What You Should Know About Short Term Rental Condos – Daily, Weekly Rentals

As of January 2022, the median sale price for a condo in Clearwater Beach near or on the water is $634,000.  Five years ago, it was $421,000. If you are getting in the market now chances are you may not see that kind of appreciation for some time as prices start to level off a bit.  Thankfully the beaches here are some of the nicest and most desirable places to visit in the country.  So even if appreciation slows down there are opportunities to invest in a condo and use it as a rental to offset the carrying costs and even turn a profit in the short and long term.

Not all rental condos have a positive cash flow
In my experience looking at the rental potential of hundreds of condos a year in this market many of them just manage to break even after operating expenses.  There are a lot of factors to consider during the buying process that will ensure your success. 

A typical condo, 800-2500 sq ft, on the beach that has been cared for can have an expected gross from $50k upwards of 100k.  Average price $634,000.

Condo hotels, 300-700 sq ft, can be expected to gross in a range of $25k to $45k a year.  Average price $350,000.

Here are a few of my favorites:

Sunset Vistas Condo Hotel Treasure Island Daily Rental $75k-$100k Expected Gross Yearly (EGY)
Marker 8 with onsite water park Condo Hotel Indian Rocks 3 Day Min $45k-$100k EGY
Crescent Beach Club Condo Clearwater Sand Key Beach 2 Week Min $60k-$110k EGY
Lighthouse Towers Condo Clearwater Sand Key Beach 2 Week Min $65k-$80k EGY
Harborview Grande Condo Clearwater Beach 1 Week Min $70K-$110K EGY
Sand Pearl Condo Clearwater Beach 1 Month Min $120K EGY
Mandalay Beach Club Condo Clearwater Beach 1 Month Min $120K EGY

Location, the views of the water, and amenities are certainly at the top of the list when choosing the right condo.  Having a good idea what to expect for monthly expenses is a close second as it will help you determine if you will break even or have positive cash flow each year.  Another consideration is will you manage the unit yourself or choose a third party to keep your unit booked and maintained?

Cash Flow Potential
During the buying process I assist my clients with a thorough analysis of each unit’s cash flow potential.  Common expenses owners are typically responsible for whether managing the unit themselves or through a management company are:

*  Most utilities are covered in the HOA fee except for electric and internet
*  Repairs as needed, replacing equipment
*  Pest control
*  Unit supply’s
*  Cleaning of the unit after guests leave $125-$50
*  HOA condo fees can be from $400-$1000 a month.  These fees can also increase    over time.  Before you purchase any condo your agent should determine if there are any assessments in the works.
*  Real estate taxes will be calculated on the new purchase price, you can get an estimate using the Pinellas County tax estimator…link here https://www.pcpao.org/taxEst.php
*  Renters insurance ranges from $1200-$1400 a year
*  Mortgage payment if financed

Condo Rental Management
Condo management companies here on the beach typically cost from 20% to as high as 40% of your gross revenue depending on the level of service they provide.  Some management companies will only do the bookings leaving the owner to pick up the housekeeping and maintenance of the unit.  Others will handle everything for the owner each month and send the owner a check.  Many condo buildings along the beach have onsite management and check in desks like a hotel.  Example of condo hotels with onsite check in desks are Sunset Vistas Treasure Island, The Biltmore Treasure Island, Pelican Point Clearwater Beach, Maker 8 Indian Rocks Beach. 

Condo Hotels
A condo hotel can be a hotel that has converted its rooms into condos or a condo building that was built and zoned as a condo hotel and has rooms that are similiar to a regular condo.  Converted hotel rooms are typically 300 to 600 square feet and located on the Gulf or Intracoastal waterway.  A good example is The Tradewinds in St. Pete and Pelican Point on Clearwater Beach.  Not all condo hotels are converted hotels.  Sunset Vistas on Treasure Island and Madeira Bay Condos on Madeira Beach are condo hotels that were built new as condo hotels but have similiar square footage to a regular condo.  Here are 3 things you should know about condo hotels:

Most condo hotels have an onsite rental company that will take care of everything for you including the cleaning and maintenance for a percentage of the gross revenue.  Most of them allow owners to manage their own units if they choose.

Financing a condo hotel can be challenging.  These units will require larger down payment and come with higher interest rates. Many lenders start out the process giving buyers a pre-approval letter only to end up choosing not to do the loan once a full condo review has been done. 

Condo hotels have limits on how long an owner can occupy the unit, most of them have a 90-day occupancy limit.

Example of condo hotels with onsite check in desks are Sunset Vistas Treasure Island, The Biltmore Treasure Island, Pelican Point Clearwater Beach, Maker 8 Indian Rocks Beach.

Local Lender
If you are considering financing a condo or condo hotel unit, we recommend calling
Jason Nordin with American Momentum Bank here in Clearwater.  They are a portfolio lender who specializes in these types of properties.  Jason has already financed several units in many of the condo hotels on the beaches.  Email Stephen@beachwiserealestate.com for contact information.

I hope you found this information helpful.  When you are ready to start your journey, I would love to help guide you and share my extensive knowledge of the condo market here on the beaches of Pinellas County.  I am always here to help.  Talk to you soon or maybe I will see you on the beach soon!

Links you might find helpful:

My free e-book you can download on your phone The 2022 Clearwater Beach Real Estate and Condo Guide https://www.homesforsaleinclearwaterbeach.com/e-book/

Condo Loans Tighter Loan Requirements Having an Effect (homesforsaleinclearwaterbeach.com)

Short Term Rental Guide Pinellas County Beaches (homesforsaleinclearwaterbeach.com)

8 Do's and Don'ts of Owning a Vacation Rental (homesforsaleinclearwaterbeach.com)