project.
I can't speak for Florida Gulf Coast or Gulf Shores, but my guess is that it would be very difficult get more than a meager cash on cash return if self managing. If you are hiring a property manager, I don't see a path to profitability for the first few years. I may be missing something bc I don't invest in those markets.
You need to decide if you want a vacation home or an investment. Every situation is different, and subsidizing your family vacations would be a very worthwhile use of your money if you have a good income and don't care if you lose $10-30k a year to hold on to a $500k-1M asset that will appreciate over time. I'm making those numbers up for example's sake, but you get the idea.
We've launched short term rentals from 2000+ miles away (and self manage). Feel free to send me a DM if you think that I can be helpful. We've all been there. I'd be happy to answer any questions and have nothing to sell.
4 Reply
January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes
2y
My team specializes in STR investors, and we have been active on the Emerald Coast for years. I'd be happy to discuss.

Oh, and we recommend you keep that 25% in PM fees in YOUR pocket. I can show you how.

Thanks, @Raymond J. Rodrigues, for the mention!
1 Reply
January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes
2y
I am also an STR investor here and the longest-running Airbnb Host in Panama City, FL.
1 Reply
Travis TimmonsPro Member
Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
2y
Quote from @January Johnson:

I am also an STR investor here and the longest-running Airbnb Host in Panama City, FL.

@January Johnson Longest running Airbnb host in Panama City? That's a nice flex. I'd love to have that in my back pocket when someone threw some snark my way and questioned my market knowledge.
1 Reply
January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes
2y
Ha ha! Yes! I was actually BORN in PC, but I actually bought the property while living in Houston! (PLEASE SEND BREAKFAST TACOS, ha ha!)
I'm living proof that you can manage from afar when you don't know what the hell you're doing!
1 Reply
Steve Maye
OP
Homeowner · Hendersonville, TN · Member since 2008 · 68 posts · 7 votes
2y
Quote from @Raymond J. Rodrigues:

@Steve Maye, based on the areas that you're looking at, I would recommend reaching out to @January Johnson.

Hi Raymond. Thank you for that. Yes, that is one of the areas I am looking. As soon as I decide on an area I will reach to a pro.
0 Reply
Ben Scarborough
Realtor · Gulf Shores, AL · Member since 2020 · 153 posts · 76 votes
2y
Quote from @Steve Maye:

I have have had 2 long term rental properties for about 10 years. Now I am considering a short term rental in an area like Florida or Gulf Shores, AL. I would like to be able to use it when it is not rented. I was a bit turned off when looking at condominium fees and other expenses, but then remembered I may be able to deduct these on my taxes.
I would be living in Tennessee and would need the property managed. Are there property managers who specialize in handling short term rentals like this? I would like to know what I would be getting myself in to. What costs to expect.
I am sorry for such a newbie question. Even if you just had a link to where I could read about this it would be appreciated.

Our team can handle everything from representing fellow STR investors in finding a home to co-hosting the property at a high level in Fort Morgan/Gulf Shores/Orange Beach, AL. I'd be happy to jump on a call to discuss the area more with you, just let me know!
0 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
2y
We had a duplex on the beach in Gulf Shores. It was an awesome property. The type of property that does not exist in Southern CA and if it did it would be 8 digits.

Our property taxes were going up faster than rents and our local properties were performing better when we got hit by hurricane 1. About half the properties were red tagged and had to be rebuilt off the sand. Our property was not red tagged. We could not get contractors to work our issues and had to go there to get work done. The following year we got hit by another hurricane. Exact same story. About half the properties got red tagged and had to be rebuilt off the sand. Our property was not red tagged but we could not get contractors to work the issues from OOS. We had to go there to get our property to be worked on. insurance rent through the roof.

We sold. I suspect my local properties have out performed gulf shores but I still have sellers regret at times as the property was awesome. It was many years before that area got hit by hurricane again.

I have an offer out at this moment on an Emerald Coast condo. I do my research/underwriting. The HOA fee is nearly $1300/month. PM is typically 20%. The Seaside condo structural failure resulted in statewide structural inspection rules. How often does an inspector not find issues? The HOA does not yet have an assessment cost for the structural inspection and resulting repairs. The HOA had a $1400 assessment for rising insurance costs. the HOA also has a $9k assessment to modernize elevator, repair stairwells, and start repairs on balconies. They have another assessment of unknown amount announced to finish the balcony repairs. So recent assessments: $1.4k insurance, $9k current repairs, $?k to complete balcony repairs, $?k for structural inspection and resulting required repairs. I am allocating $20k for unknown assessments added to the already released $10.4k of assessments which equals $30.4k of assessments in what will likely be less than 6 months (the $9k was to be paid in Oct (it can be paid over 3 months if desired) and the $1.4k is due in November. My point is there are significant costs beyond the cost of property.

In whatever market you invest, do your homework.

Good luck

3 Reply
Steve Maye
OP
Homeowner · Hendersonville, TN · Member since 2008 · 68 posts · 7 votes
2y
Thank you, Dan. That is the kind of advice I was looking for.
0 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
2y
You can self manage that new place @Steve Maye. Many of us do it from far away.

Get with @January Johnson and she will show you the ropes!
2 Reply
Gi'angelo Bautista
Flipper/Rehabber · San Francisco, CA · Member since 2017 · 176 posts · 70 votes
2y
We own a licensed short term rental property management company in an Urban market.
Here are fees from property managers you can expect (but do note that it will vary):
- Property Management fee: 20-30% (depending on the market and I think I've seen higher than that)
- Repair Management Fees: Fees are tacked on top of actual cost
- Setup Fees (getting the unit ready)
- Design Fees (hiring a designer)
- On-boarding Fees
- Linen Fees
- Cleaning Management Fees
- Any other fees (i.e. resort fees)
Expenses to expect (may vary):
*Some may be covered by the property manager*
- Supplies & Linens, Propane tank replacements, Water filters,
- Utilities (water/sewer, garbage, electricity, WiFi)
- Permit fees, TOT (local and/or state), business license fees, HOA fees, and any other local fees
- Maintenance (air filters, touch up painting, plumbing issues, and etc)
- New Amenities/furniture to improve listing as time passes
- Upholstery cleaning
- Pool & Hot tub cleaning
- Gardener
- Security Camera subscription
- Noise / Smoke / etc monitoring
- OTA service fees
- etc
I hope this helps!
1 Reply
Steve Maye
OP
Homeowner · Hendersonville, TN · Member since 2008 · 68 posts · 7 votes
2y
Quote from @Gi'angelo Bautista:

We own a licensed short term rental property management company in an Urban market.
Here are fees from property managers you can expect (but do note that it will vary):
- Property Management fee: 20-30% (depending on the market and I think I've seen higher than that)
- Repair Management Fees: Fees are tacked on top of actual cost
- Setup Fees (getting the unit ready)
- Design Fees (hiring a designer)
- On-boarding Fees
- Linen Fees
- Cleaning Management Fees
- Any other fees (i.e. resort fees)
Expenses to expect (may vary):
*Some may be covered by the property manager*
- Supplies & Linens, Propane tank replacements, Water filters,
- Utilities (water/sewer, garbage, electricity, WiFi)
- Permit fees, TOT (local and/or state), business license fees, HOA fees, and any other local fees
- Maintenance (air filters, touch up painting, plumbing issues, and etc)
- New Amenities/furniture to improve listing as time passes
- Upholstery cleaning
- Pool & Hot tub cleaning
- Gardener
- Security Camera subscription
- Noise / Smoke / etc monitoring
- OTA service fees
- etc
I hope this helps!

Very helpful. With all that you can actually make money?
0 Reply
Connor Cushman
Realtor · Cumming, GA · Member since 2018 · 158 posts · 127 votes
2y
This is definitely doable. You can hire a management company, but you can also self-manage or hire a co-host which are two options that allow you to generate a higher return so those are two options to consider for the right investor.
For example, I sell property in the Florida panhandle and give clients a full vendor list once they go under contract so that they have all of the contractors, cleaners etc they need to successfully self-manage. Totally doable. Make sure you start your process with a realtor that can provide local resources for you.
2 Reply
Andrew SteffensBusiness Member
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
2y
We are a full service STR PM company HQ in Tampa FL with properties statewide but predominantly in Tampa market. I am also a licensed Realtor and assist in acquisitions and dispositions for clients. I will shoot you a DM!
[email protected]813-563-0877
Vacation Rentals of Florida53 Reviews
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January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes
2y
Quote from @Candace Pfab:

Exactly. STRs require more management - 1 to 2 new guests per week which involves managing 50-100 guests per year, marketing the property, managing bookings, guest communication, scheduling cleaners, higher level of maintenance (think lightbulb changes, battery changes, comforter changes, parking passes), etc. A good property manager is worth their weight in gold, but we also have about half of our clients self-managing for bigger tax advantages like cost segregation and those who enjoy the process. There are also some co-host models here where someone might handle part of the process for you at a reduced fee. You just have to find the best fit for you.

A good property manager is going to cost you any gold you would have made.
; )
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