Newbie in Naples, FL needs help analyzing a 2/1 villa

3 Replies

Hello all,

I've been researching real estate for several months and have been reading as much as I can about how to do an analysis of properties. My realtor just sent me a listing for a 2/1 Villa in the East Naples area for $149,900. It has an HOA of $325 but that covers landscaping, pest control, water, irrigation, insurance, sewer, street maintenance and trash removal. The place won't need any renovation and the buyers are willing to include all the furniture.

I'm struggling with calculating the rental income. This area is predominately seasonal rentals (Jan-April). I think I can get $2500/month during the season and maybe $1200/month off season (at least based on my research). What I don't know how to do is calculate the vacancy. This is my first investment property and I'm not familiar with seasonal rentals and how to go about doing them. I downloaded @J. Scott SFH analysis spreadsheet and filled out the numbers and the cash flow was positive (I summed all the rents and divided by 12 to get an average rent of $1500).

Any other Naples based investors that can help me understand the vacancy rate for a seasonal/non-seasonal property?

Thanks for your help!

Would you be managing it yourself?  If not, you should include management fees.  And there are usually larger fees when tenants move out and move in, and screening tenants, etc.

I know nothing about Naples, FL, or renting in the vacation market, so take what I say with a grain of salt.

But, what if you rented to a local year-round for $1200 on a one-year lease.  See if those numbers work out better for you, once you factor in not having the extra vacancy issues and management fees.

From a manager's perspective, from CA, you can expect a month's vacancy every time someone moves out.  Of course, this was not in a vacation home market.  But, let's say you find a vacation renter to stay the entire time from Jan - April.  I don't know if you were talking about someone staying that entire time, with no vacancies in-between, but let's look at that.

So, 4 months x $2500 = $10,000.  

Then,  a month empty while you look for an off-season renter, and a month empty when the off-season renter moves out, before your full-season renter moves in.  Just estimating here.  So, 2 months empty.

Then, that leaves 6 months at $1200 = $7200

Total for the year $17200

But, what did it cost you in management fees?  Costs to clean and repaint, etc., in-between guests?

Or, 12 months to a local at $1200 = $14, 400 and (in theory) no vacancies or clean up costs or additional management fees, etc., until they move out.  AND, they may stay beyond that first year, and you can increase the rent a bit and not have any vacancies or additional management fees or cleaning, painting, etc.  - if they stay beyond year one.

Plus, it's much more possible you can manage the year-long lease yourself from afar, if that's your situation.

I'm just wondering if cleaning, and management fees, etc., wouldn't eat up the $2800 difference.

Also, are there different taxes that must be paid for short-term vacation rentals?  I'd heard somewhere that there were.  If that's the case, then you've also got bookkeeping to do and collecting of taxes, and paying the state, etc.  Not sure if this is an issue.

And there will be locals who need housing year-round, no doubt.  Just food for thought.

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@Rich Homer

 Thanks Rich I'll keep that in mind!  The numbers didn't work out with this deal so I didn't move forward.