Short term rentals in Jax

16 Replies

Howdy, I'm looking to invest in a short term rental property in Florida. Namely Jacksonville, but I'm not set on this. I've read/heard about the significant returns over long-term rentals that can be had, however I'm having a hard time putting together numbers that play out this story. So I'm looking for advice and input from those with STR experience, or at least in the know.

What interests me is a moderately priced property, targeting the normal folk. Not a luxury rental. Here's what I came up with, using what I feel are somewhat conservative assumptions:

180k - purchase price

4k - closing

10k - furnishing / rent ready cost

Potential income

$3000 / mo(@$100/night)

Expenses

$900 - %30 vacancy

$150 - capex(5%)

$300 - maintenance(10%)

$100 - water/sewer

$150 - electricity

$60 - insurance

$160 - tax

$750 - management(%25)

$660 - P&I(25% down, 30 yr, 4.2%)

The bigger-pockets calculator break-down is attached. Add it all up and it comes to -7.5% CoC, and a 1.94% cap rate. Quite underwhelming in my book.

Can someone poke holes in my assumptions? Tell me what I'm missing? Most people must be doing much better than this, or no-one would be doing it. Maybe I could get a bit lower vacancy in the long term, maybe a bit more than $100 a night, but I think my assumptions are in the ball-park.

Just make sure it will cash flow on a month to month for an exit strategy when the county makes laws to limit short term rentals

I went to numerous committee meeting when they were coming up with the draft before they pulled the plug in Jan 2019 but they can start it back anytime.

Currently it is illegal to short term rental at the beaches and they haven’t cracked down on it yet but just another thing to think about when you are investing.

Originally posted by @David Roe :

Where did you get your occupancy rate from?

 Based off of my own research, from talking to property managers, viewing comparable property availability on airbnb, and historic occupancy rates on mashvisor.

@Josh Norell - I'd use 3% of purchase price for closing costs, just to be safe, so $5400 in your case. I'd also recommend a pre-purchase inspection, cover your butt and know what you are getting into. Its saved many "new" investors thousands and many years of headache "Why did I buy this". Electricity - unless its budget billing from JEA, look at a cost of about 12 cents per Kilowatt. 3000 sq ft home would run you about $250 per month plus water/sewer. I think your occupancy rate is a bit high, I'd go conservative with 2/3 of that amount, if your home is really that desirable. 

The occupancy rate may be a bit high, but if I'm paying professional management, I would hope/expect to get an occupancy rate at least 70%.

But taking into consideration the other adjustments you put forth, and the expected return is even lower. I'm still quite mystified how people make the numbers work on a property at this price/rent point.

Originally posted by @Josh Norell :

The occupancy rate may be a bit high, but if I'm paying professional management, I would hope/expect to get an occupancy rate at least 70%.

But taking into consideration the other adjustments you put forth, and the expected return is even lower. I'm still quite mystified how people make the numbers work on a property at this price/rent point.

I have the same problem and I'm local to Jax.  Even if my wife manages and cleans most of the places I've seen in Jax Beach, the prices are too high to justify the returns.

I've thought about buying places near Mayo that are sort of close to the beach and would benefit from people wanting to stay near the hospital, but the returns seem so small given the cost and effort to maintain a short term rental.


@Joshua Schoer that was exactly my plan too. To get something near mayo, and the beach, to catch both audiences. I too, I’m finding the returns too little to justify the risk/effort. I’m finding a long term rental would provide better returns, without as much hassle. 

I'm currently operating an AIRBNB/short-term furnished rental in Avondale/32205

I Do Not Want To Sell, my son and I put a lot of pride in the property, and it has so much appreciation potential -- but due to unforeseen circumstances, my credit score has dropped and now my refi options are dreadful - (30yr 7% int, 2½ pts, ridiculous closing fees,10k early payoff penalty). 

I'm unsure if it's ok  posting the details, and I'll promptly delete if it's against protocol...here are the numbers: 



2BR 2 BA -- HUGE OPPORTUNITY!! – FURNISHED RENTAL -- 32205

Current operating AIRBNB/short-term furnished rental in Avondale/32205

I Do Not Want To Sell, my son and I put a lot of pride in the property and I wanted it to be a long-term hold, but due to unforeseen circumstances, my credit score has dropped and now my refi options are dreadful - (30yr 7% int, 2½ pts, ridiculous closing fees,10k early payoff penalty). Hard money loan due on Oct 1st

PROPERTY INFO:

  • Newly remodeled -- 2BR/2BA 1,073 sgft
  • HIGHLY desirable, Established neighborhood of Avondale...excellent school system, short commute to: NAS, Mayo, Equestrian center, downtown

210k - purchase price

229k – ARV

17640 Annual net @ 70% occupancy

Avg $85 nite or $2100/mo – will allow access to Airbnb account

est 5k closing costs

Needs 7k final repairs

$100 - water/sewer

$112 - electricity (avg last 5 mo)

$100 – insurance

$250 – tax

Comps:

  • 1551 Charon Rd Jacksonville, FL 32205 2 beds 2 baths 1,047 sqft

SOLD 5/17: $214,000

  • 1522 Glendale St Jacksonville, FL 32205 2 beds 2 baths 1,024 sqft

SOLD 5/18: $245,000

  • 3947 Boone Park Ave Jacksonville, FL 32205 2 beds 2 baths 1,064 sqf

SOLD 6/17: $229,000

LOW expenses – Comes with a local, loyal maintenance/cleaner/landscaper/immediate response man…he treats the property as his own and is very respectful toward the guests.


Bill,

I own a few STRs in Jacksonville (and I live here) and would be willing to see if we can put something together.  Give me a call to discuss.

Thanks,

Glen

Bill's property exemplifies the STR situation in Jacksonville that I've found in my research. With those numbers, you could realize an equal or better return with the property as a long-term rental, and not have the hassles of a STR.

Originally posted by @Josh Norell :

Bill's property exemplifies the STR situation in Jacksonville that I've found in my research. With those numbers, you could realize an equal or better return with the property as a long-term rental, and not have the hassles of a STR.

LTR is certainly an option...comps @ $1600ish. I went the way of STR because I fly down several times a year and I can arrange my stay at the house. I tested the market @ 2100 and received a strong response. What the hassle if you have the right people in place?

Remember it's offered fully furnished...furniture/artwork/tv's/sheets/utensils/bbq/etc.  

 

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