Hi BP network! I'm considering investing in a 3BR property (home) near the coast. However, it's not directly waterfront. It's approximately 12 minute drive to the beach, and 4 minute drive to the river/marsh. We're talking coastal SC. My goal is ST vacation rental.
Question is: How far away from the water is considered "too far" for vacay rentals? I don't mind lowering my rent, as compared to the beach front RE. No problem. My concern is location - is this too far to draw clients and maintain occupancy/bookings??
"Too far" is completely location dependant You aren't "lowering the rent" as a concession you simply will NOT get the same rent for an off water house vs direct access, water front or view home. I've had coastal STRs in FL to NC since 1992. Way before it was trendy. If you are marketing a "beach" place, distance to water is a HUGE factor. In the markets I'm familiar with rents will be priced by # of BLOCKS to water, not miles, with rents dropping 50% from oceanfront to first tier right across the street and down from there for similarly equipped houses. Having to drive to water puts you in the "all other" lowest rent bucket. You'll need to stand out in the "all other" bucket so find out what people really do on vacation in your area and set up your place to be a prime choice. Being off water means you won't spend as much on the house. But remember you are selling a vacation experience not a place to live. Also consider the salt factor. Coastal climates and salt water are brutal on house systems. I'm thrilled to get 7 years out of a 20 yr heat pump. Don't skimp on your repair funds and people will damage more than you think inside the house. Get rid of all carpet and put in LVP. People are on vacation so there will be coffee, wine, melting frozen pops, snuck in pets hitting the floors. Nothing worse than stained carpet and if your place isn't spotlessly clean, you get bad ratings. Sounds like you will do you own cleaning and inspections. The best way to go if you can. Check the flood situation carefully and don't skimp on insurance and be prepared for it to go up about 5-10%/yr. I've had better payout from wind damaged property (ie on the water) vs flood (FEMA payments did not fully compensate losses). And it takes months to recover so could be a long time with no income. Just lost a house to Hurricane Michael. It does happen. But the good news is that there are lots of PMs in coastal areas with internet listings. Super easy research with lots of pics for comps. The thrill of the hunt to pull all the factors together and find the right place for your situation. If you work with an agent, take their projections and reduce gross rent by 25% and up the maintenance costs by 15%.
Every market is unique. Look at Airbnb and craigslist and see how much properties similar to the one you are considering are renting for and their occupancy rates.
I don't give 100% towards promoting my STRs. But I do give about 25% more effort than whatever my main competition is doing. When they ramp up their promotion, I ramp mine up even more. When they cut back some, I cut back some. I also try to sabotage them. I send them tenants that I suspect are going to be problem or otherwise undesirable. Once I met a lady that I sent 2 deadbeats to. She said the guys eventually moved out but they are storing all their stuff in her house. They are supposed to be sending her money. I apologized to her, but I was laughing on the inside. I got rid of my problem tenants and I got my competition filled with non paying renters. Don't let that happen to you.
I also try to sabotage them. I send them tenants that I suspect are going to be problem or otherwise undesirable. Once I met a lady that I sent 2 deadbeats to. She said the guys eventually moved out but they are storing all their stuff in her house. They are supposed to be sending her money. I apologized to her, but I was laughing on the inside. I got rid of my problem tenants and I got my competition filled with non paying renters. Don't let that happen to you.
I also try to sabotage them. I send them tenants that I suspect are going to be problem or otherwise undesirable. Once I met a lady that I sent 2 deadbeats to. She said the guys eventually moved out but they are storing all their stuff in her house. They are supposed to be sending her money. I apologized to her, but I was laughing on the inside. I got rid of my problem tenants and I got my competition filled with non paying renters. Don't let that happen to you.
Wow. What knocked your moral compass so far askew?
Wow. What knocked your moral compass so far askew?
Do you want to do what's morally right or do you want to make money? I have no morals, so there is nothing to be knocked askew. Sun Tzu had a lot of famous quotes. Here is mine:
A good way to be competitive is to eliminate your competition - Paul Sandhu - July 4 2019
I guess that just says it all.
Do you want to do what's morally right or do you want to make money?
Do you want to do what's morally right or do you want to make money?
It is not an either/or choice. I do my best to do what is morally right and I make money.
@Sylvia B. We live in the same country, but we might as well live in different worlds as far as rental properties go. My STR market is not the same kind of place where you have yours. I'm not go into detail about dead bodies, overdoses, meth, walking in to intruders, police, break ins, and a host of other people trying to scam me. @Luke Carl and @Julie McCoy can probably remind me of some of my horror stories. I try to forget them, PTSD but I don't feel like I have it.
@Sylvia B. We live in the same country, but we might as well live in different worlds as far as rental properties go. My STR market is not the same kind of place where you have yours. I'm not go into detail about dead bodies, overdoses, meth, walking in to intruders, police, break ins, and a host of other people trying to scam me. @Luke Carl and @Julie McCoy can probably remind me of some of my horror stories. I try to forget them, PTSD but I don't feel like I have it.
If you really have no morals then none of those things really matter do they? Intruders, drugs, murder, scams, why shouldn't people do those things if they want to? If you have no morals, then there is no right or wrong. They scam you, you scam them, and the "winner" is the one who pulls off the biggest scam. Money is the only measure of success, so you'd better make a lot of it, and it doesn't matter who you hurt to get it.
We may live in different worlds, but I, too, have experienced dead bodies, overdoses, drug use, break ins, threats and scammers. No competition here - I'm sure that you have experienced more and worse than I. I have made a conscious choice to make changes (places I go, people I associate with, activities I participate in) that make those things less likely to happen to me. I am thankful that I have had the opportunity to make those choices, as I know that some do not.
But the point is not what you have experienced, but how you respond to those experiences. Some choose to screw others before they get screwed. That's not how I choose to live my life.
Wow. What knocked your moral compass so far askew?
Do you want to do what's morally right or do you want to make money? I have no morals, so there is nothing to be knocked askew. Sun Tzu had a lot of famous quotes. Here is mine:
A good way to be competitive is to eliminate your competition - Paul Sandhu - July 4 2019
@Dave Rav So sorry your thread got hijacked. @Paul Sandhu gave you the correct advice, however - look at what comparable properties are doing and that will be the best way to get the information you're looking for.
@Dave Rav
I would also make sure where you are planning to buy STR they are allowed.
More and more municipalities are banning them every day.
Hi, 1st time investor.
I am also interested in investing and have been looking at Panama City beach. Any advice on getting the best ROI. Basically didn't want to break the bank and stay less than 250k
I have been crunching the numbers and unfortunately with high HOA and restriction on lending, I am seeing a low cash on cash. Also PM fees are 21-25%.
Any advice would be greatly appreciated, or if I should explore a different area that ppl have had good success. TIA
"Too far" is completely location dependant You aren't "lowering the rent" as a concession you simply will NOT get the same rent for an off water house vs direct access, water front or view home. I've had coastal STRs in FL to NC since 1992. Way before it was trendy. If you are marketing a "beach" place, distance to water is a HUGE factor. In the markets I'm familiar with rents will be priced by # of BLOCKS to water, not miles, with rents dropping 50% from oceanfront to first tier right across the street and down from there for similarly equipped houses. Having to drive to water puts you in the "all other" lowest rent bucket. You'll need to stand out in the "all other" bucket so find out what people really do on vacation in your area and set up your place to be a prime choice. Being off water means you won't spend as much on the house. But remember you are selling a vacation experience not a place to live. Also consider the salt factor. Coastal climates and salt water are brutal on house systems. I'm thrilled to get 7 years out of a 20 yr heat pump. Don't skimp on your repair funds and people will damage more than you think inside the house. Get rid of all carpet and put in LVP. People are on vacation so there will be coffee, wine, melting frozen pops, snuck in pets hitting the floors. Nothing worse than stained carpet and if your place isn't spotlessly clean, you get bad ratings. Sounds like you will do you own cleaning and inspections. The best way to go if you can. Check the flood situation carefully and don't skimp on insurance and be prepared for it to go up about 5-10%/yr. I've had better payout from wind damaged property (ie on the water) vs flood (FEMA payments did not fully compensate losses). And it takes months to recover so could be a long time with no income. Just lost a house to Hurricane Michael. It does happen. But the good news is that there are lots of PMs in coastal areas with internet listings. Super easy research with lots of pics for comps. The thrill of the hunt to pull all the factors together and find the right place for your situation. If you work with an agent, take their projections and reduce gross rent by 25% and up the maintenance costs by 15%.
Hi, 1st time investor.
I am also interested in investing and have been looking at Panama City beach. Any advice on getting the best ROI. Basically didn't want to break the bank and stay less than 250k
I have been crunching the numbers and unfortunately with high HOA and restriction on lending, I am seeing a low cash on cash. Also PM fees are 21-25%.
Any advice would be greatly appreciated, or if I should explore a different area that ppl have had good success. TIA
PC has high PM fees and is a big condo market. West is Destin. Very well known but expensive. I think Pensacola is a good place to research. Good buys in AL too but the beaches aren't as nice and it's not FL. Suggest you look east to Mexico Beach (same county as PC) or next county east, Gulf county, St Joe Beach area. Not well known area the chamber of commerce calls it the Forgotten Coast. People who find it love it. I had 10 yr repeat renters. Property taxes are lower. Even nicer, less populated family focused beaches than PC. PMs in 15% range. Check the web for comps. Lots of damage there from Hurricane Michael this past fall. Many properties were wiped out so there is dearth of rentals there now. Consider buying a lot outside of a subdivision in walking or golf cart distance to the beach and put a modular home on it. I say modular because the builders are ultra busy there right now. A custom modular will be about $190/sq ft. It would be a solid year round rental and you would be starting out with a new Dade county building code home. H Michael wiped out my little 1979 house there. However the spec house I built last year 1/4 mile away had one fascia board blown off and the porch screens blown out. Building code does matter! Buyer beware on any coastal FL property built before Hurricane Andrew. Also Tyndall AFB is next door for a high quality clientele long term rental market if you decide to switch.
Thanks everyone! I highly appreciate the feedback and advice.
@Karen Bickford, I have done some prelim research here. I did find that the neighborhood does NOT have an HOA, so no restrictions on that end. But I need to research the local government/city side for rules governing STRs.
@Glenna Wood Thanks so very much for that summary!! It was very informative and provided an excellent overview. I have several rentals, but I am a newbie to the STR arena. Your post was great for me... I too have heard distance to beach measured by "blocks" not miles. So obviously, this one is out there. You guessed it too - much cheaper! Basically I can get a 3 BR home needing no repairs (ok, maybe $3k for painting and cleaning) under $200k. Also, you mention property risk - this one's raised about 6-8 feet from ground which is good. I just need to see if it will be successful as an STR, advertised as "near the water" being (correction from earlier) 2 min to river (it's actually on the marsh with dock access, which is appealing) and 12 min to beach.
@Dave Rav Your description of the property sounds like several bicycles would be welcomed at the STR. Most casual vacationers don't travel with a recreational bicycle. You might want to provide helmets and have them sign some sort of liability waiver. Cater to your market; I provide a kegorator, pellet gun and bird bait in one of my STRs.
@Dave Rav Marsh is good. Appeals to birders, kayakers, wildlife watchers. Dig up another STR owner to get the scoop in local taxing or reporting for tranisent rentals. No HOA is good. Also check the flood records. Any FEMA claims ever? Does a lender require flood insurance? All reasons to be diligent. Flood maps help but are a statistical model. Low country Carolina has had lots of inland flooding last decade or so. 6'-8' sounds good but I95 has been closed thru SC from storms which you no doubt know. When events like that hit the national news it affects vacationer decisions on where to go. Also check the longer term appreciation in the specific neighborhood as a LTR or permanent home. Would you live there? What pulls people there to live or visit? I've made very solid returns on my coastal STRs not from monthly cash flow but 1031s to bigger and better... and closer to the water! 馃槑
@Dave Rav we are about 15 minutes from Lake George and STAY booked during the warm weather months. There are many other reasons why, like we have a large house that accommodates large families (10+), a large yard, pool, deck etc. We provide all the comforts of home so people can bring kids and grandma who may not be as interested in hitting the lake every day.
@Dave Rav - I would consider that too far to be considered coastal property. Any drive to the beach is not "beach" property. My # 1 priority when moving to Panama City Beach was being walking distance to the beach. I agree with @Glenna Wood 100%. @Manish Waj I know hundreds of investors who are having success in this market. You have to know the right realtors (I do after buying 3 properties with the best!) and the right PM companies (I do after LOTS of research), and the right lenders just like you do in any good market. It's definitely worth your time to look here. We are working with a number of investors on a variety of deals right now; this will be a very strong market for many years during the hurricane re-build.
@Paul Sandhu
You make this into a zero sum game and it doesn鈥檛 have to be. In the end, your loss. You think you鈥檝e won or gained but gained, most likely, less than optimal because of your flawed strategy and mindset.
Sure Kevin, sure. I had 18 STRs at that time. Since then I'm up to 23 STRs now. An 80 bed motel that was one of my main competition closed since then too. Another 40 bed motel changed hands along with a mobile home park that had cabins. The owners of the motels and the mhp both lamented to other people who told me "People check in to my place and they leave after one week to stay at one of Paul's places." I guess my flawed strategy and mindset is giving my competition problems, while I keep expanding. No loans, I pay cash for properties.
@Dave Rav Vacation rentals are not always just about the beach. How close are you located to the airport or large corporations looking to house their employees? Also, a lot of people are looking into vacation rentals just to be close to relatives too. How close are you to nice communities? I would recommend just knowing your market and how to strategically market your customers. I had some vacation rentals that were EXTREMELY profitable near a large corporation in a 1 street light town. You just have to know your market, your contacts and what would drive your business.... Ethically!!!