Guide to Renting Your 30A Luxury Vacation Home
If you just bought a vacation home in 30A, congratulations - you’re getting in early on one of the hottest vacation rental markets in the country.
Historically, luxury homeowners have veered away from the short-term rental market. This, however, is changing as homeowners understand there’s more to gain from renting their home than just extra spending money.
We like to present it as a positive feedback loop that results in long-term preservation of and satisfaction with the home. Here’s how it works:
At InvitedHome, we’ve had many homeowners in the process of buying a vacation home inquire about the impact short-term rentals could have on their annual cost of ownership. Here’s a simple example that breaks it down. Note: the down payment, mortgage rate, and PITI shown are examples, and rates and fees are subject to change.
Home Price: $2.3M
Down payment: 35%
Principal, Interest, Taxes, Insurance (PITI): $9,969.95
Without renting the home, your annual payment to own would be $119,639 (PITI x 12 months). However, with a projected gross rental income of $114,700, the annual cost of owning that dream vacation home drops to $4,000 - 97% lower. Upon this realization, a $2.3M vacation home becomes much more attainable.
The tax situation in Florida is extremely favorable for vacation homeowners. While it's widely known the state collects zero income, estate, and inheritance taxes, its property and sales taxes also hover right around the national average. Currently, Florida's state property taxes stand at $1 for every $1,000 of the home's value. However, because Florida counties can levy their own taxes, it may be lower in your desired county. For example, in Rosemary Beach, taxes are only .678% of the assessed value. So, for a $1M home, you can expect to pay about $6,780 per year in property taxes - lower than both the Florida and national averages.
For retirees, income from retirement funds, such as a 401(k), is untaxed, as well as social security and pension income.
If you're hoping to choose a home that's your primary residence that can be rented out when you're away or for half the year, you'll also be eligible for the Florida Homestead tax exemption. Through this, the growth rate of your home's taxable value is limited, and the increase in its market value will outstrip growth in its taxable value.
Rented.com’s most recent report on the vacation rental market named Panama City Beach the number one place to buy a vacation rental property, based on several factors. The study took into account real estate prices, local vacation rental rates, insurance, taxes, maintenances costs, and the overall popularity of the destination to determine the winner, giving PCB a sterling score of 98.9/100.
The average estimated rental income in Panama City Beach in 2018 is $26,301, with an average home price of $246,400, according to figures from Zillow. But these excellent vacation rental conditions are nothing new. Last year, the same study determined that Destin, just one hour west, was the second-best short-term rental market in the country, with an estimated rental income of $46,141. Even back in 2016, PCB made the number one spot on the list with an estimated rental income of $28,800.
However, these averages don’t reflect the typical home prices and rental revenues in our portfolio. The average value of an InvitedHome property is $2.3M, and in the luxury home space, owners can generate up to $125,000 annually, thanks to West Florida’s high demand for week-long stays, the gorgeous appeal of the homes, their location, and the provided amenities. And if the predictions are true, demand for high-end accommodation in the area will only increase.
The 30A Songwriters Festival and the Digital Graffiti festival have already become huge national draws, and grow in popularity every year. Ecotourism, which includes activities like kayaking, snorkeling, and hiking, brings in guests from all over the country, and the popularity of this form of tourism is only expected to rise. One of the most visually stunning communities in the country - Alys Beach - is expected to continue to grow in the coming decades, likely becoming one of the recognizable and iconic coastal towns in the state, if not the country.
To learn more about InvitedHome’s luxury vacation rental management services, head over to our 30A Property Management page here.
Where to buy a vacation rental in 30A
Learn more about the beaches and coastal communities that make 30A such a great place to purchase a second home.
Homeowner Perks: Your 15% discount
We believe vacations are essential to the soul, so when you're a part of the InvitedHome family, you'll get 15% off a stay in nearly all homes in our portfolio. Learn more here.
Case Study on Trust
One 30A homeowner put multiple management companies' guest screening processes to the test by posing as his son trying to book a bachelor party. Find out what happens next. (Spoiler, he chose InvitedHome).
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