All Forum Posts by: Villy Ellinger

@Dev Paul I don't know about Myrtle Beach so will not offer any options. As for Destin area: 

* Yes, your budget is viable. I would suggest look at Fort Walton Beach or PCB. Miramar Beach will also have some option. Technically you will not be ON the beach there but across the street, but still ok with good views.

* Yes, non-warrantable condos will be the bulk of what is in your budget. Nothing wrong with that as long as you find the local lender. Also, some properties may not qualify for 20% down and may need 30% down. Also you may need to get a portfolio loan or some type of ARM product that mimic as fixed.

* Yes, I agree with above comments that management is key. Large companies are focused on their own profits through "multiple streams of revenue", i.e. nickle and diming owners and charging all types of fees to guests. Get some good local-owned management options. Also, don't overfocus on "rental history" but rather rental potential for the property. Low rental history can often be the result of poor property upkeep or poor rental management. Usually people who sell are not "killing it" in cash flow. That does not mean the property cannot be very successful for you.

I hope you find a great option for you. Good luck and keep us posted on hopefully a very successful deal!

Hi, @Justin Manges! I'm in Fort Walton Beach/Okaloosa Island (10 miles west of Destin). I agree with @Matt "Roar" Gardner with some small philosophical divergence on "small properties". I too am a Realtor, vacation rental owner/investor and vacation rental manager. I usually see occupancy rates between 70% to 85%. That said, I have seen properties in the same complexes as mine do way lower (and some do better). Depends on the property condition, correct pricing (I agree that sometimes a bit of vacancy is ok if you maximize revenue potential through pricing), advertising, management, customer/guest experience, ect.

As for "small units", in particular studios: I love them as far as cash on cash return potential, "profit per square foot" and versatility. Yes, they are labor intensive, but I have not found them to be "a dime a dozen", at least not on Okaloosa Island. In Destin and Miramar Beach too small units are seeing a huger run-up in pricing per sq ft because demand for them in very strong based on their relative affordability vs income potential. If anything, there is an abundance of 2 bed/ 2 bath units that sleep 6 to 8, and 3/3s that sleep up to 12 sometimes. While these are very popular with larger families, there is a shortage of rentals in the summer especially that allow for less than full week rental and are in the budget of couples traveling.  Studios prices under $200K often gross $30K+ per year. I agree that lager 5/5s or higher vacation houses in Destin are great and have exceptional rental potential, but not everyone can afford a million $$ investment property, and those don't necessarily always cash flow any way :-).

For budgeting purposes and to estimate investment returns I usually use 70% occupancy. Please note that is not a flat % across the year. Total vacancy in November/December will not kill you. I budget for 20-30% in those months. 70% occupancy in June/July is actually very low. Unless there is a major issue/hurricane/etc, June and July should be at 100%!!! Those are the months with highest prices too.

@Andre M. I own and also manage vacation rentals in Fort Walton Beach (near Destin). I agree with several of the above posts that winter guests should be a steady and reliable way to COVER monthly expenses. If you are not covering expenses, you should review pricing and see what other comparable properties are charging. A few years back I had to take over managing three units from another management company. I had a similar situation with established snow birds renting Dec 15 to March 31 for a price that had not been adjusted for over 5 years. Do not be scared to politely but firmly renegotiate with these established guests to terms that fit your business plan: raise price to where you cover expenses and require that they either rent from Dec 1 or from Jan 2. Also, conclude any snow bird pricing by the end of the second week of March. If they want to stay the last two weeks of March, they need to pay regular spring prices. The reason for requiring Dec 1 rather than Dec 15, is to cover the customary vacancy in early December. If they will be taking over the Christmas holiday, then they need to compensate by also paying for the earlier part of the month. Also, if you can avoid it, try not to allow snow birds to book February without booking January too. Yes, you may lose some established snow birds by changing terms and prices, but if you are losing money you are better off without them. There are many other who would take their place. There is also a severe shortage of weekly rentals in the winter, since most condos require full month rentals then. So sometimes, being the one property that books two separate weeks in January can bring you about the same revenue as a full monthly snow bird rent AND will give  you some down time for repairs.

@Trent Hardy great choice in picking Fort Walton Beach! (I'm very partial to the area, lol.) I live in Fort Walton. I own 3 vacation rentals here and manage vacation rentals for others as well. I own a boutique vacation rental management company. I also sell real estate here. If you have any questions about the area, etc. feel free to sent me a message.

@Matt "Roar" Gardner OMG, Amen brother!!! I could not agree more with you! Vacation rentals are 50% location and 50% hospitality experience. People should research the management company as much or more as they research the property. If you hire a huge company where they cookie-cutter price and manage everything, put guests on hold for hours and up-charge everything (including cleaning fees and  parking) by 30 or more % and the guest sees a number that is waaay higher than what the owner will receive, then.... yes, rental potential will be low and properties will have forced vacancies. Pirates Bay studios are grossing close to $30K, but some huge management company will tell you that Azure or Blu would gross $60K? Come on! Jetty East on Holiday Isle keeps a monopoly on managing "in house", so all units regardless of how updated, etc are priced about the same and rotated like a hotel. Nobody makes money there, lol.

@Nancy Bender So excited for you that you're considering a vacation rental! I am super partial, lol, so will stick to what I know. I'm in Fort Walton Beach/Destin, FL. I live here, own here, sell here and manage vacation rentals here. I like it because: this area is one of he few beaches that people from the southern and mid-western states can drive to. For a family of four or more flying can be unaffordable. Prices here are not low, but are still more accessible than other beach areas like Hawaii or California or other areas of Florida. I find it a bit odd comparing the Smokey Mountains to the Gulf Coast, lol. I'm sure the Smokey Mountains are a great area to invest. But... if you like the beach, well... It's like trying to decide between cake or steak, lol... Two completely different items.

Yes, you can find investments with good returns here, but you have to do some more in depth research. Yes, come down to the area (same applies to any other areas like Tennessee). Drive around with a knowledgeable agent or property manager, see some properties you like and some you don't, keep an open mind, crunch some numbers, sleep on it, get away from the cliches, etc. Sometimes the properties with the highest ROIs are more unassuming, not "right" on the beach, but a the right price, the right marketing strategy and a targeted clientele, can produce great returns. 

My two cents :-)

@Nathan Gesner I'm in Fort Walton Beach, FL :-). I live here, own three vacation rentals here, manage seven others and also sell real estate. So, yes, I'm super partial. I do want to point out a very important benefit of the area here: It is one of the few beach areas that are within driving distance for many visitors from the Southern and Midwestern states. It is in a real estate market that is not only driven by vacationers but also by military buyers/visitors. We survived the Covid-related vacancies better than some other areas. Hurricanes are a issue and yes, there a many other areas of Florida to consider, but prices here are in the more reasonable range.

I like living here and there is an airport too :-)

@Tony Blaine
The system won't let me post names and contacts in the forum messages, so I sent you a private message with some contacts for local lenders. Please make sure to let them know I referred them. I don't get anything for it, just good will :-).

@Tom Herzog first off, I totally agree with @Avery Carl . I'm on the Panhandle of Florida, so definitely not Orlando, but... my two cents... Will there be deals somewhat related to Covid-19 slow down? Yes. But I would not wait or try to time the market in you find a deal. As with all investments, once the news is out then it's too late. If you are interested in the Orlando area and you believe it has good potential and you also want it as a vacation home for yourself, then pick out exactly the area that you want and start watching for deals there. Covid-19 may contribute to some more deals, but also deals come up independently of that. I would suggest you get yourself pre-qualified (if you will be using a loan) and keep a close watch on the listings in the area for a deal. That way you can pounce  right up if something comes up. Also, the best deals will probably come up before the tourists start coming back. As soon as news of tourists returning to the parks hist, the "futures" pricing of properties will increase. So the best pricing deals might involve being prepared to take a bit of vacancy up front. That actually will work out great if you also pick a fixer-upper deal which may need some time to remodel. If you get it in the complex and location that you need (the things that really matter, because you cannot change location), you can use the down time until tourism resumes to get your new investment in best rental shape. Good luck! Keep us posted!

@Robert M. since the end game is getting rentals and rent $$ I would list and start getting bookings for the future dates that you have open. The ratings will come as you get review and as you accept reservations. You can't get money, ratings or reviews if you're not actually out there on the market. So, my advise would be: don't try to "time the market". If your rental is ready for bookings, go out there and get them. Good luck!