Sell/switch from STR to LTR/Use equity

[Dolores H.]

I own a condo on Pensacola Beach, FL that I purchased in 2019. We lived in it for five years before moving back to Kentucky, and since then, we’ve been renting it out as a short-term rental through a management company, paying 21–23% in fees. Unfortunately, the income hasn’t been enough to cover the mortgage and HOA dues during the off-season, and now other bills are piling up.

I’m at a crossroads and weighing three options:

1. Sell the condo, use the equity to pay off our current home and credit cards, and start fresh.
2. Switch to a long-term rental, manage it myself to increase cash flow, and eventually use the equity to purchase a second investment property.
3. Keep it as a short-term rental, but pull out equity to pay off our current debts.

My long-term goal is to transition out of the medical field and into real estate investing full-time, but I’m unsure which path to take next. I’m open to advice and would love to hear what others might do in this situation.

[Matt Jones]

Hi @Dolores Holtmann
The silver lining is that Pensacola Beach has appreciated really well since 2019, so you likely have some solid equity to work with no matter which path you take.

A few quick thoughts on the three options you’re considering:

1. Selling the condo – This could be a smart move, especially if it’s currently causing financial strain and you’re looking to reset. With the appreciation we’ve seen, you should walk away with good equity, and even in a slower overall market, beach condos are holding their value fairly well.

2. Switching to a long-term rental and managing it yourself – This option might offer more predictable income and lower vacancy, but long-term rental rates on the beach typically don’t come close to covering the same expenses that a short-term rental can—even after factoring in management fees. That said, if you’re open to self-managing a short-term rental, that’s where you’d likely see the biggest financial improvement. Self-management can boost your net income quite a bit, especially with a strong local cleaner and handyman on your team. It’s definitely more hands-on, but might be worth considering given your long-term goal of working in real estate.

3. Pulling out equity to cover other debts – This could create more breathing room now, but it also raises your monthly expenses and may worsen the cash flow situation if the rental income doesn’t increase. It could also limit your flexibility with the property in the future.

I'm based in Pensacola and work regularly on Pensacola Beach, both in real estate sales and property management. I also own and self-manage a short-term rental out there, so I’m familiar with the unique challenges and opportunities the area presents. If you ever want a rough idea of your condo’s current market value or potential long-term rental income, feel free to message me—happy to help however I can.