Florida Vacation Condo (Yea my friend just did that)

So my friend and his friend went in and purchased a Condo 3 blocks from the beach, in Panama Florida. If I recall they paid $70,000. They plan to rent it out as a vacation spot.

Here my opinion. If it was possible to rent vacation homes out, profitably. Then wouldnt make more sense to have a vacation home in every major tourism local in the country? You would make money and you could vacation “for free” in your properties. If that is the case, wouldnt everyone be doing it?
Anyone have experience in vacation rentals? I doubt I will do try a vacation rental but im trying to figure out if my friend will crash and burn or not, he cashed out his retirement for this venture.

If he’s managing it from long distance, I think it’ll be a crash and burn. It begs the question, who’s going to maintain and take care of it when they are gone? Who is going to inspect and clean it up for the next guests? Who’s going to change the locks every time someone moves out and visit it daily to make sure squatters aren’t living there or that the furniture isn’t stolen or crackheads held a wild drug party there and destroyed the place? Will hiring a property manager to do these tasks eat away all your profits? If they have relatives in the city to look after it, it might be a different story but hiring a property manager to do it?

I looked at a few hotel condos in Florida and then decided against it because it’s too far away to manage. The margins weren’t really there after the regular expenses and condo fees.

And the worst part is, how do you screen for con artists? No one’s going to let you do a credit check and criminal records check if they want to rent a place for the weekend. Say someone brought in bed bugs and the con artist claims the last guests brought it in and wouldn’t rent it and demanded you pay for an alternate hotel room and you also had to dish out $400 clams to get it professionally sprayed? After the trip, they decide to sue you for damages because it wasn’t properly managed. There’s are so many problems I see with managing rentals from afar, which demands your local attention. Not worth it imo.

There’s the saying “if it was easy, everyone would be doing it.” That applies to a lot of things and especially in investing. Dave gave some great insight for this. Anyone doing this would pretty much have to get someone to manage it because it’s about like running a hotel. You’re going to have short term stays and need a housekeeper to go clean it after each person checks out. Several years ago I rented a condo on the beach in Corpus Christi, TX for about six weeks. I recall it worked out to about $650 a month all inclusive. It was a little studio unit (no separate bedroom, just a sleeper couch), but the building had an indoor pool and it was decent enough. A couple from the midwest owned it. They left a note on the back of the door saying who there were and they hoped each person would enjoy it like they did. That unit would do ok if it stayed full most of the time, but I’m sure that wasn’t the case year round.
Also remember that in each new market, you have to find new people for management, repairs, etc.

You do need local management for key pick-up and drop-off, a regular cleaner, and handyman on call.

Fees can be high for this level of management–I believe around 30%–50% of gross monthly rent. Plus all utilities are on at all times.

I think the danger of people trashing it is not that high. Every tenant should have a credit card held on file like a hotel. If it were mine, I would accept dogs if the condos are pet friendly. Dog owners are more care-giving than non-owners in my experience.

I have rented to HUNDREDS of tenants and never yet had a unit trashed or bed bugs. But my tenants are mostly working people and not vacationers, so that may be a different clientele.

I like the “30 day or more” tenant so I don’t have to collect and pass on gross receipts taxes or lodging taxes.

It would be interesting how the numbers look on your friend’s condo in the future.