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Tips For Owning A Vacation Rental Property In Florida
Dated: January 11 2021
Tips for Owning a Vacation Rental Property in Florida
Thinking about investing in a vacation rental property in Florida? When it comes to owning a vacation rental, the profit potential and having tenants pay off a future 2nd home or retirement home can seem very enticing! Theses are just a couple of the benefits when it comes to owning a vacation rental property. The Tampa Bay area is full of fabulous neighborhoods and locations to own a top-producing short-term rental property thanks to our beautiful stretches of Gulf Beaches, miles of bike trails, fabulous year-round weather, and convenient location that's not too far from the Disney Parks of Orlando, Busch Gardens in Tampa, museums, aquariums, and so much more!
To guide you through the beginning of the buying process, we've created a list of 'Do's and Don'ts' when it comes to making that purchase! See below to learn more:
DO Work With a Knowledgeable REALTOR- Don't just hire anyone, make sure you work with an experienced Realtor that specializes in the areas you're shopping in. For example, a Realtor in Bradenton or Orlando will not be as knowledgeable as a Realtor who works around the Gulf Beaches if that's where you're thinking of buying. Ask the Realtor what they know about current rental rates, how many investment properties they've sold in the short-term rental market, and more. If you're looking for a condo property that allows short-term rentals, your Realtor should be able to guide you to the buildings that allow it, as each community can have different rules regarding rental regulations. Along the Pinellas County Beaches, short-term rental rules can be different in each City as well.
DO Create a Financial Plan- Make sure you understand the potential revenue and risks of owning a vacation rental property (such as HOA or Condo dues, property taxes, insurance, property management & cleaning fees, annual maintenance, etc).
DO Choose a Property Manager Carefully- If you won't be managing the vacation rental yourself, do your research. On the Gulf Beaches, property management companies often charge owners 30%-40% of the rental fees in their management fees. If you're expecting to pay a short-term rental/property manager the same amount as a long-term rental property manager, think again. With the constant change of tenants, cleaning & repair management, added paperwork and more, property managers for short-term rentals always charge more. Make sure you research who you're using so you aren't surprised by the fees and can expect a great experience for your tenants as they come and go. Just one or two poor reviews can create a drastic decline in the occupancy of your rental. You want a property manager that will keep your guests raving about your rental!
DON'T Ignore Property Maintenance- Have an old water heater or HVAC unit in your rental? Definitely replace it now vs having it break during a tenant's stay. In the peak of summer, older HVAC units tend to fail and repair technicians can get overwhelmed, creating delays for service and parts. The last thing you want is a disgruntled tenant leaving you a poor review thanks to a heatwave and no A/C ruining their vacation at your rental.
DON'T Be Unrealistic About Pricing- Remember, you want high occupancy rates and great reviews. Overpricing your rental or saddling renters with numerous fees will lower your occupancy rates, often costing you more money than if you had just priced your rental rates competitively from the start. For example, if you can price your rental at $150 per might and have 25 out of 30 days per month rented, your gross rent would be about $3,750 for the month. But let's say you bump your rental up to $200/night and make it one of the most expensive in your location. Now it only rents out for 10 days out of the month, earning you a gross income (before rental fees, taxes, etc) of just $2,000/month. Renters are savvy and they WILL compare the cost of your vacation rental to others in the area. Focus on higher occupancy goals to get the most return from your vacation rental.
DON'T Plan on Using Your Rental During the High Season if You Want the Best Returns- Short-term vacation rentals often get the highest rents around the holidays and busy tourist seasons. Consider this before you plan on spending every Christmas at your beach rental. To maximize your investment's income, stick to using it during the slow seasons.
DO Plan on Re-investing in the Home- The most updated properties in the best locations often rent the fastest in our vacation rental market. Plan on spending up to 1% of the purchase price of your vacation rental each year on updates, preventative maintenance, furnishings, kitchen supplies, landscaping, and more to keep your property in tip-top shape. Furnished rentals experience more wear and tear than a long-term rental, so plan on occasionally tuning up the interior furnishings and decor.
Remember to hang onto this list to get the most out of your vacation rental in 2021. If you need help buying or selling a vacation rental property, don't hesitate to reach out to us so we can help you!
Andrea is the Managing Partner of The Sandy Hartmann Group. Andrea was born and raised in the Tampa Bay area and is a licensed Realtor with over 15 years of Marketing and Finance experience, holding ....
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