Panama City Beach Airbnb!

Real Estate Deal Analysis & Advice
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Panama City Beach Airbnb!

Maggie Medal
Flipper/Rehabber · Panama City Beach, FL · Member since 2016 · 28 posts · 11 votes

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $200,000
Cash invested: $20,000

Buy and hold east end of PCB, self managing short term vacation rentals year round

What made you interested in investing in this type of deal?

We were looking for a beach house near family that we could also get some personal use out of.

How did you find this deal and how did you negotiate it?

MLS used a buyer agent and paid full market price

How did you finance this deal?

Coventional loan with 10% down

How did you add value to the deal?

We didn't really! Weren't yet educated ;-)

What was the outcome?

We are happy with the deal, short term rentals on Airbnb exclusively have been easy to manage, and inquiries year round. Good cash flow at avg $500/mo after all expenses.

Lessons learned? Challenges?

This deal was heavily influenced by personal taste (we would also be living here sometimes) and short term rental needs (had to be furnished, and upgraded) We also hadn't done a ton of REal Estate investing education at that point!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes @bradamerson from Beachy Beach real estate :-)

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January Johnson
Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 487 votes
7y

@Marc Miller, my Airbnbs are not on PC Beach but are in Panama City - all are in St. Andrews.  When it's not "tourist season", I often rent my places to medical students who are here for rotations.  I have also had inquiries from travel nurses, but I have not yet rented to them.  I currently have hurricane refugees in all 3 of my places, and they are staying for multiple months each.  That's made this a nice, quiet rental "season" so far, ha ha.

@Maggie Medal, we should have a drink some time before you make the decision to get your license, ha ha!  :  )  

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  • January Johnson
    Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 487 votes
    7y

    Interesting that you only paid 10% down for what is, essentially, an investment property.  Maybe you have a different loan product that allows this, but most lenders require 20%+ down for investment properties.

    As an Airbnb owner in PC (and a Realtor), I advise you to have sufficient insurance that will cover your short-term rental. Not every insurance company insures these. However, if you change your insurance to cover your place as an STR, your mortgage holder will be notified and that could cause a problem with your loan if you did not disclose the intention of your purchase (to rent it out). So you likely either have to go without sufficient coverage or run the risk of having your loan called due. It might not happen, but these scenarios are both possible. Just letting you know to CYA, either way. : )

    PS:  I love Brad!  We did a deal to buy a house for my dad, and he was the listing agent.

    2Reply
  • Marc Miller
    Realtor · Panama City Beach, FL · Member since 2017 · 12 posts · 6 votes
    7y

    @January Johnson @Margaret Wallace Do you tend to have your Airbnbs rented constantly?

    My wife and bought a duplex on the east end last year and are considering Airbnb for one side, but I don't know what I should use for a vacancy rate. Any help is greatly appreciated!

    0Reply
  • Maggie Medal
    OP
    Flipper/Rehabber · Panama City Beach, FL · Member since 2016 · 28 posts · 11 votes
    7y

    Hey @Marc Miller! Yes, we do tend to have our Airbnb rented consistently throughout the year.  We use a dynamic pricing tool called Wheelhouse to price each nightly rate to be competitive throughout the year. Its costs 1% of each booking so this is worth it to us since it is our only management fee :-) We have a housekeeper we pay per cleaning, and we do the maintenance/landscape when needed. I'd be happy to meetup and share our experience along with our income! We are also on the east end near St Andrews :-)

    Do you currently rent the second side of your duplex longterm? 

    1Reply
  • Maggie Medal
    OP
    Flipper/Rehabber · Panama City Beach, FL · Member since 2016 · 28 posts · 11 votes
    7y

    Hey @January Johnson! Thanks for the feedback! Would love to connect with you sometime, I'm thinking about getting my real estate license :-)

    1Reply
  • January Johnson
    Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 487 votes
    7y

    @Marc Miller, my Airbnbs are not on PC Beach but are in Panama City - all are in St. Andrews.  When it's not "tourist season", I often rent my places to medical students who are here for rotations.  I have also had inquiries from travel nurses, but I have not yet rented to them.  I currently have hurricane refugees in all 3 of my places, and they are staying for multiple months each.  That's made this a nice, quiet rental "season" so far, ha ha.

    @Maggie Medal, we should have a drink some time before you make the decision to get your license, ha ha!  :  )  

    2Reply
  • Douglas Knupp
    Member since 2019 · 2 posts · 2 votes
    7y

    @January Johnson I am curious if you do AirBNB and actually reside in the home as your primary residence, if the bank would call in the loan should they find out you are using it for AirBNB?

    0Reply
  • January Johnson
    Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 487 votes
    7y

    @Douglas Knupp, if you live there and Airbnb it, that is your business, and the bank shouldn't be interested either way. If you buy a home as a primary residence and then state that you will use it as such (there's a form you sign at closing) but then DO NOT live in it but instead rent it out as an STR or LTR, then you are, essentially, committing fraud, and the bank would be VERY interested in that.

    The way people get caught is when they change their insurance coverage to reflect that the property is a rental (which you SHOULD DO, by the way, or else a LOT of potential issues will NOT be covered).  The bank is then notified of the change in insurance, which may arouse their suspicion, and they could call your note due because of this.

    1Reply
  • Marc Miller
    Realtor · Panama City Beach, FL · Member since 2017 · 12 posts · 6 votes
    7y

    @Margaret Wallace I would love to meet up and hear about some of your experiences.

    Currently, we are renting the other side of our duplex long term. The tenant we inherited has lived in the unit for over 20 years! So it would be extremely hard to tell her that she can no longer stay there, but I think it would be really nice to have a place where family could come and stay if I decide to rent the unit out as an Airbnb.

    1Reply
  • Maggie Medal
    OP
    Flipper/Rehabber · Panama City Beach, FL · Member since 2016 · 28 posts · 11 votes
    7y

    @Marc Miller Wow that is a serious longterm renter! Tough choice, here are our numbers to help you out. You can see our listing on Airbnb here https://www.airbnb.com/rooms/19808699?s=51 It is a 2bd/2ba house about 1,000 sqft with fenced in yard. 2 blocks to the beach. We do allow pets, and most of our renters bring them. We haven't had any major problems with this, and can command a little higher nightly rate because not many places on Airbnb in PCB allow pets. 

    In 2018 the house was available for 8 of 12 months (Feb/March was blocked when we stayed there, and Nov/Dec was blocked after the storm for repairs) Net income for 2018 averaged over 12 months was $1465/month. 

    This is BEFORE the mortgage payment of around $1000/mo. But this is AFTER any rental related expenses for the year including all utilities at $3721 (water, electric, trash, cable), cleaning services at $4730, supplies at about $1000, and our only management fee (the dynamic pricing tool Wheelhouse) at about $200 for the year. 

    So after all carrying costs including PITI (the mortgage payment) our average net per month was about $500. Hope that helps!

    How big is your 2nd unit and how far from the beach? 

    1Reply
  • Robert S.
    Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
    7y

    @January Johnson @Douglas Knupp A home like this can be purchased with 10% down using a mortgage product that is geared for clients who wish to buy a second (read vacation) home, provided their income can substantiate the purchase. As long as the buyer doesn’t sign anything stating that they will not rent it out, no fraud has been committed.

    1Reply
  • January Johnson
    Real Estate Agent · Emerald Coast, FL · Member since 2016 · 820 posts · 487 votes
    7y

    @Robert S. - Yes, but this thread is about PCB Airbnbs, STRs, so....  ;  )

    And if the buyer signed something that said they intend to live in the home, then that would likely be considered fraudulent, no?

    Also, the insurance issue, as I stated earlier. If you don't have enough coverage and something happens, you're screwed. If you change your coverage and that alerts the mortgage holder that you ARE renting it out as an STR, then you're screwed.

    I try to operate honestly and transparently, so I do not advocate hiding or misrepresenting your intentions.

    0Reply
  • Robert S.
    Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
    7y

    @January Johnson @Maggie Medal If the home is bought using a mortgage for a second home, it clearly cannot be a primary residence. When purchasing a property in this fashion, there a few things to take into consideration insurance wise. Purchase loss of rent insurance, it is a cheap add on to your policy and comes in extremely handy. Also, make sure you have proper property damage insurance and mold remediation insurance, also a cheap add on. I recently suffered a burst pipe in my beach property, approx. $70k of damage including mold remediation. Insurance covered everything, and paid my rent for the lost rental season. The only downside was having to float the construction cost (write a check for approx. $10k- 20k every couple of weeks) to keep the contractors moving forward while waiting for the insurance checks to come in.

    2Reply
  • Marc Miller
    Realtor · Panama City Beach, FL · Member since 2017 · 12 posts · 6 votes
    7y

    @Maggie Medal I love how beachy your rental look! 

    And my second unit is 1bd/1ba with 600 sqft. We are about a ten minute walk to the beach. I've seen a few other 1bedroom places renting for about 100 dollars a night. Does that price drop in the winter at all? 

    0Reply
  • Lewis Anderson
    Real Estate Agent · Tampa Fl · Member since 2017 · 176 posts · 16 votes
    6y


    @January Johnson The reason why they got the home at %10 down was because they probably said that it was a vacation home which allows you to pay only %10 you still have to pay for PMI and other stuff but that is minor.

    0Reply
  • Christina Papazian
    New to Real Estate · San Diego, CA · Member since 2020 · 7 posts · 2 votes
    5y

    @Maggie Medal I just came upon this thread, as I'm looking at possibly buying a STR in the PCB area (deciding btw that and Orlando). Your place is adorable! I love the blue walls. I was just wondering how it's going now, post-lockdown. Are you still netting about $500 a month or has that gone up? I've heard most places are seeing an increase in nightly rates and occupancy as well. Thanks!

    0Reply
  • Alexander Ferrer tortorelli
    Specialist · Fort Worth · Member since 2017 · 27 posts · 9 votes
    5y

    @Christina Papazian any luck finding STR over PCB? I'm also starting to look over STR. Please keep us updated . Thank you

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