Rental Investment Questions

If you want straight talk about renting this is the place!

Just off the top of my head, I'm sure I will come up with more later:

1) EVERYBODY uses VRBO. So make sure you have a VRBO listing that works in conjunction with your rental company. You can have your rental company field the responses or you can field them yourself (usually for a discount on commission) but definitely do VRBO and use as many pictures as you can.

2) Don't get fancy with the furnishings. Make it easy care but comfortable and inviting. This takes some thought.

3) Renters expect wireless internet these days. And they all want a view and easy access to the beach. A great pool is a huge bonus.

4) Don't expect to come close to cash-flow while renting your property. View it as a way to help you pay your mortgage and be grateful that values are way down so you can get what you want.

5) You probably should just go ahead and get flat screen TVs.

6) There is a wide range of services offered by rental companies. Some will do everything for a higher commission, some will split duties with you. Duties include: communicating with potential renters, booking them and keeping the calendar, collecting rent, paying sales tax to the state, keeping the place clean, keeping it on a good maintenance schedule, replacing missing or broken items, general upkeep, fielding complaints.

7) I have had pretty good luck with fielding and booking my own renters. We also put some family photos in the house. I truly think as a result they think of it as someone's home and not just a rental. This makes a difference when it comes to wear and tear! IMO. But it is a lot of work. Would be hard if I had a full-time job, but I stay at home with my kids and while I am busy, I do have bits of time during the day to deal with this stuff.

Let me know when the time comes if you need a rental company recommendation, I have been very pleased with mine from both a housekeeping and maintenance standpoint.

Good luck!

P.S.:

If you are thinking of this as an "investment" then forget it. (though it may work out well in that regard.) If you are interested in "making memories" with your family now and later and reserving a spot at one of the most beautiful beaches in the world while you can afford it, it becomes not so unreasonable.

Also: Have a storm plan, and be sure to think through what you would do in the event of a total loss. Wind policies in Florida have a 2 percent hurricane deductible. Which means on an insured value of $500,000, you'd have to pay $10,000 out of pocket just to get started on the repairs.

I would suggest that you read through all the real estate discussions as over the years variations of your questions have been asked before. You are not the first starry-eyed visitor who came down to SoWal with money burning a hole in your pocket!

If you want straight talk about renting this is the place!

Just off the top of my head, I'm sure I will come up with more later:

1) EVERYBODY uses VRBO. So make sure you have a VRBO listing that works in conjunction with your rental company. You can have your rental company field the responses or you can field them yourself (usually for a discount on commission) but definitely do VRBO and use as many pictures as you can.

2) Don't get fancy with the furnishings. Make it easy care but comfortable and inviting. This takes some thought.

3) Renters expect wireless internet these days. And they all want a view and easy access to the beach. A great pool is a huge bonus.

4) Don't expect to come close to cash-flow while renting your property. View it as a way to help you pay your mortgage and be grateful that values are way down so you can get what you want.

5) You probably should just go ahead and get flat screen TVs.

6) There is a wide range of services offered by rental companies. Some will do everything for a higher commission, some will split duties with you. Duties include: communicating with potential renters, booking them and keeping the calendar, collecting rent, paying sales tax to the state, keeping the place clean, keeping it on a good maintenance schedule, replacing missing or broken items, general upkeep, fielding complaints.

7) I have had pretty good luck with fielding and booking my own renters. We also put some family photos in the house. I truly think as a result they think of it as someone's home and not just a rental. This makes a difference when it comes to wear and tear! IMO. But it is a lot of work. Would be hard if I had a full-time job, but I stay at home with my kids and while I am busy, I do have bits of time during the day to deal with this stuff.

Let me know when the time comes if you need a rental company recommendation, I have been very pleased with mine from both a housekeeping and maintenance standpoint.

Good luck!

Thanks so much for the response.. You have nailed a lot of issues that I was curious about. We would be using VRBO for sure. We have been finding our Vacations Rentals from there for years.
Also when I choose the word "Investment".. I'm not looking to become rich off this place lol Just mean in terms of for us to stop throwing away money and actually putting it into something we own and love. Last summer alone we spent over 8,000 dollars on just two visits there. And to think that could have been into a place of our own is just sickening. And I don't even want to add up everything over the past ten years lol

The tip about putting family photos into the place is very smart! I always wondered about that. Only one that we have rented in the past had personal photos.. and I actually thought it was a nice touch.

As for the Wireless Internet that is a MUST .. We are addicted really bad ourselves and I know others would appreciate the access to feed their addiction as well.

Our long term goal is to eventually move there. The two times we get to come and visit are like coming home. I've always thought the stork dropped me in the wrong part of the U.S.

Since SHELLY is oddly absent I'll go ahead and say it.

If you can't afford the property without renting it don't buy it. It's too much. Rentals are not guaranteed and if you can only afford the property by using it on shoulder months and must have renters from spring break through Labor Day plus a 3 month snow bird you're going to be in bankruptcy and/or foreclosure before you get to sweat the first hurricane.

As TFT said it's not going to cash flow and I wouldn't even count on breaking even. If you ask most owners who have rented for a long time (I mean 20+ years) they'll tell you that the whole point of renting beach homes came about as a way to supplement the maintenance costs, taxes, and general upkeep along with having someone to watch over your home.

Honestly anyone can "make it work" on paper, but again that's no guarantee. You don't know what next season will bring, it could be another 2004/05 style hurricane season. You might purchase a home that is just a black hole. I know a couple that built a beautiful home that was well appointed and had what I would consider a great location. The house just wouldn't rent for some reason.

Before any real estate agents get up in arms and decide to attack me, call me negative, or send me a nasty PM; keep in mind that you have ETHICAL OBLIGATIONS to your clients. Most of the Realtors on here are very ethical and honest, but there are a few that troll for the quick commission and don't care what happens tomorrow much less 6 months down the line. Feel free to PM me for a list of the ones I would use.

I would suggest that you read through all the real estate discussions as over the years variations of your questions have been asked before. You are not the first starry-eyed visitor who came down to SoWal with money burning a hole in your pocket!

Great advice Mermaid!! If I can be so bold as to offer a synopsis of all those posts it would be Dream on Dream of Fl. As Mermaid so succinctly put it, starry-eyed describes your ambition. I would describe it as well intentioned naivety or outright masochism. The bottom line is, a nice idea guaranteed to lose you more money than if you had just rented and left all the headaches to someone else.

Since SHELLY is oddly absent I'll go ahead and say it.

If you can't afford the property without renting it don't buy it. It's too much. Rentals are not guaranteed and if you can only afford the property by using it on shoulder months and must have renters from spring break through Labor Day plus a 3 month snow bird you're going to be in bankruptcy and/or foreclosure before you get to sweat the first hurricane.

As TFT said it's not going to cash flow and I wouldn't even count on breaking even. If you ask most owners who have rented for a long time (I mean 20+ years) they'll tell you that the whole point of renting beach homes came about as a way to supplement the maintenance costs, taxes, and general upkeep along with having someone to watch over your home.

Honestly anyone can "make it work" on paper, but again that's no guarantee. You don't know what next season will bring, it could be another 2004/05 style hurricane season. You might purchase a home that is just a black hole. I know a couple that built a beautiful home that was well appointed and had what I would consider a great location. The house just wouldn't rent for some reason.

Before any real estate agents get up in arms and decide to attack me, call me negative, or send me a nasty PM; keep in mind that you have ETHICAL OBLIGATIONS to your clients. Most of the Realtors on here are very ethical and honest, but there are a few that troll for the quick commission and don't care what happens tomorrow much less 6 months down the line. Feel free to PM me for a list of the ones I would use.

Great post. Distance from your primary home also should be a factor. Are you close enough to come down for the weekends to enjoy it? Do you have family close enough to enjoy it also? Do you envision retiring at the beach? If so it might be a good idea to buy, but think hard about the layout and the location before you do so.

Spending $8K in a year to be a renter may feel like a "waste," but I can tell you honestly from the other side that owners have very real expenses and even the peak rental period is not easy money. If you have the right personality for it, can afford the house without it and wish to spend most of your free time in SoWal, then go ahead.

The whole "investment" idea started when people saw values heading up quickly and thought it would last forever and/or never go down. Whoops. Best not to go there....

A few more tips, hints, suggestions -

1) Managing a rental is more work than you are probably currently anticipating.

2) Your personal belonging will receive a great deal of wear and tear.

3) Make sure you can afford the mortgage without a single dime of rental income before you leap.

4) Avoid a mortgage if possible, or save up as much as your can and put down a very large down payment.

5) Consider that you will most likely not want to stay in your home during peak rental periods. The market here is seasonal so if you stay in your place three weeks over the summer you'll be giving up critical rental income.

6) Avoid costly properties - nothing over 300-400K or you will be sinking thousands a year on your 'investment'.

7) Invest in a home that has long term cost savings built-in, or invest in cost saving measures once you buy. (dual flush toilets, tankless water heaters, florescent lighting, etc.)

8) Do the math so you know what you are getting into. There are commercial rental spread sheets available online that will help you figure out the real cost, over the life of your ownership. The numbers and return may surprise you.

9) Research rentals in the area for an extended period of time so you understand what people want in a rental. There are numerous rental agencies with online listings, rates, and rental calendars you can look at for detailed info.

I went through all of this last year and came to a simple conclusion - it wasn't what I thought it would be. I've since given up on the idea. I already live here though, so that's something you gain by buying that I didn't factor into my calculations. As a pure investment, I'd go with the stock market instead.

This may sound unusual coming from a Realtor, but renting is not "throwing money away." It is simply an expense for housing, whether it is vacation or primary home. Even home owners have that same expense -- it is also known as interest on the loan, or if you paid cash, it is the opportunity cost of the equity you have in the property. Renting and Owning, each have their +/- You mention the amount of money you spent over the last few years on renting, but you may have easily spent more by owning, and be upside down on your mortgage. So, maybe you actually saved money by renting. Owning is more of a lifestyle choice, a luxury, and a place to park money, than it is anything else. Just my $.02.

Is it possible that property values could increase over time? Absolutely. Can you get tax advantages by owning a rental property? Yes. Can buying a rental property prove to be an investment? Yes, but in my opinion, only if it makes business sense (being able to collect rents of at least 1% of purchase price, per month, every month, which ends up being a return of about 8% per year -- this is with you not paying a management company).

This may sound unusual coming from a Realtor, but renting is not "throwing money away." It is simply an expense for housing...

Great point! I had a hard time wrapping my head around this when I moved here a little over 2 years ago. But, by my last estimate I've "saved" a quarter of a million dollars in potential lost equity by renting based on recent sales of homes I considered buying in 2007. No offense to my MANY Realtor friends but it really wasn't "a great time to buy" in 2007.;-)

....your naivet? is showing...which means you should not buy for 2 reasons:

(1) You used the word "investment" and "rental" in the topic when inquiring about purchasing a vacation home.

(2) You used the phrase "throwing away money renting" to describe paying a few grand for your vacation rental over the past few years. (There's LOTS of vacation homeOWERS who would give their left nut to be in that position right now.)

Go away and learn to crunch some numbers before you "invest" in anything.

BTW: I'm so proud of the answers and advice given by you all--brings a tear to my eye.

.

No offense to my MANY Realtor friends but it really wasn't "a great time to buy" in 2007.;-)

...it depended on which side of the commission you were on.

.

Okay, assuming this is something you are wanting to get into then consider this.

Are you planning on retiring to the area? Will the house you are purchasing now work for that goal. Is it big enough, too big, is there an ominous undeveloped commercial property next door, etc. There are some sowallers that are currently in a house they consider way to big for themselves and want to downgrade. I won't call them out, but don't buy into the theory that bigger rents better. The opposite is actually true. Currently the rage with snowbirds is 2 bedroom units that they can house the grand kids in the second bedroom. This is also a fairly comfortable set up for your average family.

...it depended on which side of the commission you were on.

True that...

Okay, assuming this is something you are wanting to get into then consider this.

Are you planning on retiring to the area? Will the house you are purchasing now work for that goal. Is it big enough, too big, is there an ominous undeveloped commercial property next door, etc. There are some sowallers that are currently in a house they consider way to big for themselves and want to downgrade. I won't call them out, but don't buy into the theory that bigger rents better. The opposite is actually true. Currently the rage with snowbirds is 2 bedroom units that they can house the grand kids in the second bedroom. This is also a fairly comfortable set up for your average family.

SWGB,

You gave great information until the bigger does not rent better.

Our experience has been bigger books earlier , rents at a higher rate and has a much large demand relative to availability. Now bigger may not be the best choice for everyone because of other factors, but bigger rents much, much better.

I know it's hard to hear these responses. I don't think anyone is trying to put you off as much as shed some light on the truth about a second home. I feel the same way you do. Every time I cross over the bridge, I feel like I'm coming home. I just somehow want a piece of my life to be anchored in SoWal. I can tell you my husband and I have done some serious number crunching over several years of market watching. I just can't ever make the numbers cover the monthly nut. I've heard people say they're breaking even or making profits. Maybe this is true, but I can't make it work with the spread sheet I'm using. The honest scenario we always come back to is, "What if it never rents?". We have to be good with that picture. As an owner of one home there always seems to be something coming up that needs our attention. It's the nature of the beast. Just keep that in mind. Your dream beach house will have the same scenario. We haven't given up on the dream, don't you either. Just look at all the angles before you jump. We've finally just said, "What the heck", and are now contemplating a full time move. I wish you the best a would love to hear what you guys decide. Have a great trip. We hope to be back down sooner than later.

Rather B Paddlin,

I'm not in the rental business, and I don't have any stats on rentals to know the answer to that question about bigger not renting better or faster or whatever. However, I have seen the larger homes in Grayton Beach sit empty for most of the summer, while the smaller homes seem to stay rented much more frequently.

Well isn't this a happy group of people! This is the exact reason why I've only been a member of this forum since 2005 and haven't posted anything!
1) I didn't wake up one day and say .. "Hey I think I'll buy a property in my favorite vacation place" .. this has been 10 YEARS of coming there and thinking about doing this.. I stated that in my first Post.

2) Not a single one of you even know what I can afford. My primary home is completely paid for .. so as for a Mortgage here in TN .. That isn't an issue

3) Ever thought that I just might be paying Cash for my "Investment"?

4) The purpose of this post was to either make contact with or to have someone recommend a Real Estate Agent that would be willing to go over my Options (as in available homes and condos currently on the Market) But since I see that isn't the outcome I'm gonna receive, I will have to do that elsewhere.

So with that said .. to TooFarTampa .. Thank you for your kind words and tips.. When I do buy something.. I will implement some of them!

For the rest of you.. I'd go find a Dr to get that stick out that is shoved up ya wazoo :roll:

We are a happy group of people and we take care of each other - which is why everyone was trying to make sure you had all the information and were aware of the negatives before making a big decision.

There are a lot of 2nd home owners who WISH they had gotten such "stick in the wazoo" advice, because they are currently finding it out the hard way.

Well said. I think these guys are a bunch of very smart people, but boy, were they being a downer. Give Nina a call at 850-685-0198 and you will be dealing with one of the smartest and most positive realtors in this area. She's a real sweet person who will have your best interests in mind.

I know it's hard to hear these responses. I don't think anyone is trying to put you off as much as shed some light on the truth about a second home. I feel the same way you do. Every time I cross over the bridge, I feel like I'm coming home. I just somehow want a piece of my life to be anchored in SoWal. I can tell you my husband and I have done some serious number crunching over several years of market watching. I just can't ever make the numbers cover the monthly nut. I've heard people say they're breaking even or making profits. Maybe this is true, but I can't make it work with the spread sheet I'm using. The honest scenario we always come back to is, "What if it never rents?". We have to be good with that picture. As an owner of one home there always seems to be something coming up that needs our attention. It's the nature of the beast. Just keep that in mind. Your dream beach house will have the same scenario. We haven't given up on the dream, don't you either. Just look at all the angles before you jump. We've finally just said, "What the heck", and are now contemplating a full time move. I wish you the best a would love to hear what you guys decide. Have a great trip. We hope to be back down sooner than later.

Isn't that the truth... and if you let that "to do list" grow for just a little toooo long.. it can be painfully expensive catching it up. Homes down here get the crap beat out of them by the weather, that's for sure.

Well isn't this a happy group of people! This is the exact reason why I've only been a member of this forum since 2005 and haven't posted anything!
1) I didn't wake up one day and say .. "Hey I think I'll buy a property in my favorite vacation place" .. this has been 10 YEARS of coming there and thinking about doing this.. I stated that in my first Post.

2) Not a single one of you even know what I can afford. My primary home is completely paid for .. so as for a Mortgage here in TN .. That isn't an issue

3) Ever thought that I just might be paying Cash for my "Investment"?

4) The purpose of this post was to either make contact with or to have someone recommend a Real Estate Agent that would be willing to go over my Options (as in available homes and condos currently on the Market) But since I see that isn't the outcome I'm gonna receive, I will have to do that elsewhere.

So with that said .. to TooFarTampa .. Thank you for your kind words and tips.. When I do buy something.. I will implement some of them!

For the rest of you.. I'd go find a Dr to get that stick out that is shoved up ya wazoo :roll:

Hi Dreamin

Scooty is right ... we do tend to take care of each other here. This is THE place for straight talk, news, debate and info on SoWal from a very wide variety of personalities. Sometimes the gloves come off. If you've been lurking for awhile you know what to expect from the regulars. I would not be here myself if it were just a fluffy puffy place with lots of falsely cheery stuff. We pretty much keep it real.

The RE market slide has been very stressful, obviously, and a lot of people have learned some very hard lessons (yours truly included), and some of them have posted what they have here because they have been there and done that.

The story will be different for those buying into the current market. But our wounds are still a bit fresh, so bear with us.

It did sound from your original post that you might be hoping to get rental advice from Realtors, and if that is what you meant I don't think that's a good idea. Best thing to do is gather as much info as you can from as many owners and management companies as possible and use what you know for your specific situation.

There are lots of great Realtors who post here and I would bet you will get some PMs, if you haven't already.

And by the way, I'm sure you know this, but cash buyers are always

Good luck!

Ok I'm gonna start this off by saying .. I totally do not know what I'm getting into.. so this is why I'm turning to this board for some help and tips lol

My husband, kids and myself have been coming to the area for vacations for the past 10 years and we would love to put some of that money that we are throwing away on rentals into an Investment. Our goal is to purchase a property there and put it on a Rental Program while we are not using it.

We have A LOT of questions about how this all works and welcome any tips from people already doing this. We will be there in the area the week of Sept 19-26th and was wondering if any Real Estate Agents would be willing to sit down with us and discuss our options. We would also love to hear or meet with other Property owners who could give us some words of wisdom.

I'm sure it'll be a stressful adventure that we are wanting to take on, but in the long run.. What is more wonderful then having a place we can call our own in our favorite place on earth!

Thanks in advance!

We are sooo happy we made the decision a few months ago to buy a second home in Sowal. It is so great to know here in Chicago that we can jump on a plane (especially come May 2010 - nonstops??) and totally relaxxxx. We have been thrilled with the number of rentals booked through Watercolor at our home there. So far so good. We too look at it as a way to cover expenses and not to "cash flow". Keep in mind that peace of mind in knowing you have a great "happy place" for yourself and your kids in the midst of the chaos of life. I wouldn't encourage anyone to get in above their head. But hey, if you have thought it through for years and are comfortable...go for it!! Don't analyze spread sheets too much. Life is short. Only you can know what is right for you. Trust your gut.

Beach Bound

Well isn't this a happy group of people! This is the exact reason why I've only been a member of this forum since 2005 and haven't posted anything!
1) I didn't wake up one day and say .. "Hey I think I'll buy a property in my favorite vacation place" .. this has been 10 YEARS of coming there and thinking about doing this.. I stated that in my first Post.

2) Not a single one of you even know what I can afford. My primary home is completely paid for .. so as for a Mortgage here in TN .. That isn't an issue

3) Ever thought that I just might be paying Cash for my "Investment"?

4) The purpose of this post was to either make contact with or to have someone recommend a Real Estate Agent that would be willing to go over my Options (as in available homes and condos currently on the Market) But since I see that isn't the outcome I'm gonna receive, I will have to do that elsewhere.

So with that said .. to TooFarTampa .. Thank you for your kind words and tips.. When I do buy something.. I will implement some of them!

For the rest of you.. I'd go find a Dr to get that stick out that is shoved up ya wazoo :roll:

...just for you--who states up front, "I totally do not know what I'm getting into"--NOW is a great time to buy! Let loose the Realtors!
.

We are a happy group of people and we take care of each other - which is why everyone was trying to make sure you had all the information and were aware of the negatives before making a big decision.

There are a lot of 2nd home owners who WISH they had gotten such "stick in the wazoo" advice, because they are currently finding it out the hard way.

Really? I don't find the things said such as ... "Go away and learn to crunch some numbers before you "invest" in anything." or "Dream on Dream of Fl." to be useful or needy.
I never knew when I titled this as "Investment" it would be such an issue. Any purchase you make in Real Estate is a gamble and can be an investment.. and also a flop.
The current home I own could be flattened by a tornadoe.. or sucked into the ground in an earthquake! But in the end of it all.. those are things that are out of my control.
Also out of my control is the goal of moving there at this moment full time.. or I would. My husband owns a well established Electrical Business which we can't just up and move to FL. Along with the fact that I have a very ill mother that I can't up and move away from. This is where the desire to purchase a property there for us to use came from... Because basically ANY rental we were lucky to get would have been profit in our book.

The ones that were trying to actually look out for me and give me advice... not wanting me to get in over my head was fine. It was the others that really crossed the line. You can get your point across without being crude and heartless... And thats all I ask.
With that said .. I got some PM's from friendly people who have given me some Realtor names. All and all .. I believe that's all I was asking for along with "Helpful" tips. I guess some people have different meanings for that word.