House vs Condo Beach Rental STR

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House vs Condo Beach Rental STR

Tyler Hardy
Rental Property Investor · Williamson, GA · Member since 2018 · 78 posts · 35 votes

I'm looking into into beach properties as an STR but I go back and forth on whether or not to look for a single family house or a waterfront/beachfront condo. This would be for the sole purpose of an investment but I'd like to buy in an area that I would like to stay myself once the returns justify the loss of revenue for a person night or two. I'm mainly looking in the 30A area between Panama City and Destin, FL but I'm interested in areas all the way West to Gulf Shores, AL. Basically, I'm open to the best area to attract STR tennents, as well as long term "snow birds" to maximize my annual revenue. That being said, I've never owned a condo but I have owned many homes. A condo comes out cheaper up front (generally) but how are the long term numbers compared when you factor in HOA and maintenance fees? On the other hand, a SFH is generally farther from the water (I'm trying to stay within golf cart distance to the beach), has less amenities than a condo, and higher property taxes, but seems like it would offer more appreciation than a condo. I'm also trying to factor in what clientele would be interested in each property and how that would affect damages, and length of stay. Am I over thinking this? Do any STR beach rental property owners have any insights? Has anyone owned both concepts and can compare them?

Keywords: PCB, Rosemary Beach, Fort Walton, Seaside, Watercolors, Seacrest, Miramar, Navarre, Alys Beach, Floribama

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Candace PfabBusiness Member
Realtor · Orange Beach AL · Member since 2018 · 150 posts · 125 votes
6y

@Tyler Hardy Hi Tyler. You are asking some great questions and the best answer I know to give you is that rental income & expenses can be more predictable in a condo and attract a greater pool of guests. You will have a larger pool of folks that say, we always like to stay at Caribe or a Phoenix property, so they will be specifically searching for those types of properties. When you break down the HOA fees vs a expenses on a single family home, you typically see comparable numbers with the exception of amenities maintenance, which as you have already suggested, can drive up income & demand. While some of the condos do also see special assessments, you can also see large unexpected expenses with a single family home. Another consideration is that if we have a major storm event, it is usually much harder to get a single family home back up & running than a condo unit due to differences in construction and difficulty in getting a contractor to focus on your home vs a larger condo association who can attract contractors that regularly provide services for the association or can attract contractors due to the scope of the project. You can insure for loss of rent on your insurance policy, but there is usually a time or dollar limit on that & we have known of many instances where the work was not completed before the loss of rent coverage ran out. Hope that helps! We have owned two rental condos here & know the AL coast & W FL panhandle well. Feel free to reach out if we can help in any way!

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  • Tyler Hardy
    OP
    Rental Property Investor · Williamson, GA · Member since 2018 · 78 posts · 35 votes
    5y

    @Mike Anderson my thoughts exactly. I plan on eventually having beach and mountain or ski properties to offset each other's slow season.

    1Reply
  • Mike Anderson
    Rental Property Investor · Clayton, GA · Member since 2020 · 185 posts · 152 votes
    5y
    Originally posted by @Tyler Hardy:

    @Mike Anderson my thoughts exactly. I plan on eventually having beach and mountain or ski properties to offset each other's slow season.

     Yup, plus different markets allow separate second home loans. 

    1Reply
  • Matt "Roar" Gardner
    Real Estate Agent · Tampa, FL · Member since 2018 · 464 posts · 452 votes
    5y

    @Mike Anderson and @Tyler Hardy - As with any market (even if the market is generally ideal), it still takes work to find a solid property.  My clients are still landing solid cash flowing deals in the Destin, Fort Walton Beach, and PCB areas.  

    The market has softened a bit now that we're past the high season. As a realtor and investor, I recently got a SFR under contract. Their list price was initially $580K, but we're under contract for $480K right now (and it has solid projections).

    HOA fees are totally property dependent and will vary from over $1,000/mo to no HOA at all, so that is definitely a factor to consider.

    Also, regarding the second home loan plan in the beach market, that is definitely a possibility for SFRs, but it's a bit more tricky when it comes to purchasing condos.  Most condos around here are non-warrantable, which will restrict any special loan programs.  There are exceptions to this (like Ariel Dunes I or Calypso Towers with very specific lenders), but just be aware of the possible financing requirements when you're considering the condo route.  

    Best of luck!!

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  • Tyler Hardy
    OP
    Rental Property Investor · Williamson, GA · Member since 2018 · 78 posts · 35 votes
    5y

    @Matt "Roar" Gardner are you saying that the condo HOA fees fluctuate be on the season to make it easier on the owner in the winter and more profitable for themselves during the busy season? That's the first I've heard of that and that seems like as genius way of doing things. I would be willing to pay more during the summer if it meant not having the extra overhead during the winter. Thanks for the info.

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  • Tyler Hardy
    OP
    Rental Property Investor · Williamson, GA · Member since 2018 · 78 posts · 35 votes
    5y

    @Matt "Roar" Gardner now reading over this again, I may have misunderstood your HOA comment.

    1Reply
  • Mark H. Porter
    Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
    5y

    In Myrtle Beach, the sfr's weathered the COVID storm far better than condos. People didn't want to share an elevator or be too close together on the beach. Even though they locked out STR until the middle of May my beachfront property has been straight through from then until last week. The condotels were getting less than 40% occupancy during the week.

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  • Candace PfabBusiness Member
    Realtor · Orange Beach AL · Member since 2018 · 150 posts · 125 votes
    5y

    We have many beach condominium options in Orange Beach/Gulf Shores that qualify as a second home investment with programs with as low as 10% down, so you don't always have to come up with the larger down payment, but some buyers choose to go with a higher down payment to get a better rate.  It really depends on how long you plan to hold and what your long term goals are with acquiring additional properties.  

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  • Tyler Hardy
    OP
    Rental Property Investor · Williamson, GA · Member since 2018 · 78 posts · 35 votes
    5y

    @Candace Pfab thanks for the info. I've thought about Orange Beach because of the lower insurance. I'll have to look into that. Thanks.

    1Reply
  • Amber DiBenedetto
    Member since 2023 · 2 posts · 0 votes
    3y
    Quote from @Mark H. Porter:

    In Myrtle Beach, the sfr's weathered the COVID storm far better than condos. People didn't want to share an elevator or be too close together on the beach. Even though they locked out STR until the middle of May my beachfront property has been straight through from then until last week. The condotels were getting less than 40% occupancy during the week.


    Hi Mark, I know this is an old post but I just joined BP and I've been debating oceanfront condo vs non-ocean front house for STR in Murrells inlet.

    What are your thoughts about it now that covid is settling down? Are you still seeing more rental interest in the houses?

    I wont be able to afford an oceanfront house, but i can afford an oceanfront condo. So, I guess I am just wondering how much the view impacts a renters choice? 

    0Reply
  • Mark H. Porter
    Investor · SC NC, VA · Member since 2020 · 1k+ posts · 756 votes
    3y
    Quote from @Amber DiBenedetto:
    Quote from @Mark H. Porter:

    In Myrtle Beach, the sfr's weathered the COVID storm far better than condos. People didn't want to share an elevator or be too close together on the beach. Even though they locked out STR until the middle of May my beachfront property has been straight through from then until last week. The condotels were getting less than 40% occupancy during the week.


    Hi Mark, I know this is an old post but I just joined BP and I've been debating oceanfront condo vs non-ocean front house for STR in Murrells inlet.

    What are your thoughts about it now that covid is settling down? Are you still seeing more rental interest in the houses?

    I wont be able to afford an oceanfront house, but i can afford an oceanfront condo. So, I guess I am just wondering how much the view impacts a renters choice? 


     Hi Amber - there are some key determinants to increased revenue here on the Grand Strand.  1) an elevator if greater than two stories, 2) proximity to the beach, 3) a pool, and 4) a jacuzzi or spa.  The desire for a single-family home is still greater than condos as there are still folks not wanting to be around crowds.

    Now, of the four features above, proximity to the beach probably places #1 followed by having a pool.  So many people come to the beach but won’t set their foot in it.

    0Reply
  • Jeannie Harrison
    Member since 2023 · 1 post · 1 vote
    2y

    What a great thread, even if it was started 4yrs ago.  I'm ready to dip my toe in these waters and I've learned a lot from your folks already. 

    I'm tossing back n forth on this subject as well. HOA fees are crazy in condos on or near the beach but I'm wondering if the cash flow would offset that?

    I'm looking in the same areas of the Fl Panhandle but maybe take a look further west in AL 

    Are their vacationers who would want to stay 10 min from the beach? Personally I wouldn't want to but I'm a beach girl. 

    I'm pre-approved for 2nd home/Investment.  Would a no less than 6 mth rental across from the beach be a good investment? 

    1Reply
  • Kyle Momany
    Real Estate Agent · Tampa, FL · Member since 2018 · 144 posts · 132 votes
    2y
    Quote from @Jeannie Harrison:

    What a great thread, even if it was started 4yrs ago.  I'm ready to dip my toe in these waters and I've learned a lot from your folks already. 

    I'm tossing back n forth on this subject as well. HOA fees are crazy in condos on or near the beach but I'm wondering if the cash flow would offset that?

    I'm looking in the same areas of the Fl Panhandle but maybe take a look further west in AL 

    Are their vacationers who would want to stay 10 min from the beach? Personally I wouldn't want to but I'm a beach girl. 

    I'm pre-approved for 2nd home/Investment.  Would a no less than 6 mth rental across from the beach be a good investment? 


     Congrats on getting started!

    As an agent and investor, I've actually seen the best returns just off the beach. The price point for beachfront is significantly more, but brings in slightly more income. In Destin/PCB most areas that allow short term rental are south of the Hwy (Hwy 98). If you're buying south of the highway, you're no more than a few minutes to the beach.

    I'm not going to say that a MTR/LTR won't work in the area, but generally they don't.

    Let me know if you have any other questions! 

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