Short Term vs Long Term Rentals
Located in Fort Walton Beach Florida.
Which rental variation is most profitable with given market?
What about the off season vacancies? How does that affect the cash flow?
Thank you all!
Vacation rentals are much more work to manage but could be more profitable if ran efficiently.
Long term rentals are more passive but less profitable.
In Florida I assume you would have vacationers almost year round..
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Real Estate Agent NC (#312479)
- http://www.quietwatersrealtygroup.com
I consider vacation rental as worth at least 25% less than long-term rental. Your credit card fee, listing site commission, higher insurance rates, higher wear-and-tear, having the furniture place, you pay self-employment income, consumables like coffee , sheets, cleaning, higher maintenance,
Originally posted by @Aubrielle Coldros:Located in Fort Walton Beach Florida.
Which rental variation is most profitable with given market?
What about the off season vacancies? How does that affect the cash flow?
Thank you all!
@Ken Latchers. Thank you!
Hi@Aubrielle Coldros ! As an agent and investor local to the area, I can tell you that vacation rentals are more profitable. Some might argue that they are less recession proof but a less
Profitable STR market may end up as a wash with single family in this area.
If you search you can find similar threads of single families having very lame returns around FWB and surrounding areas, unless you rehab/BRRRR them and then rent them. If you go further out you can do better (like crestview).
I have multiple friends with vacation rentals doing well self managing (it isn’t that much work if you use systems). Even with management the returns are worthwhile. I’d be happy to send over some example properties and assist you with your search (for either type of property).
Let me know how I can be of service!
Beat of luck to you.
@Aubrielle Coldros Hey! I know there is alot of success in the Short term rental market. It is very easy to automate the rental and leave you with very little interaction with the property if you do things right. If you at all interested, id love to break down the market further and tell you how i manage it in Fort Walton Beach!
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#1 Short-Term & Vacation Rental Discussions Contributor
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So short term is more work, you can automate a lot of this or run it from your phone. Given the right property and location and skipping using a PM it is possible to do much better than a LTR.
Hello Aubrielle,
As a commercial mortgage broker , I have several of my lenders who have rolled out short term lending programs (Vacation Rentals, AirBNB) . Usually to qualify they look for 1 to 2 years rental history,
and no tax returns needed, 75% to 80 LTV for purchase of refinance. I live on the GulfCoast so this is music to my clients ears. A new era of lending and great for investors of short term rentals.
Again, be very wary and doubtful about people who are seeking a commission from working with you
the claim that short-term is more profitable seemed almost bordering on malpractice here. There are no guarantees and what people think generally overlooks a lot of details and facts.
and how many hurricanes and tropical storms roll through that area annually? Is called risk. Sometimes higher profit come with higher risk that isn't always a good thing
Originally posted by @Charlie Cameron:Hi@Aubrielle Coldros ! As an agent and investor local to the area, I can tell you that vacation rentals are more profitable. Some might argue that they are less recession proof but a less
Profitable STR market may end up as a wash with single family in this area.
If you search you can find similar threads of single families having very lame returns around FWB and surrounding areas, unless you rehab/BRRRR them and then rent them. If you go further out you can do better (like crestview).
I have multiple friends with vacation rentals doing well self managing (it isn’t that much work if you use systems). Even with management the returns are worthwhile. I’d be happy to send over some example properties and assist you with your search (for either type of property).
Let me know how I can be of service!
Beat of luck to you.
In general, STR's are going to have higher upside but are also more risky. As for whether or not you should go STR vs LTR, It all depends on your market, your property, and how risk averse you are.
If you're doing it right, your peak season revenue should more than offset the low occupancy during the off season. Also in FL there is a ton of demand for Snowbirds which can be a good way to help with off season occupancy rates.
I would think short term would do better in that area but as others have mentioned, they are definitely not passive. You can run some numbers by making a high level guess that the property should do about 10% gross annual rent of the property value (at least that's what they were telling me in Destin) so a $500,000 property would do about $50,000/year gross. Definitely validate that with the realtor you choose and also see the existing property rental history. In my eyes gross rental revenue is far more valuable than the occupancy rate. I would rather it's booked 50% of the time and getting $50,000 than 100% of the time getting $50,000. Catch my drift? Then factor in the expense of mortgage, taxes, short term rental insurance, cable and internet, lawncare and pool (and any other grounds maintenance), HOA fees, property management, utilities, furnishings, etc).
Like I said, I have two friends who are doing well with STRs and so are the folks buying out of state. As an investor with 24 long term rental units, and local to the market, I'm simply giving my own view of this market there @Ken Latchers. As does everyone on BP. I network with new BP members (especially military/veterans) on almost a daily basis with no monetary benefit. I firmly believe that providing more value than you receive results in the highest satisfaction and success.
@Aubrielle Coldros can check out numbers and run them herself (and as an investor, I can also perform conservative estimates). Using local rental management companies we can confirm income numbers as well. I'd never sucker someone into a bad investment to make a buck. As a military member, I put integrity and people first!
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#4 Short-Term & Vacation Rental Discussions Contributor
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You can also rent STRs to travelling workers with a per diem. Their needs are pretty basic, a place to go after work to drink beer, cook, do laundry, shower, sleep. I provide all that in an atmosphere like Hugh Hefner would provide if he were to decorate a place for refinery contractors. Refinery contractors are my primary renters. Big burly guys with neck tats, they drive jacked up 4x4s, smell like diesel fuel and chew tobacco in their sleep. You'd avoid the aisle if you saw one in Wal Mart. I'd punch him in the arm and say "What's up mofo?"
I shoot for 6 months of gross rent to equal the purchase price of the house. It can take 7-12 months to get 6 months of rent. My market is not the typical market, I live in Hades.
Like you said "As an agent and investor local to the area, I can tell you that vacation rentals are more profitable"
You cant say that at all. You are ignoring a ton of costs involved, the lack of experience, the costs of being remote, the many problems of being new to str and a lot of other things.
uninformed...PROFITS!!!
reality... RISK ADJUSTED PROFITS!!!
Originally posted by @Charlie Cameron:Like I said, I have two friends who are doing well with STRs and so are the folks buying out of state. As an investor with 24 long term rental units, and local to the market, I'm simply giving my own view of this market there @Ken Latchers. As does everyone on BP. I network with new BP members (especially military/veterans) on almost a daily basis with no monetary benefit. I firmly believe that providing more value than you receive results in the highest satisfaction and success.
@Aubrielle Coldros can check out numbers and run them herself (and as an investor, I can also perform conservative estimates). Using local rental management companies we can confirm income numbers as well. I'd never sucker someone into a bad investment to make a buck. As a military member, I put integrity and people first!
@Ken Latchers, she’s not remote. So that gives even more flexibility.
Sure, I overgeneralized, but to be clear I’m talking about the specific market asked about (FWB).
How my statement differs from your “STRs are 25% less valuable than SFRs” I haven’t a clue. Me being an agent doesn’t somehow diminish my opinion as an investor about the area.
People are doing well from in and out of state with STRs in this specific market. I’m more than happy to provide numbers on REAL properties to those interested.
I think we’re BOTH right in our own ways. The risks are different for sure. Now let’s leave everyone else alone and take this offline!