Excessive rental rate Hawks Nest on the Beach??

[Mango]

Mango,

Sorry, I disagree.

Yes - owners can expect to cover their expenses. If you select the right house, right location, right amenities and manage it yourself; the house indeed will cash flow positive. There are good deals on the market right now that will cover their own costs. Think big (8-10 bedrooms), think private pool, think 1st tier gulf view, and think not trendy. The numbers will work.

RBP

I personally cover most all my debt service on my properties, and with the depreciation tax deductions, the fact they have appreciated since purchase even with the dip in market, a low fixed rate, I can afford to keep my price competitive. But at the height of the frenzy, I personally do not feel those people can cover their debt service, and certainly not positive cash flow and even with the dip in market prices, I do not feel the numbers will work positive cash flow. Down at the gulf people forget that things needs replacing much more often, windows, grills, plumbing from sand, the list goes on, painting needs refreshing, new pillows, comforters, cookware, the list goes on. Not to mention managing yourself creates a second job, of which at times, I have to delegate because I need to worl at my bread and butter business.

I do manage myself and my houses are not trendy, but clean and comfortable, have gulf views, and convenient to amenities. We also have done all our own work, painting etc., since the costs of hiring someone is more than I am willing to pay.

The above reasons are why I did not sell them at the height of the market and run for the hills. I have been in the real estate finance business since I was 20 years old and saw what happened in the early nineties when the market collapsed then.
I bought them as 1)long term investments (as all markets are cyclical) and for the value they have brought to me and my family. Our only wish is that we lived closer to use them more often, which eventually will change.

 

[Rather B Paddlin]

Good thoughts......

Check out the mls. There are some 8 bedrooms houses priced right with yearly revenues exceeding $100,000.

 

[KBB]

I agree with you, Rather B. Paddlin. I purchased most of my rental properties back when the prices were much lower than they are now (thought they were high then !) and most do pretty well with their cash flow...some better than others. But if you have a gulf view property that only had an increase of "around $7,500" in expenses, then you need to count your blessings....or maybe you should re-calculate your expenses. Property taxes and insurance costs ALONE should have been more than that, not to mention interest rates, etc.

"The way I see it, if you lose one or two rental weeks because the rent is too high, you've undermined yourself. The name of the game is overall revenue. "

Perhaps this is your business philosophy, but not mine. I don't rent my properties just to make an extra buck. The cost of renters (electricity, wear and tear, etc) can cost more than the PROFIT. I would rather rent my property at a higher rate in the peak season (when you know its going to be booked no matter what) and be able to lower the price more in the off seasons. Renting houses at the right price is similar to selling a house for the right price.... If your house is getting so much interest and bookings so early, perhaps you are under priced....just like the example of if you sell your house in 2 weeks, perhaps you didn't ask enough for it!

I agree that the property you (Kathy) mentioned did have too large of a price increase...but people will pay a premium for GULF FRONT because there aren't that many of them available. I personally think you might be too low on your price of $5600 if it can sleep 24 people, has a pool and gulf view. BUT, there are other features people do look for like....age of the house, high ceilings, granite countertops, size of the rooms, etc.

I wouldn't crack on someone else's "marketing strategy" or gloat on my own....I just think there are different streaks for different freaks...I mean different strokes for different folks....well you get the idea. Gotta go answer that rental call.....

Sincerely,
Dr. Have Moore Money
Dean of Harvard Business School

 

[Unplugged]

I agree with you, Rather B. Paddlin. I purchased most of my rental properties back when the prices were much lower than they are now (thought they were high then !) and most do pretty well with their cash flow...some better than others. But if you have a gulf view property that only had an increase of "around $7,500" in expenses, then you need to count your blessings....or maybe you should re-calculate your expenses. Property taxes and insurance costs ALONE should have been more than that, not to mention interest rates, etc.

Perhaps this is your business philosophy, but not mine. I don't rent my properties just to make an extra buck. The cost of renters (electricity, wear and tear, etc) can cost more than the PROFIT. I would rather rent my property at a higher rate in the peak season (when you know its going to be booked no matter what) and be able to lower the price more in the off seasons. Renting houses at the right price is similar to selling a house for the right price.... If your house is getting so much interest and bookings so early, perhaps you are under priced....just like the example of if you sell your house in 2 weeks, perhaps you didn't ask enough for it!

I agree that the property you (Kathy) mentioned did have too large of a price increase...but people will pay a premium for GULF FRONT because there aren't that many of them available. I personally think you might be too low on your price of $5600 if it can sleep 24 people, has a pool and gulf view. BUT, there are other features people do look for like....age of the house, high ceilings, granite countertops, size of the rooms, etc.

I wouldn't crack on someone else's "marketing strategy" or gloat on my own....I just think there are different streaks for different freaks...I mean different strokes for different folks....well you get the idea. Gotta go answer that rental call.....

Sincerely,
Dr. Have Moore Money
Dean of Harvard Business School

Excellent post Rocco! :clap_1: :clap_1:

 

[Rather B Paddlin]

Hey Rocco,

Not my quote.

"The way I see it, if you lose one or two rental weeks because the rent is too high, you've undermined yourself. The name of the game is overall revenue. "

I believe you could attribute that one to Donna.


PS: The boys said thanks for the day of tubing and waterskiing. rbp

 

[SHELLY]

Mango,

Sorry, I disagree.

Yes - owners can expect to cover their expenses. If you select the right house, right location, right amenities and manage it yourself; the house indeed will cash flow positive. There are good deals on the market right now that will cover their own costs. Think big (8-10 bedrooms), think private pool, think 1st tier gulf view, and think not trendy. The numbers will work.

RBP

The only way an investment SoWal property purchased now at these prices (and considering increased taxes, insurance, maintenance) can be cashflow positive is if the purchaser puts down a SUBSTANTIAL down payment. Lots of these homeowners are sitting on 100%+ mortgages and were expecting a quick flip (once long-term rates kick in) and are now trying to make the monthly nut by jacking up rental costs. They'll quickly find that this strategy will backfire.

 

[Rather B Paddlin]

Shelley,

I guess you have it all figured out, again.

rbp

 

[Beachlover2]

Sometimes the rentals aren't worth the wear and tear - damage. Now if there was only a way to figure out which are going to be good rentals and which aren't.

 

[SHELLY]

Shelley,

I guess you have it all figured out, again.

rbp

What can I say?...its a gift

 

[Huntclose]

Has anyone noticed the fee increase from Rental agencies?

This is another reason to raise rental fees......and manage it yourself.

hunt