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A significant percentage of people looking to buy in this area are planning to offer their newly acquired properties as vacation rentals. The motivations for renting vary from straight investment properties to defraying a portion of the cost of ownership on a second home. As the manager of Paradise Beach Homes for the past 15 years, I am regularly asked what makes a good vacation rental. There are many factors that affect how well a property will perform on short term rental.
Location is probably the single most important factor impacting performance. Regardless of the property being a condo or a house, gulf front is the most desirable location, followed closely by sound front. If a property is not gulf or sound front, then ease of access is important. On Pensacola Beach, we have public access easements running across the island in numerous places,and being close to one of these easements is a big plus. For homes and condos not located directly on the water, a pool significantly enhances the rental potential. A pool not only adds to what you can charge on a weekly basis, but also increases rental frequency. For an average 4 plus bedroom home on Pensacola Beach, a pool will increase the income potential by $20,000 to $30,000 per year.
When looking at purchasing a home with the intention of adding a pool, it is important to do research up front to verify you can secure the necessary permits to build the pool. When building a pool requires a variance from the Santa Rosa Island Authority, part of the process includes reaching out to the neighbors to insure they do not have any objection to the pool. If any of the abutting neighbors object to the addition of the pool, they can, in some cases, block the required variance. If a pool is an integral part of your plan, it pays to do the leg work up front.
Running a close second to location, would be the number of people the property can accommodate. A two bedroom condo that sleeps 6 will rent better than a two bedroom condo that sleeps 4. A three bedroom that sleeps 8 will rent better than a 3 bedroom that sleeps 6. When you are talking about houses for rental purposes, I would recommend a minimum of 4 bedrooms. A 5 bedroom house will generate more than a 4 bedroom, a 6 bedroom will generate more than a 5 bedroom. When you get into the 6 and 6 plus bedroom homes, you ideally want 2 living areas. The main living area would be for the adults, and the second living area would be for kids. It is not uncommon to have an extended family renting a property where they need to sleep 18 – 20 people. A group this large would require that second living area. Vacation rental properties also need to seat as many people for dining as they sleep. A house that sleeps 18 people and only seats 8 for dining really doesn’t work for a large family or multiple families traveling together. So, the dining space needs to be large enough to accommodate the number of people you advertise the home to sleep. It can be a combination of breakfast area table, dining table, and bar stools as long as everyone has a place to sit for meals.
I often tell people that how many people the property sleeps and how nice it is drives rentals. Repeat business is a super important factor for long term success in the vacation rental business. We have properties where the same guests have rented the property every summer for 10 plus years. In order to keep the guest coming back year after year, the properties must be well maintained, and updated on an ongoing basis. In most cases, guests today are choosing properties from website photos and sites like VRBO and Homeawaythat require lots of photos in order for the property to come up well in searches. Properties that show well in photos with lots of light and pops of bright colors definitely have an advantage over the tired drab properties. It is very important for vacation rental properties to show well both on the interior and exterior. With condos and townhomes, how well the association maintains the common areas also has a direct impact on rentals. Older complexes with poorly maintained exteriors are not a good choice for the vacation rental market. Similarly, older complexes with lots of stairs and no elevators are not generally a good choice for vacation rentals. Our society is aging and extended families often have members who can’t maneuver stairs.
Another path to success in the vacation rental business is allowing pets. Fully one third of vacationers today travel with pets. Properties with a grassy area and fenced yardare very popular with travelers. The pet fees guests pay for the privilege of bring Fido are good source of additional income for owners. The bylaws for many condo and townhome associations prohibit short term guests from bringing pets. If a potential buyer of a condo or townhome wants to take advantage of the income potential from this market segment, they need to thoroughly research the rules and regulations for the property before purchasing. Buyers would also generally want to avoid carpet and go with hard flooring such as tile or vinyl plank that is more forgiving when pets have accidents.
On Pensacola Beach, there are several non-rental subdivisions and several condos with rent restrictions. If you are looking to buy on Pensacola Beach for vacation rental, you need to make sure you are not buying in a short term rental restricted area. Villa Sabine, Seashore Village, and Sugarbowl, are all examples of rent restricted subdivisions. The Verandas Condo does not allow short term rentals and Santa Rosa Towers enforces a minimum 7 night stay. There are some floors at Portofino that do not allow short term rentals. At Paradise Beach Homes, we are always glad to provide rental projections for prospective buyers. This is a service we offer to Realtors from other company or to prospective buyers who are already working with a Realtor.