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01 / THINK LIKE AN INVESTOR

Where Should I Buy a Vacation Rental?

Where should I buy a vacation rental on the Emerald Coast?”

It’s one of the first questions investors ask me.

Destin? 30A? Panama City Beach? A condo? A house? Gulf-front? Walking distance to the beach?

But there’s a problem with the question.

“Where should I buy?” isn’t the first question an investor should be asking.

WATCH • SHORT  VIDEO

Where Should I Buy a Vacation Rental?

THE MARKET

There Is No Single Emerald Coast Real Estate Market

I see a lot of investors make is treating the Emerald Coast as if it were one real estate market and that is a mistake. 

Because it isn’t.

Destin can be be entirely differently from 30A. Condos and houses often behave differently. And even within the same market and property type, one condo building or neighborhood can perform very differently from another one.

That’s why broad market statistics can be useful for understanding direction—but dangerous when they’re used to make a decision about an individual property.

The closer you get to the property you’re considering, the more relevant the data becomes.

So Where Should You Buy?

Start with what you want the investment to accomplish. Then work backward to the market and property that give you the best chance of accomplishing it.

On the Emerald Coast, different markets tend to solve different problems.

Destin / Miramar Beach
Large vacation-rental market, broad selection of condos and homes, strong family demand and lots of comparable rental data.

Scenic 30A
Higher acquisition costs, stronger luxury and second-home component, limited supply in many locations and a different appreciation/rental equation.

Panama City Beach
Large condo inventory, often lower entry prices than 30A, substantial rental demand and opportunities where individual buildings have become mispriced.

Okaloosa Island
Smaller market with strong beach orientation, predominantly condos, and opportunities that can behave very differently building by building.

But don’t choose a market because somebody tells you it’s the “best.”

Choose the market that fits the job you need the property to do.

02 / GETTING STARTED

What Are You Actually Trying to Accomplish?

Most investors start with the property.

I think that’s backwards.

Before you decide what to buy, how much to spend or where to buy it, decide what you need the investment to accomplish.

Two properties can both be good investments—and be completely wrong for the same investor.

You Can Want All Four. But One Should Come First.

The problem comes when investors try to maximize all four simultaneously. A property optimized for personal use isn’t necessarily the best cash-flow property. A value-add opportunity may require more risk and work. A long-term wealth play may not generate the highest income today.

03 / GETTING STARTED

How Vacation Rentals Make Money

A lot of investors look at a vacation rental and ask one question:

“How much will it cash flow?”

It matters. But cash flow is only one way real estate can make you money.

A vacation rental can potentially build wealth in four different ways. Understanding all four changes how you evaluate a deal.

04 

TAX

BENEFITS

Potential Tax Savings

Depreciation and other deductions may reduce taxable income and improve your after-tax return. Tax benefits vary by investor.

THE BIGGER PICTURE

Don’t Judge the Investment by Cash Flow Alone.

A property producing strong cash flow today may have limited appreciation potential. Another property may produce less cash flow but build more wealth through principal paydown and long-term appreciation.

Neither is automatically the better investment.

What matters is the total return relative to the money you invested and the risk you took.

04 / CHOOSING THE INVESTMENT

Understanding the Emerald Coast Markets

One of the biggest mistakes I see investors make is talking about the Emerald Coast as if it were one real estate market.

It isn’t.

Destin, Miramar Beach, 30A, Okaloosa Island and Panama City Beach may share the same coastline, but they don’t necessarily share the same buyers, price points, rental economics, inventory or market cycles.

And even within those markets, condos and houses can behave very differently.

Where you buy matters. But understanding the market you’re actually buying into matters more.

One Coast. Several Markets.

The differences don’t stop at the market level. Within each market, property type, neighborhood, condo building—and ultimately the individual property—can behave differently.

That’s why knowing that “30A is up” or “Destin is down” isn’t enough to make an investment decision.

THE INVESTOR’S VIEW

What Changes From Market to Market?

When you move from one Emerald Coast market to another, you’re not simply changing locations. You’re changing the economics of the investment.

Five things can change dramatically:

05

GROWTH POTENTIAL

What could drive—or limit—long-term value growth?

05 / CHOOSING THE INVESTMENT

What Makes a Great Vacation Rental?

A great piece of real estate isn’t necessarily a great vacation rental.

I’ve seen beautiful properties with incredible views struggle as rentals—and less impressive properties generate surprisingly strong revenue.

The difference often comes down to a simple question:

Why would a vacationer choose this property over all the other options?

When you buy a vacation rental, you’re buying real estate. But you’re also buying—or creating—a small hospitality business.

The property has to work for both.

THE RENTAL TEST

Give the Renter a Reason to Choose You.

Every successful vacation rental needs some combination of things that make it more attractive than its competition.

06 / CHOOSING THE INVESTMENT

Condo vs. House: Which Makes the Better Vacation Rental?

There isn’t a universal answer.

A condo can offer a lower price of entry, beachfront locations and resort amenities that would be extremely expensive to duplicate in a house.

A house can offer privacy, more space, greater control and opportunities to create an experience renters can’t get from a typical condo.

The better investment isn’t determined by property type. It’s determined by what you get for the money—and what renters will pay for it.

HOUSE

More Control. More Responsibility.

Potential Advantages

• Greater control over the property
• Private pools and outdoor spaces
• More opportunities to differentiate
• Larger groups can produce higher rental revenue
• Land can contribute to long-term value
• Fewer association-related risks in many cases

Potential Trade-Offs

• Higher acquisition cost in many beach locations
• You own the maintenance problem
• Roof, pool, HVAC, landscaping and exterior repairs are yours
• Insurance can be expensive
• More moving parts to operate
• Location can matter enormously—a cheaper house farther from the beach isn’t necessarily a better deal

DON’T COMPARE PRICE ALONE

Compare What the Property Can Produce.

Suppose a $600,000 condo can generate $60,000 in annual rental revenue while an $850,000 house can generate $120,000.

The house costs substantially more—but that doesn’t automatically make it the worse investment.

Conversely, the condo isn’t automatically better because it’s cheaper.

Compare acquisition cost, operating expenses, rental potential, risk and the experience each property can offer the renter.

07 / CHOOSING THE INVESTMENT

Florida Condo Risk: SIRS, Reserves & Assessments

A Florida condo can look like an incredible deal on paper—and still be a terrible investment.

The unit itself may be beautiful. The rental numbers may work. The location may be perfect.

But when you buy a condo, you’re not just buying the unit. You’re buying into the financial and physical condition of the entire building.

That means an investor needs to understand more than the property.

You need to understand the association.

THE CONDO HEALTH CHECK

Three Things You Need to Understand Before You Buy

03

ASSESSMENTS

What could owners be asked to pay?

Current and potential special assessments can dramatically change the economics of a purchase. Find out what’s already been approved—and what may be coming.

CHEAP FOR A REASON?

Distress Can Create Opportunity.

This is important because I don’t want the guide teaching people simply to avoid troubled condos. That’s too simplistic—and it misses one of your strongest investor insights.

Inspection issues, reserve shortages and assessments can scare buyers away. Financing may become more difficult, and sellers may become more motivated.

That creates risk. But sometimes it also creates opportunity.

A well-capitalized buyer who understands the building’s problems, estimates the true cost and buys at the right price may find an opportunity other buyers won’t touch.

The mistake isn’t buying a building with problems.

The mistake is buying without understanding what those problems could cost you.

Distress Can Create Opportunity

BEFORE YOU BUY A FLORIDA CONDO, ASK FOR:

☐ Milestone/structural inspection information, when applicable
☐ SIRS/reserve information, when applicable
☐ Current association budget and financials
☐ Current reserve balances
☐ Pending or approved special assessments
☐ Recent association meeting minutes
☐ Insurance information
☐ Pending major repair projects
☐ Rental restrictions
☐ Any issues that could affect financing

Requirements vary by building and circumstance. Your agent, lender, association, inspector and appropriate legal/tax professionals should help evaluate the specific property.