Long term invest

Short-Term & Vacation Rental Discussions

Long term invest

Member since 2022 · 44 posts · 20 votes

Hello,

what steps do you guys take for long distance properties?

my husband and I want to buy a property for our vacation home. We will visit there once~twice a year and meanwhile we want to rent it out as short term rental. ( we are thinking of Florida and that market seems slow these days )

we are in CA. We want Cash flow.

we are going to get loan.

So do you guys visit properties and then put an offer? Or do you just use realtor and ask video tour? Or do you put offer and then visit?

We found properties we liked however in order to cash flow, we need to do good negotiations since the price we will offer will be much less than what seller asks..

it will be our first investment and we are excited and nervous.

Any advice will be appreciated.

Thank you.

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January Johnson

Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 486 votes

I echo what others have said. I sell the entire Emerald and Forgotten Coasts, or as I like to say, "between the Colas" (Pensacola and Apalachicola). 99.9% of my clients buy remotely, and many of them don't come in person, even for closing. I am happy to tour you around if you DO choose to visit, but I am equally happy to do video tours, FaceTime with you, and anything else you need to be comfortable purchasing from a distance.

I also come complete with recommendations for everyone from lenders (@Raymond J. Rodrigues is on my list!) to insurance brokers to inspectors to handymen and cleaners.

Happy to speak further with you about my area any time.

Thank you, @Michael Baum for the mention!

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Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
2y
It's really nice to walk the property and know the area/neighborhood before putting offers in. You'll want a vacation feel area if you go for FL, and that could be hard to figure out remotely. But in all reality, purchasing long distance and deciding if you should or shouldn't see the property, is a personal decision with what you're comfortable with.
[email protected]330-557-3021
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Timothy Hero
Lender · United States · Member since 2020 · 1k+ posts · 499 votes
2y
Seeking cash flow opportunities by getting outside of CA is a solid start, but Florida is anything "but slow" for market conditions.

The market (at least South Florida) is starting to become a CA with pricing. I'm from the area, so I'm very familiar with what areas to stay away from, and homes in high crime areas that were worth $100k 5 years ago are now going for $350k.

You're coming from CA, so $350k is a drop in the bucket in your eyes, but in the normal world of RE, to pay $350k for a property and have drug dealing outside the property is not ideal.

Florida is great for STR's. Most of the STR's I quote for financing are Florida, but the issue is the last hurricane caused a surge in insurance. Expect to pay 30-50% more for insurance in Florida than any other state. Then add the fact that it's an STR and expect another 10-15% increase.
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Sejin Kim
OP
Member since 2022 · 44 posts · 20 votes
2y
Quote from @Collin Hays:

If you are financing 80 percent or more of the property, positive monthly cash flow to start out, is going to be very difficult. That is primarily because the cost of money (interest rate) is twice what it was two years ago.

I suggest that you adjust your thinking about buying a vacation rental just a bit. If you can just break even on it each month, that is still a fantastic investment, because OTHER PEOPLE are paying off the bulk of the asset for you.  And that asset is probably going to be worth a whole lot more in 15 years than it is today.

Even if it didn't appreciate a single dime, it would be a phenomenal investment.
Example:

You buy a $1 million rental. You finance 80% of it ($800,000). If you put it on a 15 year amortization, your guests pay off the $800,000 in 15 years. So YOUR investment of $200,000 is now worth $1 million after 15 years, AND you own an income producing property that is completely paid for!

Find me an investment like that in the stock market, and I'm all in.

Good luck!

Thank you! Thar sounds very good idea and so easy to understand !
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Kevin Marshburn
Real Estate Agent · Miami, FL · Member since 2019 · 25 posts · 19 votes
2y
I've done many out of market flips, quite a few sight unseen. But for any investment that I hold, what I'd recommend is to go visit the city you'd like to invest in. Spend at least a weekend there first with a realtor. Schedule showings at different properties in any of the areas you have interest. If you're not sure of areas (or neighborhoods) ask the realtor (find an investor friendly agent who knows the STR market there). That should give you a very good feel for the area, what you like and dislike, etc.
From there, once you're ready to make offers, you will feel much more comfortable doing it remotely since you're familiar with the neighborhoods, have some points of reference, etc.
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