All Forum Posts by: Villy Ellinger

She is very good and knowledgeable in many areas, but is located in TN and does not specialize in STRs. I still use her because of some 1031 activity with some prior investments I had in TN. It is much easier for continuity purposes. However, I would prefer CPA here in FL who has more clients who deal with STRs. There are some points with asset/expense classifications, depreciation, etc that are somewhat subjective and different from regular rentals. If you have a choice I would definitely select a CPA with STR experience.

@Bethany James I realize I'm not really answering your question (I apologize, lol), but I use OwnerRez and I really like it. Not sure how many properties you have, but might be something to check out.

@Heather Whittaker I feel your pain! I have four STRs in FL (Fort Walton Beach) and up unit last year I used to manage 10 others. I don't manage for other people any more. I was stuck in that space where buying an accounting suite specific to STR was not cost-effective, so I used QuickBooks Pro and modified. I still do that for managing my personal rentals. Quickbooks is for day to day book-keeping. I don't know how many units you have, so I can tell what will be right for you. But for me, even if I buy a separate QB account for each of my properties, it's still cheaper than paying a book-keeper who is reasonably qualified. As for hiring a CPA firm to do your on-going book keeping, I don't thing anyone but very large management companies do that because of cost. So back to possibly getting a book-keeper.... Most book-keepers are not trained or familiar with STR type accounting specifics. So you will have to train them. So you still have to learn it and understand it. If you have sufficient # of unit to where the cost of hiring a book-keeper is worth it, then yes, get one. But do monthly audits and make sure you have checks and balances and you understand the books.

As for taxes, I use a CPA. I present her with the information from my STRs in a format we have both agreed. I have worked with her for a long time and she has educated herself on STR tax rules (different from regular rentals and considered commercial activity in FL). Still, I'm not very happy with her and I am actively looking for a CPA that does more vacation rental work in FL.

Regardless of what you do and who you hire, you will need to be able to understand the book-keeping software and to at least be audit their work monthly. I do my own QB monthly accounting. QB is not specifically set up for STR but there are various ways to set it up to where it works very well.

Good luck. 

@Jack Mawer I agree that there are a number of excellent real estate agents on Bigger Pockets and many would be happy to assist. I do want to address something else you mentioned -- that your client is "having trouble finding an agent" here. There are a ton of agents on the Emerald Coast. Seriously. Most are very eager for business. That said, I personally have encountered several potential clients who had unrealistic expectations and unwillingness to change those. I'm not saying that's the case with your client. Your post does not have sufficient information. But ..... agents work really hard to do the best for their clients. Unfortunately when a client comes along looking for a short-term rental that will "be a rare market deal, turn-key and will cash-flow at 30% with full hands-off rental management" (I'm just giving you an example of what I've heard from a client before :-)), we agents can do very little than to try to explain and then gracefully back out :-). I would suggest that you advise your client to have an honest conversation with any agent she selects and listen carefully to their professional opinion. There are some very experience agents here on BiggerPockest. Most are also investors themselves. Sometimes when agents back out or stop responding or seem disinterested is because they feel the client's needs and expectations are difficult to achieve in the current market. I usually don't have a problem calling it like it is (I'm not super nice, lol, I'm a numbers person), but other agents are more discrete. Again, I don't know the particular situation, but I find it very odd when someone tells me they can't find an agent on the Panhandle, lol. Every third person here has a license, lol. I hope your client gets the best representation possible.

I agree with a lot of what has already been said about knowledge of the market, the lending conditions, etc. I definitely believe in "practice what you preach", so having experience owning and running STRs in the area is key. Clients often have questions about the details in order to determine if a property is a right fit for them. In addition, experience in financial analysis (ROI calculations, real estate financial analysis, etc and cap rate analysis) is very important. Real Estate agents are not allowed to give "Professional" investment advice, but understanding and being able to go through a explain the numbers is key. STR investments is very much about the numbers. Finally, some additional experience in the hospitality industry is also a great plus to go with the personal STR management experience. I've had clients who want to self manage have questions about software recommendations, analytics tools recommendations, etc. All of these things are not something that a real estate agent would usually know if they've never managed an STR :-).

The only time hotels are beating out vacation rentals here in Destin/Fort Walton Beach is when people are traveling in very small groups (1 or 2 people) and for just a night or two. For family travel and for longer stays, hotels are no longer the go-to. The only advantage hotels have is the no cleaning fee for very short stays. 

@Ross Gallo

Like some of the others who commented, I'm on the Florida Panhandle (Fort Walton/Okaloosa Island), so I can't speak specifically for your area. But generally speaking, the destinations that suffer the most are those that require flying, particularly international travel, etc. On the other hand, people who would otherwise go to Europe for their summer vacation, tend to drive to destinations closer to home during recessions. That means Destin/Fort Walton for many from the Southern states. Also, smaller units tend to do better because people are not as able to travel in large multi-generational groups for the bigger condos. Shorter trips are another way that people respond during recession. So some flexibility in that respect would help with bookings. During the Covid "closing" months in FL I booked monthly to travelling nurses and military. It's an option for the off-season and slower shoulder months if that sort of thing is available in your market. I do have to say that during the slower times/recession-like periods getting your rental to be 5-star rated is particularly important, so cleanliness, updates, upkeep, etc become more important. During times when demand surpasses supply of vacation rentals, guests might be more likely to overlook shortcomings. When money for vacation is tight people are going to look for deals, but they are also not going to be very understanding when those "deals" don't have good reviews :-). I have several vacation rentals and just bought a new townhouse to use as VR in May. I expect a slow down. I also expect that people who bought in the peak of the price increases and where hoping to cashflow with minimal personal involvement, might find out that the 20%+ mgmt fees of large management companies are eating all of their profits now. But if you self-manage or use a boutique mgmt company that tailors their marketing to each individual property, hopefully you'll do ok through the dip. Good luck!

@Michael B. I tend to agree with the advice about looking into a 1031 Exchange. While prices are currently very inflated, properties are starting to sit on the market and prices are "softening" already. With a 1031 you will be buying the exchange property or properties with CASH, so you will have very good leverage to get the best possible pricing. Condo financing is already tough and financing of properties that need some repairs is almost impossible. That puts a lot of buyers out of the investment game and gives cash buyers an advantage. I just bought a townhouse for cash and I got a good price for it. Needs new roof. No big deal, I'm getting that done now. I'm in Florida, BTW. I also currently have some clients selling their condos here and using the 1031 funds in a different market where they are buying land that they believe will be developed soon and will bring appreciation that way. Lots of options. 

I personally feel that the market is oversaturated with super-luxury or multimillion dollar properties at this time, at least here on the Florida Panhandle. Several smaller properties seems like a more versatile way to go. Someone mentioned the RV / small house development in Defuniak Springs, FL. I'm aware of that too. There are several other such developments being started aiming at affordable housing (very, very needed here on the coast or we'll have no place where people who service the hotels, restaurants or vacation rentals to live). 

@Anshuman Vyas in you GOT to be in PCB, I would suggest the west end, Laguna, Riviera, Sunnyside. That area is less hectic that the Pier Park area and is also very close to 30A, which is a very desirable feature. Everything is PCB (and everywhere on the Panhandle) is overpriced. But if you are trying to cashflow, then townhouses and single family homes will do better generally if managed ok. Also, if you are at all ok doing some remodels, you will get a better deal. If you are financing, 10% down is no longer going to get you anything. Those offers are just being ignored. Cash is king. But... you can still finance. Appraisal gaps (which result in the buyer paying more cash than planned) are generally expected. But with interest rates going up, appraisal gaps expectation will get less as some buyers scare away from the market (because of higher rates). 

If PCB is not a must for you, I would suggest that you look into Okaloosa Island/Fort Walton Beach, Fl. Prices are high here too as is demand. The area is smaller, so inventory is smaller too... but... check it out. Ok, I'm being subjective. All of my personal investments are here. As a Realtor I sell all along the Panhandle. But as an investor, I buy in Fort Walton Beach :-). 

Good luch!

@Salvatore DiGiacomo

I don't know much about the Outer Banks, but... Gulf Coast is where I'm at. I'm a real estate agent, but I consider my primary occupation an investor. My properties are all STRs that I manage myself. I think the area here is great for that. As @Ricardo Hidalgo mentioned above, I totally agree that the west end of PCB/Laguna Beach/Sunnyside/Riviera is a hot area to look into. You gets best of PCB and 30A.

Since a lot of the commenters here are also agents, and we agents tent to me kinda salesy, lol.... I'm gonna give you some contrarian honesty.... The market here is very expensive currently and very competitive. If you are looking to finance and not paying all cash.... prepare for appraisal gaps, numerous disappointments, etc. Last week I put in an all cash offer ($10K over ask), 20 day close and only a 10 day inspection period and I did not get it. There were a bunch of other offers and I got "killed", lol. Not the first time. I have buyer clients that have been making offers for months (good offers). Also, with the prices so high and getting higher, cash on cash returns are getting slimmer. That does not mean that investing here is a bad idea. It just mean it may take a bit for returns to get to where you want them. On the other hand, properties that are on or reasonably near the beach are very limited. There is really no space to expand that much more, because the coastline is limited. Yes, interest rates are getting higher, and so prices may correct some. That said, as prices begin to correct, listing inventory may shrink. The reason many sellers are now listing their properties on the market is because they can get great price. If the high price lure goes away, people who own by the beach will probably decide to stay put.

To another comment above (I'm not trying to be contrary, just feel that the forums here benefit from different perspectives): yes, there are plenty of condos and townhouses in the $500K range. There are also plenty of buyers looking in that range. So if it is at all desirable, prepare to fight for it :-). Good luck!!!