Can 30A Real Estate Cash Flow?

Posted by Clayton Bonjean on Saturday, November 7th, 2020 at 9:48pm.

The 30A Area offers many excellent investment opportunities.  I often receive phone calls from buyers and investors asking me which rental properties in our area offer positive cash flow?  The answer is... almost all properties offer positive cash flow on cash purchases and only a select few do when financing is involved. 

Positive cash flow on a cash purchase is very easy to achieve as you only have to cover expenses like property taxes, insurance, utilities, landscaping, rental management fees, and general maintenance.   It begins to get more difficult when trying to cash flow a 30A property with a mortgage, due to the debt service.

A very small percentage of properties on the Emerald Coast can offer positive cash flow with a standard 20% down loan;  however, it can be done.  Below are some tips on how to cash flow a 30A beach property with a mortgage and how to obtain the highest cap rate when paying cash. 

Destin to 30A Investment Properties - Important Info 

  • Condos are very hard to cash flow with a mortgage due to their high association fees;  however, there are a few high income generating beachfront condo properties that may offer positive cash flow or close, but most of these properties are on the higher end.  I have also seen positive cash flow on some smaller efficiency condos in the Sandestin Resort due to their popularity, low price, and low condo fees.   Also, please do your due diligence because many factors can affect the ability to cash flow like location, expenses, rental rating, quality of management and percentage charged for management.
  • Large homes often outperform condos due to their lower HOA fees, high demand, and high incomes.
  • For homes, the more bedrooms the better.   Avoid 3 bedroom homes and try for 5 bedrooms or more to hit that sweet spot.
  • Homes with pools have a higher probability of positive cash flow.  Homes with pools are in high demand and bring higher rental rates.
  • Proximity to the beach is critical.  For short term rentals, avoid homes North of Hwy 98. 
  • You will have a better opportunity for positive cash flow on the homes that are higher end.  
  • Self management is a deal changer.  Most management companies charge 20 to 25% to manage your property.  If you are able to manage your own property, your likelihood for positive cash flow increases dramatically.  Many of my customers utilize services like HomeAway, VRBO and AirBnb.  This is not ideal for most, but I have seen many pull it off.  The hardest parts are coordinating house keeping on the turn days and dealing with the maintenance issues that often arise.
  • Outside the Box - Long term rentals can often offer positive cash flow.  Our area has a shortage of long term rentals;  therefore, they are in high demand.  Long term rentals are much easier to self manage due to the lack of weekly rental turns.  If you do elect to hire a management company, they charge around 10% and this is less than short term management.  If you wish to enjoy your property, this option is not for you, but there are opportunities here and it is easy to cash flow the right long term rental with a mortgage.


The link below shows homes from 30A to Destin that should offer superior cash flow and higher cap rates.

30A and Destin Homes under 2 Million with at least 5 Beds and a Pool


30A Real Estate Pro - Clayton Bonjean

 "If you are interested in buying or selling 30a Real Estate, you need to look no further, because this website was designed with you in mind.  You are welcome to search all 30A Real Estate listings,  If you already own property on 30A, feel free to use this site to search recently sold comps and stats.  If you would like to utilize all functions of the site, like saved searches, auto updates, and saved properties, feel free to SIGN UP and we will never call, unless you ask." BrokerClayton@gmail.com  

 

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