Seacrest/Rosemary prices. Am I crazy?

Question

Ok so I’ve been watching this area for years now. Any time I run numbers the houses seem to have a return of -5% to -15% returns (at 25% down) and cash returns of 5-10% on STR. I’ve been running numbers since just before the run up in 2021/2022

I totally understand people buy here for “price appreciation” but it seems like the prices are completely disconnected from reality. Is there something I’m missing. I understand Alys Beach because that’s more of a “personal residence” area. But Seacrest is not that. Panama and Destin both see similar price appreciation but cash flow day 1.

Ricardo Hidalgo · Answer

They aren't looking to make money on cashflow... They are looking to write off taxes, leave it for the next generation and enjoy life in a community that meets all of their needs (convenience and privacy). Most of the people buying in Ays Beach or East end on 30A are very high net worth individual. None of them care for cashflow and frankly I've sold 4 in Rosemary and Alys beach ALL CASH.

If you are wanting cashflow or build a portfolio look into navarre beach, destin or Panama City beach.

Andrew Steffens · Answer

I just took my first (limited service) client in PCB and am a little shocked a 3/2 townhouse with pool is projecting only around $40k in income. That property in the Tampa market could bring in $80-100k+. Sure it may be a little more expensive on the purchase but at least it would be a positive ROI.

Collin Hays · Answer

Some people are actively seeking out losses to "help with their taxes."

Ryan Moyer · Answer

I think the easy answer is that some people buy vacation homes as actual vacation homes, not cash flowing rental investments.

Even before short term rentals became main stream there were thousands of people buying homes for personal use, and just letting them sit empty for 340 days of the year.

So if people can use them for the 25 days or whatever they want, and rent them the other 340 days to subsizide the mortgage then that is even more appealing.

In short, no one is buying in those areas for cash flow.

Ryan Moyer · Answer

The area the OP is referring to is actually one of the worst areas to buy for tax purposes because the majority of the home value is in the land, which can't be depreciated.

That's not to say it isn't helpful in making their decision, but if taxes were priority #1 they would be buying in an area where the house vs. land value is more slanted to the home, the opposite of 30A.

The most likely thing is that they are very wealthy people buying them as true vacation homes, and the rents merely subsidize the mortgage when they're not using the home themselves.

Seacrest/Rosemary prices. Am I crazy?

Seacrest/Rosemary prices. Am I crazy?

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