I'm looking to possibly getting into the vacation rental business by purchasing a condo or home reasonably priced, in Florida as a income property only. I'm new to this and don't really know much about it, can anyone provide some insight? I would like something near or on the water. I was looking at hotel condos because the have Management that takes care of everything. Being out of state (Michigan) I couldn't really be there if an issue arises that needed attention. Looking for someone that could help walk me through learning about everything and providing a turnkey investment for me, help find the perfect property, as well as a lender for vacation investment home loans and an excellent property manager.
These same questions get asked on here several times a week. Read the posts from the last 7 days and you will find all the answers to your questions.
@Paul Sandhu strikes again
We are looking for the same thing! I'm learning the vacation rental curve as well. We are focusing on Tampa, Ft. Myers or Naples area (we can take direct flights to those areas from Iowa). Let's connect and share with each other what we learn as we enter this new world! We have rentals in Iowa, but the vacation rental world is a new market for me...excited to enter!
@Ben Mackenzie do not by any means use the hotel-condo management. Their fees are almost double than the standard vacation rental manager and provide no additional service that a local or national mgmt company can't do.
@Tiffany Ralston - Depending on the area in Tampa there are vacation rental restrictions (Pinellas County, for example, does not allow less than 30 days rentals) Many ignore the rule because no from the city is really enforcing it but if you have a grumpy neighbor then you can be fined. In general Clearwater beach is by far the best out of the two but Fort Myers is a really great area.
If any of you need assistance let me know. I only know realtors in South FL (Miami/Fort Lauderdale/West Palm) but can assist with any general information about starting up a vacation rental the FL market.
I live and work in Fort Myers area and agree with someone saying about restrictions you have to watch when you purchase a property. Have you looked into Cape Coral market? There are a lot of properties on the water with no rental restrictions and prices are very reasonable compared to other markets you mentioned. Good luck and let me know if I can be of any help
Avoid Condo-tels at all costs...
If you are an absentee owner, I STRONGLY encourage using a trusted and reputable vacation rental company. Any good realtor could point you in that direction. Expect to pay 30-40%.
From an investment perspective, if you're not earning at least 8% annually on your money, you are wasting money. Investing it elsewhere could be more beneficial.
If the property you buy was in a rental program, that income could be used to help qualify with your lender.
Dupaco Credit Union (up in Iowa) is lending on purchases here in Lee County. I've done several appraisals for them. Not sure what their vacation rental lending looks like... but they are lending down here, so that may be a good start.
Hi Everyone! I'd be curious to know what the short-term rental season looks like in Ft-Myers, Naples, Cape Coral area? I mean is it dead 6-9 months out of the year or what? I do short-term rentals up north but that's an entirely different market.
@Gene Maltsev Thanksgiving to Easter-ish is prime season here. Figure you get a bit over 5 months. However; we have sunshine year round... so even in the 100 degree dead of summer, you can rent a pool home out to someone. The weekly rate usually drops by 30-40% or so... but someone who knows what they're doing (or has a good management company) and has a good property could expect to see occupancy for at least 250-275 days a year.
PS... GO SOX!
@Seth Nadreau Thanks for the quick response! When you say "here", do you mean in Cape Coral or do you mean the Cape, Naples, Ft Myers area? I'm considering a property in Marco Island. I can't find hotel occupancy numbers so it's hard for me to guestimate as to what the monthly occup. numbers are. Also, even if I knew the monthly occupancy, I still would have a hard time figuring our projected revenue. Any advice as to where I can find that info? I'm open to buying anywhere so long as I have a clear picture of what I can expect in terms of ROI. TIA!
"Here" would be pretty much the entirety of SW Florida from Sarasota down to Marco Island. As for occupancy, it varies greatly based on management. Vacation rental owners who utilize full service rental companies usually do better than those who use realtor friends or VRBO... although a good management company will have a property marketed across all platforms including VRBO and AirBnB as trends are shifting this way.
As for determining projected revenue, this is one reason I strongly encourage buyers to consider grabbing a property that has been in a rental program. Those numbers become much easier to determine if a property has 5 years of history.
If you like Marco Island, you might also want to consider Sanibel Island. Completely different vibe, but very popular for summer rental programs given the beaches, greenspace and small town charm.
Thanks for the info! A few more follow up questions:
-Are there beaches in Cape Coral? I looked it up, and info seems to allude they are a 15-20 minute drive away...
-Do you know off hand which counties do not allow short term rentals in SW Florida? That will easily narrow down our search of possible locations to invest in.
@Gene Maltsev Your info about vacancy is super helpful! thank you!
I write this dreaming of the beach as it's snowing outside on april 14th in Iowa!! ;)
@Seth Nadreau thanks for that. Ideally, I'm looking for a spot that has visitors year round. I don't want to be stuck with a property that has 40-50% occupancy half the year. Plus, I know that rates vary but if the off peak rate is 30-40% of peak season, the numbers don't work. I'm looking for an ROI above 30 (aren't we all, right?). I know my customers because I've been doing this long enough (up north). So my other question I had was about renovation costs. What's the average cost per sqft to renovate down there?
Thanks in advance!
@Gene Maltsev Cape Coral itself has no beach access (although there's been talks about one for years). The nearest beach is Fort Myers Beach which is between 20-60 minutes away depending on the time of year. For $400,000, you can pick up either a 1960s wood framed duplex, 2/1 on each side, within walking distance to the beach in Fort Myers Beach... or you can get TWO 2000s concrete block duplex, 3/2 on each side possibly with a pool or fresh water canal view, located near all amenities but a bit further to the beach. One cash flows better.
Location to the beach isn't as much of a dominant factor as one might think. The whole area is tropical-ish and there is so much to do that a family coming down for a week may hit the beach once or twice, catch a spring training game, go to the water park, go to the zoo in Naples (50-60 minutes away), explore Sanibel, try a different beach (Englewood or Barefoot... both 60 minutes away), walk the streets of historic downtown Fort Myers and enjoy one of the many craft breweries or distilleries in the area.
Sorry... put my broker hat on for that pitch. :-)
@Seth Nadreau $14-25 per sqft for renovation is crazy low. Are you sure we’re talking about the same thing? Imagine you buy a house in decent shape on the outside, but needs work inside. For example, new kitchen, update bathroom, and create a bedroom and kitchen on the lower level where there’s a half bathroom. I would imagine the costs are in the neighborhood of 75-100 per sq ft. Thoughts?
thanks for the broker hat! It's good to know what the demand is and what people are liking...we are total beach people and always stay beachfront, or two houses away....but I like to see things from other's perspectives to be aware of all opportunities!
@Gene Maltsev This is south Florida... almost everything is on one level. No basements or lower levels here unless your buying a raised cracker-shack. Honestly, most buy and hold properties don't need $25,000 worth of work... and that's what $25/sf on a 1,000sf house comes too.
If you're flipping, you're certainly higher than that $/sf... but for a buy and hold, that's not unreasonable. Keep in mind this is Florida... materials and labor are relatively inexpensive. I did my entire kitchen myself. Cabinets cost $1,800. Granite cost $1,700. Appliances cost $2,800. Do the math. :-)
when you’re doing everything yourself then maybe you’re closer to that rate. But yeah I was talking about flip rates. I’m not a carpenter so I don’t have the time or skill of doing all the work myself.
It’s important that if I’m buying renovating and holding, that I eventually get the money back on the renovation.
I would be extremely careful in several markets in Florida. There is a deal found or made every day but we are at the top price wise in several areas. Interest rates are rising and it’s the perfect time to buy way too high. I have learned this the hard way, so take my advice. Also, do not believe any realtor who tells you otherwise.
Thanks for your advice! Which markets do you believe one should be extremely careful in?
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