STR beach property - Panhandle of Florida - any Feedback?

Question

All - does anybody have any real time data/feedback on deals getting done in this market? We have been sitting idle waiting for a vacation rental to pop up - but they all seem to be either flirting with breakeven or netting something like $30k on a $2m property with 20% down after debt service. We are honed in on the gulf coast of florida (panhandle area) thank you!

Joshua Strickland · Answer

@Phillip B. Your numbers look right. I self manage to keep the 20-25% management fee. I haven’t owned mine for a full year yet, but have a 3/3 new construction condo in PCB that will do $80-85k/ year. Debt service just under $3k/ month plus $600/ month HOA. $10-$12k in other expenses. Leaves me with a net of around $25-30k or about 30-35% depending on a few factors. Paid $618k, but now those are going for $800+ in my building.

Long story short, you can still make a great return if you self manage. Using a property manager you will have less headaches(day to day at least) but still can turn a smaller profit.

Kenneth Garrett · Answer

@Phillip B.

I have a STR in Miramar Beach.  I bought last year.  The market is very competitive.  My STR is a 3/2 single family home two blocks from the beach in a gated community.  It cash flows great.  The buy numbers are very crazy.  I’m trying to buy another when the right opportunity comes my way.  I’m glad your running numbers.  If your numbers include paying a management company, I would urge you to self manage, It doesn’t take that much time.  Provided you have a good cleaning company and reliable handyman, it will be worth your time.

Kenneth Garrett · Answer

@Phillip B.

I think your revenue numbers are pretty accurate.  It’s your expenses you need to watch.  If I had hired a property manager, my cash on cash return and profit would have been reduced dramatically.  Nothing against property managers, but I feel the amount of time to manage a STR or a few STR’s is not as high as people make it out.  I self manage my LTR’s as well.  I just believe the amount of time and or stress is exaggerated.  Nothing teaches you better to manage then by doing it yourself.  If you find your not cut out for it then by all means hire a manager.

Phillip B. · Answer

Thank you for the feedback - I think you nailed it there, as most seem to be playing the appreciation - thanks

Phillip B. · Answer

Michael - yes. Numbers wise I’m seeing the best deals (best deals on zillow that is - I don’t talk to anybody that is closing deals off market, etc) net around that after all expenses, and a lot that do less (unless you are putting more down). Example - purchase price $2m, net around $20k after debt service. gross rent - 200k

Management 50k

Taxes/insurance/utilities 30k

Debt service 100k

Net 20k those are obviously rough numbers but in the ball Park - and I’m making assumptions based on projections I’m putting into a spreadsheet - I have not pulled the trigger on anything

A good example is this one that just hit my inbox for sale

41 Mello Way miramar beach, FL

Ask $1.75M

Listing says rent projections are 180k

house is listed at $586/sq ft asking price. Side note - is anybody constructing new? It seems like you could build something like this for under $400/ft including land + soft cost

Michael King · Answer

What is a good calculator for STR? @Kenneth Garrett I note your numbers and accept them as a good starting point for me. I live in the panhandle and looking for a place close to the beach in Destin/Panama City. I have a few LTRs in Missouri and have a good understanding of the numbers needed...but an STR is a little different with respect to variables such as vacancies and cleaning. I'd love to hear guidance on this topic.

When you mention 10-15% net after debt service, are you also referring to property tax, HOA fees and insurance?

Phillip B. · Answer

Thank you for the feedback Ken. We’ve looked in that area as well - headed down there a few months ago to look at a property listed the night before. Listing agent called and told us to turn around unless we could beat a full price cash offer. We turned around.

Are you seeing roughly 100k gross rental income per $1m purchase price? And net (before debt service) of around 65-70%? And net after debt service of around 10-15%?

STR beach property - Panhandle of Florida - any Feedback?

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