Exploring Florida panhandle market for vacation rental

11 Replies

Good evening all! So after lots of readings and speaking with some of the people here, Im leaning towards Florida Panhandle market as one of my top 2 choices. From what I understand, best income is to be made in bigger SFH rather than condos. Besides regulations are unlikely to change from curren as HOA doesnt come into picture. My budget is 400-550k with 20-25% down payment. Targeting properties with potential of netting 80-100k in yearly revenue. Looking to self manage. Open to do some upgrades if I get a great price. Which specific cities, towns, beach communities I should target? Any thoughts, pointers (especially from folks doing it first hand) and realtor contacts will be appreciated.

Destin and any of the beach towns on 30A are going to be on the more luxury side of things, while Panama City Beach is a little less nice, but the numbers make a lot of sense. They get just as much tourism and the purchase prices are cheaper.


You should connect with @Matt 'Roar' Gardner

Thanks a lot @Avery Carl. I have been reading your many comments and i like your region too for what I want to achieve. I agree on PCB, its not that nice but numbers look good. 

There's not going to be a whole lot of property that meet your criteria considering your budget and rental expectations. I do know a local lender that can do 10% down with no mortgage insurance and the rate is below 4%. Amount must be over 600 and under 1 million. In your price range for a single-family home, you probably won't have a beach view. Possibly a peek a boo Beau. Having a pool or a community poPossibly a peek a boo Beau. Having A private pool can increase your income by 20 to 25% as well. There are specific areas where the rates of return are better than others for sure. If you have time I can break those down for you one day. I hope this helps him some.

Dev:

The panhandle of florida is out for you--You are in a dreamland based on your net 80-100k; our best property 1 block from beach 4 br w/pool, purchase 650k, now 880k, rents 320 days a year, we manage,  and gross 100k--We've been in the panhandle(Destin/30A), for 30 years, and there is no unicorn like you look for.  Panama city is cheaper,but not much, gulf shores and Orange Beach AL is less, but not close to your profit requirements.  Maybe take a look along the brown sands of texas or the carolinas, or small towns on florida's rocket coast. I think Orlando may be a bargain for pricing and give better returns; common sense would think they are overbuilt, but that is mostly hotels, and not AirBNB's, whic are more bargain priced, have year round appeal because of the theme parks (60 million visits per year), and truely demand outstrips supply.

Good Luck, Jon, Sand Dollar Vacation Properties

I disagree with the comment PCB is not that nice. Did you visit the area? Did you see all the recent developments? The towns of 30A and Destin will not have the same ROI as Panama City Beach due to high price appreciation over the past eight years. An inventor will look at the emerging areas with high ROI not established areas with low ROIs.

I would be happy to send you some deal checks for Gulf Shores & Orange Beach AL that I have run recently if you are interested in learning more about those areas and can also connect you with some agents with our firm in PCB and Ft Walton which have some opportunities, but will say that we are not seeing GRMs that high in our area. Also, keep in mind that it is not just HOA restrictions that you have to watch, but also STR restrictions by local municipalities! Our market has already gone through that. Just send me a colleague request if you would like to connect!

I grew up in the panhandle and I agree with a few of the comments above. Panama City, FL got hit hard by hurricane Michael- so it looks messy right now and, frankly, some of the areas that were hit hardest were very old and not desirable as far as traditional tourists go. Panama City Beach is making an attempt to set itself apart. I see it blending with 30A based on the direction Inlet Beach is going with some of its developments. Laguna beach area used to be the least expensive area with close access to the beach- start there? The kind of revenue you are wanting to "net" is outside of what I have seen in Destin, PCB and surrounding areas. In fact, I see around 10% net on most properties and that is if they do a great job at marketing. So, a property listed for 1M has that potential...if all goes very well. The thing that most don't consider or try to avoid is the possibility of buying a fixer-upper as a STR. Finding an older place that needs updating for much less...updating and furnishing might serve you better. Please be sure to investigate the STR regulations in the specific subdivision (area) you end up with. The rules are changing frequently- I feel it is important to know the local govt. feelings toward STR first. As you likely know, close proximity to the beach will be key with STR.

     Interesting read.  I wonder about the phrase "netting 80-$100k in yearly revenue".  Do you mean gross rents?  If net rents, what is your definition of net?

    Most investors out this way are looking for approx. 20% of the properties purchase price/value, in gross annual rents, for a property that does not require tons of work.  My understanding is that ratio can be hard to find in most markets.

Thanks @john d. for your reply. I meant 80-100k in annual rent for a 500-600k property. You say that 20% of purchase price should be gross annual rent, which is closer fo what i thought as well. But reading most of the comments here it seems that's not the case, its more like 10-15% and that too if you are lucky. Assuming netting 30% of that annual rent in net profit after all the expenses, it doesnt seem worthwhile. Unless its just a passive investment (which again its not if you are self managing). Or perhaps as someone commented you buy a run down property, fix it and then perhaps returns are little better 

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