All Forum Posts by: Villy Ellinger

@Ale Rioja if you are looking for a traditional house-hack approach, then you're looking at multi-family (duplex, triplex, etc). Condo that allow STRs here on the Emerald Coast are harder to finance and also not as flexible (think HOA rules, when it comes to just renting out a room). It's not impossible, but it's doable. Destin has very slim pickings in multi-family and they will most likely be in residential areas that do not allow STRs. Fort Walton Beach does have some multi-family units that come up. Those are very popular with investors, so prepare for multiple-offers. Also, some remodel will be needed. Depending on proximity to the beach and whether the non-owner occupied units can be used for STRs or need long-term rentals, that would drive pricing for the property.

I don't know what your budget it. But... Miramar and 30A rarely have multi-units for sale. Again, budget is the key.

Thinking outside the box a bit.... unlike Destin where the city does not allow short-term rentals in most of the residential areas, Fort Walton Beach and Navarre do not have that restriction. One suggestion for a househack would be to buy a regular home (or one with a mother-in-law unit) and rent out a room or two. In the summer as Airbnb (lower price than traditional condos, but still $$ in your pocket) and in the winter months do 1-2 month rentals of the same room to traveling nurses or to military moving and waiting for housing (lots of that here with several military bases). 

If you live in the home obviously you will get the most favorable financing terms as well. 

@Dennis Cobos I think PCB is probably the best option on the Panhandle right now. New lending rules coming up for second homes starting April 1, so a bit of an investor rush going on right now. But still there are options. Check out Gulf Highlands in PCT. A new listing actually came on today. Those are townhouses, not condos, so the financing is easier and the 10% down still works. The complex has great amenities. Also in PCB there are several other townhouse and single family home types listed that might be good options. Condos (if you wanna go through the financing ordeal) are still priced more reasonably in PCB because the inventory is more. So if you MUST have ocean view, PCB would be the lowest per sq ft right now. 

Check out Sunnyside and Laguna Beach. Very close to 30A. Not cheap (but cheaper than 30A), but I (subjectively as a "yoga on the beach girl" and also as an investor really like the area.

Good luck!

@Ethan M. Uhm....I wouldn't buy anything you're not sure you want to buy for what it is today. We don't know for sure about tomorrow. If someone could predict with certainty how rents will go 100%, that person would be very rich by now :-). Also, I want their number, lol.

Prices are high now and cashflow is hard to spot immediately. What I'm seeing out in the market is investors confusing "rental history" with "rental potential". I work with STRs. So... lets say you have a property that has rental history of $30K for last year and is now listed for sale. An investor comes in, looks at the prices, crunches some numbers, plugs in the $30K rental history and declares lack of cash flow :-). Perhaps he or she is correct. But... what I would suggest is doing some research on similar properties that are NOT for sale and are successful/popular STRs and seeing what they are currently bringing in annual rent. Maybe they are doing $50K or more, which does create cash flow. That's probably why they are not being listed for sale. Maybe the one with the $30K rental history had a bad manager, or brown carpet in the bathroom, or a cockroach colony, lol. Maybe fixing those items would immediately provide higher rental potential (not in five years). On the other had, it the guy whose property is doing $50K decided to sell how, he/she would build in "price premium" for the fact their property is doing so much rent, which would actually diminish the cash flow potential for the next buyer. That's just a very wordy way to say that underappreciated properties do not show cashflow but can. 

@Steve Puglisi I self-manage. If you can, you should consider it. As several others already said that is the best way to cashflow. However... I do understand that some people are too busy to self-manage and need to hire a manager. If you need to do that, I agree with those who said "beware of 10% STR managers". Unless you have a multimillion dollar property that rakes in $200K+ in gross annual rent, 10% provides very little to the mgmt company, so it's not worth their effort to try very hard OR what they do provide is a limited service with you still having to be very involve. One such example is Evolve (I'm not a fan!!!)

If you hire a manager, do your research, etc and pick a good one, they will select how to market your property and hopefully will be very successful at it.

If you decide to self-manage (again I strongly recommend!), here is my experience: I currently use VRBO, Airbnb and my own website for direct bookings. I use OwnerRez for my property management software and it does interphase with all sorts of platforms. There are other programs too. They all have API capabilities with most listing sites. I have tried Booking.com, TripAdviser, Flipkey and a few others. What I found out is that the 80/20 rule heavily applies. In other words, even if you list on 100 sites, most of your bookings will come from just a few sites. In your area those might be different from mine (I'm on the Panhandle of FL). The other sites basically just create confusion and "noise" and cannibalize bookings that you would have gotten anyway through your main sites. I don't find it helpful to waste my time tracking a bunch of listing sites. I didn't like Booking.com and they had awful customer service for property owners. (Personal opinion). TripAdvisor charged huge fees to the guests which artificially inflated the prices. I would get one or two bookings per year from there. I would have gotten those times booked anyway on VRBO or Airbnb.

Good luck!!! Hope it all works great for you! 

@Paul S. I'm like you and prefer to be cautious even if it costs me a few bookings. Big difference is that my STRs are condos in busy tourist complexes. So for you it seems even more important to have some sort of screening mechanism. I personally only use the instant book feature for my studios, not for the larger property. Also, I use OwnerRez software interphase with the booking platforms AND I require for each reservation the main guest (the one whose name is on the booking) to sign a rental agreement. It is 4 pages long prepared by a lawyer. They sign it electronically. It is very easy to send automatically through OwnerRez or whatever platform you use. When they sign it you get their contact info with email even if they booked through Airbnb. My house rules state that renters will be required to sign the agreement. Whether they actually read it or not (most don't) the idea that they signed it makes them more conscientious of your rules and lets them know that you have some legal recourse if needed.

I do have minimum age and occupancy limit. 21 for the studios and 25 for the large condo for the main guest. Do people lie sometimes? Yes. But if you actually make them review some rules prior to booking they seem to be more careful. A few have refused to sign, so I refused to rent to them.

You can't do a background check on guests obviously, but with STRs they pre-pay, so at least you know you already have their money. Adding a damage deposit (that would apply also if they cause a noise complaint or other rule violations like partying, etc) adds a measure of security too. 

Good luck! I hope all works out. Most guest who would book a quiet property are there to relax not cook meth, lol, but yes, I see your concern :-). 

Actually PCB is probably one of the few areas right now on the Gulf Coast where you can find a cash flowing deal. I agree that STR will be your best bet there. Also, you'll have a much better cashflow potential if you self manage.

What I like at PCB is that there is more inventory still then the rest of the Emerald Coast (I'm in Fort Walton and there is very little here now). I also would suggest that you look at town houses  (check out The Gulf Highlands complex)  and single family homes for STRs. Financing will be way easier than condos and the new financing rules for second homes don't kick in until April 1, so you got a few months. 

Also, you might want to consider Sunnyside and Laguna Beach on the west end of PCB. Location so close to 30A but at PCB prices is very attractive. 

As for your question on whether you should start making offers that work for you... Uhm... my personal opinion as a Realtor would be that you consider the market. If your offer has no chance of succeeding, maybe don't waste your time and the sellers. But if a lower offer might have a chance (# of DOM, some sort of flaw with the property, etc) or if your offer is all cash with super quick close, then go for it and see what happens. 

I'm personally also currently looking at PCB not just for clients but for myself too. Good luck! Just keep at it and something will pop up that you like. 

@Sheeva R. I agree with the above comment that Panama City Beach might still have some reasonable options on the Panhandle. My properties are in Fort Walton Beach/Okaloosa Island, which is my preferred area, but I'm looking in PCB now because prices have outpaced rental $$s in my area right now. Destin and Miramar might have options that would work if you are looking in the higher priced properties (beach houses over one or two million) and if you actually have a solid marketing plan for those. Otherwise, Destin/Miramar is probably hard to cashflow if purchased at today's prices.

@Britt Loukos I think this is awesome! My personal and professional opinion as both investor and Realtor is that Sunnyside is the place to look right now (also Laguna Beach and that whole area between Inlet Beach/30A and the west side of PCB). You will do awesome with this property this coming season!!! Congrats!

@Sheeva R. prices in Destin (also FWB, Miramar and 30A) are definitely way up and in many cases outpacing the rise in rental income from STRs. That said.... I agree with a few of the above comments that there are still some deals to be found. Airdna does not correctly capture all data. It also captures all the "duds" and you don't want to compare to the lowest common denominator. Also, reported rental history on listed units does not really represent the property's potential, but only the performance of the previous owner or manager. A lot of large/bulk management companies under-perform because they do not focus on the max potential of each property, just the overall revenue stream for the company.

If you find something that has potential you may actually be able to negotiate yourself a better purchase deal if the Airdna or the rental history is currently not reflecting the true property potential. See what other similar properties that are actually successful (i.e. not selling) are doing as far as rental numbers. You might still get yourself a deal.

Also, maybe check out PCB or Sunnyside/Laguna Beach (between 30A and PCB) for some pricing that is still a bit not as crazy. 

@Alisa Noll I think that you've done your analysis on conservative estimates is very smart. I always do that. If you can make this work as an investment for you at 13% cash on cash, that does not mean that you will not strive and likely hit 20% or more like others in the forum suggest. It does mean, however, that if a hurricane hits, or some major repair comes up and drives the return down temporarily, you will be able to weather it smoothly because you were prepared to be able to operate even at a lower CoC return.

To some comments above about putting your money in the stock market instead. Why "instead"? Do both. In my book investing in real estate is not a substitute for the stock market. I do both. I'm old school that way, lol, and still believe in diversifying assets :-).

Yes, STR is a lot of work, but it gives you a lot more control over your performance (especially if you self manage) than many other investment options. You cannot dictate the course of the companies or mutual funds that drive your stock portfolio. You also cannot very quickly pivot pricing, marketing etc for a long-term rental (heck, sometimes you can even evict non-paying tenants). But in vacation rentals you can make it whatever you want and can drive revenue a lot more dynamically. I love that about the business. If someone is looking for a very passive investment, then maybe STR is not for them. I personally love the business, the challenge, creativity, etc. That is my primary work now and I think it's so much better than sitting in a corporate office :-)