Short Term Rental Expenses on Florida’s Emerald Coast: What it Really Costs to Own an AirBnB in Destin, 30a, and Panama City Beach (Episode 4 of 10)

Avery Carl [00:00:02]:
What’S up guys? It’s Avery Carl from the Short Term show doing the intro for the Panhandle of Florida. We are doing a 10 episode deep dive on two markets here, both the Emerald coast and the Forgotten Coasts of Florida which basically makes up the entire Florida Panhandle. So 10 episode deep dive here. We are going to add quarterly updates so make sure you hit that subscribe button. We also have some supplemental materials for you guys on our website. So anything you need to know know about current short term rental property pricing in terms of how much it costs to buy a property in these markets. You can find that on our website@theshorttermshop.com you can also find current air DNA income data thanks to our friends over at, you guessed it, Air DNA. And we’ve got all that for you guys so that you can listen to this at any point in time and go find live pricing and live income data.

Avery Carl [00:00:57]:
Also, if you guys want to buy a short term rental investment with a short term shop agent on the Emerald or Forgotten coast, you can just email us at agents the shorttermshop.com and we will get you hooked up. These are two of my very favorite beach markets by the way. I’ve chosen to live in the Emerald Coast. I also invest in the Emerald and Forgotten coast. So very near and dear to my heart. Also, if you guys just have more questions and you want to chat about short term rentals, we’ve created an amazing community over on Facebook with over 50,000 short term rental investors just talking shop all day. It’s got the same title as my book, it’s called Short Term Rental Long Term Wealth. So head over there to chat more about short term rentals.

Avery Carl [00:01:36]:
And if you want to chat live on Zoom, we’ve got a call every Thursday that you can join@str questions.com Happy investing y’ all. Hey guys, welcome back to another episode of the Short Term show special episode series on the Emerald and Forgotten coasts. So we’ve already done an episode that you heard last week on the income numbers and how to look at what properties are making. So now we’re going to do part two of that of the Analysis series and talk about the expenses that are common in this market. So I have an awesome panel here to help me do that. Some familiar faces and some that will be new to you. We’ll start with January Johnson. January, introduce yourself really quick.

January Johnson [00:02:22]:
Hi there January Johnson. I’m a Panama City native, returned here after a long time away. I have four short term rental properties and I cover from Panama City beach to basically Navarre beach, part of the Emerald coast in sales.

Avery Carl [00:02:36]:
Thank you, Jan. Next we have Austin Lewis. Austin, you want to introduce yourself really quick?

Austin Lewis [00:02:41]:
Yeah. Hey guys. Super happy to be here with y’ all. I am a Pensacola born native. I cover from the Alabama state line. So Credo Key and then all the way over to Fort Walton Beach. So Pensacola beach and Navarre beach, which are in between.

Avery Carl [00:02:58]:
Awesome. And next we have a couple investors. First we have Aaron Gardiner. Aaron, you want to introduce yourself really quick?

Aaron Gardiner [00:03:04]:
Yeah, for sure. Thanks, Avery. So Aaron Gardner. I live in Minnesota. The only reason for that is that’s where my employer is. We’ve got, yeah, we’ve got two short term rentals and various other long term rentals in the portfolio. So one in the Emerald coast and Santa Rosa beach and the other in Sevierville.

Avery Carl [00:03:25]:
Thank you very much. And Patrick Andres.

Patrick Andres [00:03:30]:
Patrick Andrews, Alabama native. I have two short term rentals in Panama City beach on the east side of Panama City Beach. Both are houses.

Avery Carl [00:03:40]:
Sweet. So I’ve got them. I got one in Destin, one in 30A and one on Cape Sandblast. So we’ve got owners covering the entire market as well as agents covering the entire market. So let’s talk about the common expenses for these things. So we’re just going to kind of start at the beginning at the most basic and move through to the things that are a little more specific to our areas, just so our listeners have a good idea of what it costs to own a place in any of these markets. So let’s start at the beginning, which I think is probably utilities. So what are your typical utilities looking like? Let’s start with electric around here.

Austin Lewis [00:04:21]:
I normally tell people for rough math, around $60 per 500 square foot. So and of course, you know, that’s there’s definitely going to be much words higher and much more. It’s lower. It’s just the average across the board.

Avery Carl [00:04:36]:
Yeah, I don’t have anything too specific on, on electric other than these are most of the houses here have been built in the past 25 years. So you’re not looking at a whole lot of like 50s or 60s builds that that might have some reasons why they’re not as energy efficient. So I would say I always just tell people that it’s, you know, it’s as if you were going to live in the house, run the utilities that way. But Jan, did you have something?

January Johnson [00:05:01]:
Yeah, I was just going to say depends on the type of property. Obviously a condo is going to be different than A single family home. But I mean I would say 150 to $200 as a good average for an electric bill. And you know. Yeah, I don’t, I don’t really think about it in terms of square foot. That’s interesting to think about, but yeah, 150 to 200 average.

Patrick Andres [00:05:20]:
So FPL charges 11 cents per kilowatt hour. The reason I know this is I just added solar to one of my properties and so that property is now going to be paying me money to pay for the solar. The other one is a 4,000 square foot house. During the summer months it’ll run 560amonth.

Avery Carl [00:05:38]:
Yeah, that’s about what our 3,500 square foot is in the. It’s in the mid-400s, which is a four bedroom. So electric’s pretty, pretty typical, you know, for anywhere. Let’s talk about water. So sometimes we have pools, sometimes we don’t have pools. Our water bills are typically, if we haven’t had to fill the pool, under 50 bucks a month for our four bedroom in Destin. Anybody else have anything too, like crazy?

Aaron Gardiner [00:06:09]:
No. We’ve got a three bedroom. It’s about 1600 square feet and we’re running in the $50 a month neighborhood on water. So nothing really shocking.

Patrick Andres [00:06:20]:
I would say I’m running $97 each month at both properties in Panama City Beach. One has a pool, one doesn’t.

Aaron Gardiner [00:06:28]:
Yeah, no pool in mind.

Avery Carl [00:06:32]:
Okay. Yeah. So pretty standard water bills. We don’t. Pretty much everything around here, guys, is going to be in the entire panhandle is going to be on municipal water of some sort. We don’t see many wells at all. Where I do see wells is typically for sprinkler systems. Like we’re on municipal water, but our sprinkler is on a well.

Avery Carl [00:06:50]:
But it’s typically not something that you’re gonna. That’s going to be supplying the actual house with water. So I would.

January Johnson [00:06:58]:
You’re not going to pay water if you’re in a condo that’s part of your hoa. Yeah, good.

Austin Lewis [00:07:04]:
Same with gas. We don’t really have a lot of gas around here. We get asked that about, you know, from northern clients, but very rare we have any properties with gas.

Avery Carl [00:07:13]:
Yeah, I would say pretty much all the properties are going to be, you know, a combined H VAC unit, central heat pump, which means in the, if it get, if it happens to get really, really cold, which it rarely does, you’re. You might have a little problem keeping up with the heat. But typically doesn’t Happen too much around here.

Patrick Andres [00:07:32]:
But.

Avery Carl [00:07:32]:
Yeah, well, it’ll be all electric heat. There won’t be any gas heat. We will see some gas appliances. In other markets that we’re in, there are no gas appliances, but we’ll see some here and. But just not as many. I think a lot of people prefer if they’re building a house specifically to be a rental, it’s easier to clean an electric one. You don’t have to worry about guests not being able to figure out how to. How to turn the.

Avery Carl [00:07:55]:
The fire on. On the stove. Right. And blowing the house up. So. But there is. There is some gas. I would say like 50.

Patrick Andres [00:08:02]:
50.

Avery Carl [00:08:04]:
All right. Internet. What’s the typical Internet service provider around here? I mean, it’s. I would. I think we’re paying like 150amonth at our four bedroom because we. We stopped doing the cable. Do you guys do cable or you do it streaming only?

Patrick Andres [00:08:17]:
We do the streaming.

Aaron Gardiner [00:08:18]:
Just streaming. No cable. We got the fastest WI fi we could find, which was a bit of a struggle, honestly.

Avery Carl [00:08:26]:
So, yeah, Internet companies around here aren’t particularly fast or efficient at getting Internet installed, but, you know, it’s all right. And in Walton County, I don’t know about Okaloosa and Bay. If there’s a lot of people in town, the Internet will be kind of slow.

Patrick Andres [00:08:41]:
Yeah, I’ve got two different providers at my house is one’s charter and they’re running 94amonth for unlimited. And then I’ve got Wow. At the other house and for unlimited, they’re running 64, so.

January Johnson [00:08:57]:
Oh, wow. We also have Xfinity and depending on where you are at and T may serve you, but I don’t know. They have some limited service arrangements or service areas. But if you’re. Again, if you’re condo, you don’t pay that.

Avery Carl [00:09:11]:
We have some kind of wacky companies in. In Walton county, we’ve got Mediacom is the big provider, and then the other one’s called Netcom.

Aaron Gardiner [00:09:19]:
Yeah, we use Mediacom for sure.

Avery Carl [00:09:23]:
All right, so through all the basic stuff. So let’s talk about pool expenses. So what does it typically cost to maintain a pool per month in this market? If you guys have a pool?

Patrick Andres [00:09:36]:
So I’ve got a pool at one of mine, and I’m just paying 150amonth for weekly service on it.

Avery Carl [00:09:43]:
And that’s exactly what I tell people to budget. So I’m glad to hear that I’m validated there because that’s. That’s about what we pay for our pool property. About 150amonth. And anything else as far as maintenance, like, anything crazy happened that you need to address?

Patrick Andres [00:10:00]:
Well, I mean, you know, you got some stuff like the pool. Pool liner may start leaking, or if it’s not a liner, there may be a leak that pops up. The pool lights may have an issue that’s popped up before. And my pool guy takes care of it all. He’s also a handyman, so he gets in there, he takes care of it for me. So it’s not too. Anything too crazy, though it’s fairly straightforward. He’s there every week and stays on top of it.

Patrick Andres [00:10:23]:
We did add a pool heater to the property. That way we could increase bookings.

Avery Carl [00:10:29]:
How much extra would you say that pool heater costs you to run a month?

Patrick Andres [00:10:33]:
That’s why I added solar to that property. So I get a tax break with the solar. It’s 30% of the cost of it doesn’t add value to the property taxes for me, and it’s basically paying for all the power at that property now. And I should get a check back from FPL at the end of the year.

Avery Carl [00:10:52]:
Okay. Awesome. Our pool heater is gas, so. So we do have a small gas bill, but gas is pretty affordable. But you definitely. You don’t have to have a pool. But it helps to, like, if you can get a property with a pool, get it. Or second best would be an hoa, like a community pool.

Avery Carl [00:11:11]:
I do have one property. My place on Cape Sandblast does not have a pool, and it does fine without it. As long as the numbers work without it, that’s fine. But we do have a permit to get one put in. We’ve just been dragging our feet on actually getting that done. I’m sure Patrick’s heard all about that.

Patrick Andres [00:11:25]:
From Luke, but I have told me about the process to even get a permit. It was crazy.

Avery Carl [00:11:30]:
Yeah. Yeah. So get a pool if you can. It’s not really that much to maintain. About 150amonth. If not, just, you know, make sure the numbers work without.

Aaron Gardiner [00:11:40]:
And I think one point on the pools, the. We get a lot of requests. We have an HOA pool. It’s just a few houses down. It has to be heated because many. Many actually aren’t. And we get that request all the time. It’s a big difference between a heated pool and a not heated pool.

Avery Carl [00:11:58]:
That’s a really good point. Ours wasn’t heated when we first bought it. And we went through.

January Johnson [00:12:02]:
We did.

Avery Carl [00:12:02]:
We’re like, oh, it’s probably not a big deal. It’s like a little bougie or whatever. But then we started getting requests and people would not book us on the kind of shoulder seasons because it wasn’t heated. So it made sense to, to definitely just go ahead and get that done. Great point, great point. All right.

Austin Lewis [00:12:18]:
Cost for that, Avery. So.

Patrick Andres [00:12:21]:
Well, I can tell you how much it costs to add a heater. It’s about $10,000. Yeah.

Avery Carl [00:12:27]:
And ours was done wrong the first time and the guy, the, the vendor who put it in did not. In Okaloosa county they’re pretty, pretty particular about permits and things. You do have to get a permit to put in a pool heater and the original vendor didn’t get one and told us that he did and then he did it wrong. And then so we had to have somebody come back and then we had to backtrack because the permit wasn’t done and, and it was just a mess. But it should have been around 10,000. It ended up being more having to get it done. So it’s not a cheap thing to do, but it does pay for itself in a couple of years easily.

Patrick Andres [00:13:00]:
Yeah.

Avery Carl [00:13:00]:
Yeah. All right, so let’s talk about cleaning fees. So what’s everybody seeing for cleaning fees across your different size properties?

Patrick Andres [00:13:12]:
So I’ve got two properties. One sleep 16, one sleeps 20 and I’m paying the cleaner 475 for one of the properties which is a little bit smaller and 500 for the other.

January Johnson [00:13:26]:
How many, how many bedrooms and bathrooms do you have?

Patrick Andres [00:13:28]:
Six bedrooms, four bed, four bathrooms and the one I pay 475 for, five bedrooms, five bathrooms, two half baths and the one I pay 500 for, but it’s about a 1200 more square feet to clean.

January Johnson [00:13:41]:
I showed a property about a week ago and it was four bedrooms, three baths and an above ground pool, but it had a deck and you know, it was nice looking. And the cleaner was there when I was getting video and I asked her and she said she charged 425 for that particular house. So that’s totally in line with what you’re saying to me.

Patrick Andres [00:13:58]:
Yes.

Avery Carl [00:14:00]:
Yeah, we’re paying between four and 500 for our three bedrooms and four bedrooms in 38 and Destin and then it’s lower, it’s closer to 250 for our four bedroom in Cape San Blas. A little cheaper over there, are yalls. Oh, sorry. Go ahead, Aaron.

Aaron Gardiner [00:14:19]:
Yeah, I was just going to say cleaning is a bit expensive when comparatively speaking to severable for sure. We’re at 280 for a three, two. So yeah, it’s, it’s much higher than what we were used to. But we, we just layered in the cost.

January Johnson [00:14:34]:
The, the cleaning, you got to have it clean or your health care. Oh yeah, you got, you got to pay the good service. I went a long time with some mom and pop operators, which was fine when I had one and then three and now I have four. And so a cleaning service that does the linens and all the amenities. I mean, when I started nine years ago, it was just, I kind of hodgepodge that together. But now you got to have reliable people who have a team and you know, can, can give you eyes on the property and be reliable about that. So, yeah, it’s important.

Avery Carl [00:15:03]:
I think I want to shine a light on that really quick because a lot of people I’ll see on Facebook groups because I’m a member of like every single short term rental Facebook group in existence on Facebook. And I’ll see a lot of people when they’re looking for cleaners saying, I don’t a company, I want a single person and I want it to be the same person every time. And I just don’t think that that is an efficient or I mean really good at all way to do things because you’re really limiting your cleaner on what they can do for you, but also on their ability to make a living. Because cleaners can’t make a living on one property. And in the summertime, in the high season, they may have to be turning four or five properties, maybe more in a day. And if you’re saying that it has to be them every time, you’re kind of keeping them from being able to make a living. And that’s just not the way that things are done. Like it’s totally fine to have a cleaning company and it’s a different person every time because it’s the difference between getting it clean by a company that’s actually making money and able to provide the service and then one person who’s like doing the best they can but doesn’t have enough time, and then now they’re stressed and crunched and they might not be, you know, they might not do the best job because you’re limiting them in that way and they’ve got other turns to get to.

Avery Carl [00:16:15]:
So I’m not a fan of that.

January Johnson [00:16:17]:
I do want to say that if you, if you go that route, you need two different people. You need two different mom and pop people. Because if somebody doesn’t show up or somebody’s sick, what are you going to do you know, if you don’t have a team, then they can’t just send in the, the next, you know, the next, the JV team or whatever, you know, they got, you’re, you’re stuck. If it’s mom and pop and mom and pop are sick or they’re, they have a vacation or their car breaks down, you’re stuck and you’re going to be cleaning it or you’re going to be doing something else. So.

Avery Carl [00:16:45]:
Yep. And so for the prices you guys are paying, are your cleaners providing the consumables like paper products and things like that? Are you Amazoning to them?

Patrick Andres [00:16:54]:
My supplies, the toilet paper and the paper products we do supply through Costco. We Costco down to her, like laundry detergent, dishwasher detergent, stuff like that. Because a lot of guests, if they’re in these bigger properties, they’re paying a little bit more. They want to not have these little pods there. And I just wait till everything goes on sale at Costco and I buy a bunch and send it down to her.

Avery Carl [00:17:17]:
So what are you doing, Jan?

January Johnson [00:17:20]:
My cleaner, I just switched over to the actual service that cleans my personal home. All my properties are in the same town that I live in, so that’s a little bit different, but same, same thing. I mean they do, they have a short term rental arm of their business. And so my cleaner brings the little soaps, shampoos, you know, conditioner and garbage bags, dishwasher pods and laundry pods, all of those things. Traditionally I have supplied those things and just kept them in an owner’s closet and the, the housekeeper would put those out. I do also provide body wash and shampoo, but since she started bringing them, basically they just have a choice until my, what I provided runs out. But I’ve done it both ways.

Avery Carl [00:18:01]:
Yeah, our supplies, everything, like all of the paper products, the pods and the, and the shampoos and conditioners and things. But we do the linens ourselves, so sheets and towels we do ourselves. So we have control over what the quality of that is. There are some companies that they’ll provide the linens for you for an extra charge. But I just, I don’t like that. I like to have a little control over what’s going in and out, make sure they’re, they’re decent. So.

January Johnson [00:18:28]:
Okay, because once they pick up your linens, you’re never going to see your linens again.

Avery Carl [00:18:33]:
Right.

January Johnson [00:18:33]:
They’ll bring you equivalent or sort of linens. I even tried it where I had two sets of things and they would swap Out. But still I have all my properties and the service doing it all, you know, the wrong sheets went to the wrong house and finally I just said, you know, you do it.

Avery Carl [00:18:48]:
Yeah. So what’s typically included in a clean around here? So are they just cleaning the house, they’re also taking your laundry off site and washing it, or is that a separate service? Are they doing any type of pool maintenance, hot tub maintenance? What are you guys getting for your price per clean?

Aaron Gardiner [00:19:06]:
We, we get the standard clean. They obviously clean the home. They redo all the beds, but they do wash on site. So a little bit different wash. They wash on site and we, we supply everything for, for the property and then have backups in the owner’s closet. It’s all done on site.

January Johnson [00:19:24]:
One of my properties has two units.

Avery Carl [00:19:26]:
It’s.

January Johnson [00:19:26]:
They’re both under the same roof, but they’re separate entrances. I have a main house and like a mother in law suite. And so two years ago I paid to have my garage plumbed and electrified for two washers and two dryers so that we could do laundry on site. Because I mean, I used to ask my guests to start a load of laundry. But I mean I just have the housekeepers do it in the closet, that kind of stuff. But it makes it nice if both units are occupied at the same time. Nobody’s waiting for a washer because that’s where the washer and dryer are on that properties in a garage.

Patrick Andres [00:19:57]:
So my cleaner takes them off site and launders them because there’s a lot of times there’ll be like blood on the sheets or something like that because somebody’s got psoriasis or psoriasis or something like that. And they’re just older people that are bleeding on the sheets do they just.

Avery Carl [00:20:10]:
Can’T help it, Older people just bleed?

Patrick Andres [00:20:12]:
Well, I mean like, you know, it’s just when they get thin skin, when they get a little bit older, it’s. And they scratch in the middle of the night. They don’t even know it. There’s blood on the sheets. So it’s a little tougher to get out. So she takes them to the laundromat, takes care of them that way.

Avery Carl [00:20:29]:
And makeup too. Like I noticed I’ve, I’ve watched myself at the past couple hotels that I’ve stayed at for conferences. And even if I use a makeup wipe, even if like I wash my face really good somehow, maybe I’m just not good at washing my face, but I will still like on the towel, there will still be a Little bit of makeup, even though I try not to. And I know as hosts we get like completely infuriated by that. And I’ve noticed, like, nobody means to do that. Like, nobody’s like being a jerk and just wiping and just for the sake of wiping it on your, on your towels. But it’s hard to, to do. Like, even when you like, scrub, scrub, scrub, when you go to wipe your face afterwards with your towel, it’s, it gets on there.

Avery Carl [00:21:09]:
So now I’m going to get emails about, you know, better procedures for face washing. But it’s easier to do than a lot of people think to accidentally do that. So ours definitely takes them. She takes them off site too. And I think too, it’s just a little more efficient. Like if you’ve got the clean ones there, we’re putting these on, we’re taking these old ones away and we’re not having to sit here for three hours while we do laundry because got a bigger property too. It, it can be more than one, one or two loads of laundry.

January Johnson [00:21:34]:
So towels alone will kill you. I mean, beach towels, bath towels, and however many towels you put out is how many towels they’re going to use. So if you want to, if you want to put all your towels out, then you’re going to have three, four loads of towels instead.

Avery Carl [00:21:48]:
Yeah. And then too, if they’re, if they’re trying to cram things into, into the washing machine so that they’re having to do less loads, then the water can’t circulate and it kind of, it will make the laundry still smell. So I prefer off site. All right, enough about laundry. Anything else that is included or not include. Anybody have a hot tub in this market? We don’t. I don’t. I see some.

Avery Carl [00:22:11]:
Mostly you’ll see like in ground ones as part of a pool.

Patrick Andres [00:22:15]:
I’ve got a spa online. We tell them it’s not a hot tub, so that way they know it’s, you know, during the summer months, unless they pay for heat, we’re not eating it for them.

Avery Carl [00:22:25]:
Oh, really?

Patrick Andres [00:22:26]:
Yeah, I mean, I’m not gonna, you know, if they want to pay for it to be heated, I’ll be happy to eat it for them. But, you know, and I can get it up to 100 degrees. It’s not a big deal. But most people want to cool down during the summer months. It gets so hot. So.

Avery Carl [00:22:39]:
Yeah, I agree. I don’t think it’s really necessary to have a hot tub in these markets because it’s hot outside.

Patrick Andres [00:22:45]:
Yeah.

Avery Carl [00:22:45]:
Let me Just boil myself in this hot tub while it’s 102 degrees outside. It doesn’t make sense.

Austin Lewis [00:22:50]:
I found a lot of the ones that are being sold with a hot tub are primary owners that they live there, you know?

January Johnson [00:22:56]:
Yeah, I love a hot tub. I don’t care what season it is.

Avery Carl [00:23:01]:
But now during.

Patrick Andres [00:23:02]:
During the spring season and the fall season, they love having that thing heated. So it’s, you know, because it gets a little cooler at night. So they love it then. So it’s nice having the in ground spot.

Avery Carl [00:23:14]:
Yeah, I can see that. So typically, cleaners aren’t really touching the pool, right? Are they skimming it or anything? Ours doesn’t know.

Patrick Andres [00:23:23]:
I’ve got my pool maintenance where they come out and do the clean on the turnover day, so they take care of that for me. Cool.

Avery Carl [00:23:34]:
And that’s about 150amonth. And then you’ve got your cleaners at like 400 or 500 a clean. All right, cool. So I think anything else related to cleaning expenses that we haven’t gone over, so you know what they’re doing? They’re going in, cleaning the whole house. They’re taking away or washing the laundry there, putting new laundry back on, getting everything ready. Nothing too crazy. Like, you know, in other markets there’s some other, like specific tasks that. That need to be done, but not in this one.

Avery Carl [00:24:06]:
Anything else before we move on away from cleaning? Patrick, you look like you want to say something.

Patrick Andres [00:24:09]:
I’m just gonna say I’ve also have them check the grill to make sure there’s propane in the grill. So And. And they do that for me as well. And I have. And I have an extra tank so that way they can change it out.

Avery Carl [00:24:22]:
That’s smart because I, myself included, because I don’t grill enough to remember to turn off the propane. I just leave it running. Luke one time left the grill on all night with. And the propane was connected to like an underground tank, so it was almost, you know, endless. And I looked outside in the morning and saw like the heat waves coming up. But we have had a situation before in another market where a guest left burgers on the grill. Like they didn’t leave it on or anything. But the cleaner didn’t check and the next guest went to use it and there was rotten burgers on the grill.

Avery Carl [00:24:57]:
That was pretty gross. So we actually recently went completely grill less in our beach markets because somebody burned down our fence in Destin and it’s working out so far. We just make sure they know we do not provide a grill. And it hasn’t been a big deal so far.

January Johnson [00:25:16]:
I don’t provide anything that, that, I mean again, I don’t have a six bedroom, five bath house or whatever you said you have, Patrick. But. But I don’t provide things that I have to maintain that aren’t going to distinguish me in my little area and be a money maker for me. So I don’t want. I don’t want another mouth to feed. I don’t want another grill to clean or another.

Avery Carl [00:25:38]:
Yes.

Patrick Andres [00:25:39]:
And I have had a grill melt, melt offense for me from a guest. So they, they melted my PVC fence at my pool property. So yeah, I’m right there with Gabriel.

Avery Carl [00:25:49]:
Yeah. And they didn’t tell us and somewhat we only knew that it was happening because the neighbor called the fire department and I can’t believe Luke answered the phone when they called. But yeah, that was fun time.

Patrick Andres [00:26:04]:
So several guests asked whether we have a grill there or not. So we do provide it. And I just make sure there’s a fire extinguisher right next to it.

Avery Carl [00:26:13]:
Well, ours. So they, they left it. It was, it wasn’t something that happened while they were standing there using it. So it, it was just like too close to like some pine straw or something and then burned down. I don’t exactly know. This is. According to the fire department. That’s not a call you want to get.

Avery Carl [00:26:34]:
All right, so enough about cleaning. Let’s talk about maintenance and capex. Is there anything specific that across all. You know, all. A lot of you own multiple properties that you’re running across in terms of general maintenance or capex. Like for example, adding a pool heater.

January Johnson [00:26:53]:
Well, I’m going to say your air conditioning is going to need to be replaced more frequently than some inland location because of salt air. So you just have to build that in. I don’t mean like every five years or anything, but definitely, you know where you would think it would be 15 to 20. It’s going to be like 10 to 12 or something like that maybe.

Avery Carl [00:27:10]:
So you just.

January Johnson [00:27:11]:
You have to plan for whatever appliances outside are exposed to salt air because.

Avery Carl [00:27:16]:
That’S gonna makes it rust much faster. That was on my list of points to make. Great job, Jan.

Austin Lewis [00:27:21]:
Door locks. I’ve noticed with door locks they. They tend to seize up a little bit because of the same thing.

Avery Carl [00:27:29]:
Yeah. The lock on my front door, on my office, the outs. The outside is. I almost said frozen. The outside is rusted. So I. And I’m too lazy to like just get that taken care Of. So I just go through.

Avery Carl [00:27:39]:
Put the key in the back door of the office because the front lock is rusted and I’m too lazy to get it taken care of.

Patrick Andres [00:27:46]:
Yeah. And you’re definitely going to want to make sure you get your ACs maintained every year and just make. That’s gonna be one of the. And get the coils clean inside and out. It’s going to be 500 to get that done. If you get the inside and the outside ones done, depending on how many units you have. I know I’ve got three units at one, two units at the other. So you just want to make sure you do that.

Patrick Andres [00:28:06]:
That way in the middle of the summer, you’re not getting a call that the AC’s out. Hopefully.

January Johnson [00:28:10]:
Yeah. That I have a service that changes the filters and checks my ac, so they go every month and change the filters. And I mean, I could do that myself, but. But the two reasons that I like it is, A, I’m sure it’s done monthly, and B, if I need some kind of emergency AC service, I’m at the top of their list because I have this recurring service. So, you know, I can call on a Saturday or a Sunday and get, you know, get emergency service if needed. But the routine maintenance, I mean, twice I’ve had AC go out for people. I mean, I have a portable AC unit that I bought at, like, Sam’s Club, that my. In my garage, and I can take it over again.

January Johnson [00:28:48]:
My properties are two and three bedrooms. So, you know, I have been able to do that. But you don’t want that call, man. You don’t want that call. Hey, we just checked in and there’s no ac. And of course it’s like, you know, Sunday at noon. It’s never going to be Monday at 10am.

Avery Carl [00:29:04]:
Yep. Anything else? Rust was my main specific call out here. AC is a big one, obviously, because it gets hot. So landscaping is expensive here.

Aaron Gardiner [00:29:17]:
Yeah, we noticed that as well. We had to redo the landscaping in our place. It is expensive. And then the pine straw, which. It looks beautiful. It does deteriorate rather fast, so you’ve got to get that done a couple times a year as well, which isn’t overly expensive. But the good news is you don’t have to mow, which is great. So.

Avery Carl [00:29:35]:
And it’s difficult to keep grass alive in Florida. It’s, you know, it’s really hot, obviously. So if you can, like one of our properties that has a yard, the other two don’t. It’s like Sandy or a condo but the one that has a yard, we just got rid of all the grass and it’s like a rock, like a hardscape, I guess it’s called, because it’s just too hard to keep grass alive and you don’t want to deal with sprinklers coming on with guests and then things, they unplug things. And it was just easier to do it that way. So I recommend not having grass. If you’ve got a fenced in property with a yard, just make it like a cool rock landscape. That’s worked really well for us for sure.

Austin Lewis [00:30:14]:
The weeds grow like 10 months a year down here, so you don’t want to have to pay somebody to come cut your weeds every. Every month.

January Johnson [00:30:22]:
Yeah, pest control is important here. People freak out when there’s a roach or a, even a lizard. I had somebody ask me, I love the lizards, is there some kind of infestation? And I was like, no, they just live here. They’re lizards, they’re not a pest. But you don’t want to see a roach because people freak out about that. And, you know, whether or not it’s outside or whatever. I mean, there’s, there’s some Florida wildlife you have to deal with, but you don’t want things in your house. So pest control.

January Johnson [00:30:48]:
I do it at least twice a year.

Avery Carl [00:30:50]:
Yeah, we do. Monthly.

Patrick Andres [00:30:52]:
Monthly, Yep.

Aaron Gardiner [00:30:54]:
Monthly.

January Johnson [00:30:55]:
Yep.

Avery Carl [00:30:55]:
Catch up, Jan. I think the lizards are cute. It’s kind of like reminds me like when you go to Mexico and there’s the big iguanas everywhere. We have these little tiny lizards and they’re much cuter and. All right, so let’s talk about property taxes and insurance. So this is the thing that is kind of the elephant in the room, the insurance when it comes to Florida. So insurance is high here for obvious reasons. It’s a little, it’s higher than normal right now because a lot of insurance companies dropped last year after the hurricane or right before.

Avery Carl [00:31:32]:
Actually, I can’t remember it was hurricane related. I don’t remember which hurricane it was. Jan, do you remember?

January Johnson [00:31:38]:
Well, Hurricane Michael was in 2018 and something like 76% of all, really all insurance claims in Florida last year or year before were had an attorney attached to them. So they. That means everybody got a much bigger payout than you would have if you were just single person fighting with your insurance company. And for that reason, that’s why a lot of people, a lot of companies are bankrupt or have left the state. I mean, routinely they, they leave the state for. Sometimes refill their coffers in other places and they’ll come back after a couple of years. But right now we’ve had several in receivership and yeah, it’s because there have been several hurricanes with public adjusters who fight for you, but then you end up paying more later.

Avery Carl [00:32:21]:
Yeah. So it goes up and then it goes back down again after, after a few years. So we’re in one of those up periods right now. But I think the, the governor is involved now with getting, getting some back back in here so that they’re not exorbitant anymore.

January Johnson [00:32:35]:
But insurance definitely limited the amount that people can sue for or how, you know, what you can, what you can su. Can just file suits and have it be very litigious from the beginning. So there’s, there’s been some curbing on that, but I don’t think that’s necessarily going to immediately translate into lower rates, but not something that’s happened. And of course insurance is highly dependent on the age of the property and the age of the systems. I mean, I, I wanted, one of my clients wanted to buy a townhome the other day. That was awesome. But the roof is 30 years, 34 years old. It’s original tile roof.

January Johnson [00:33:08]:
And even though it might be good for 50, the insurance says no, it’s older than 30, so we’re not going to write a policy on that. So the owners have to fix the roof before they can sell the property. Because unless you’re paying cash and even then nobody can, you know, you can’t get a decent insurance policy on super old roofs or systems.

Patrick Andres [00:33:26]:
Yeah, and I think they’ve got a bill in front of the legislature down there where they’re going to stop people from being able to assign claims. And if they also stop, I think they’re going to stop attorney fees as part of it, which will let get insurers back in. Because if somebody was getting a dollar claim, they were getting 500,000 for attorney fees and the attorneys were the ones making out like bandits on those claims. So that will reduce costs for the insurance companies as well. So hopefully they’ll be coming back into Florida.

January Johnson [00:33:56]:
And after the, after the attorney, by the way, in 2018, you know, a lot of people who had water and not necessarily flooding, but just water and mold damage and stuff. The, you call your insurance people or these, these companies would come through town and they’d say, oh, we can do mold remediation and they’ll go in and cut out Sheetrock and put their fans and you think, oh great, they’re handling something for me. But what they’re doing is they’re giving your insurance company a thirty thousand dollar stupid, outrageous bill that they’re going to get paid because it’s emergency service, you know, and, and now you’ve got holes in your Sheetrock and you’re out a bunch of money that you didn’t know or, or that’s counted against you. But that’s an extreme situation. I don’t want to act like hurricanes are the norm. I mean, they don’t.

Avery Carl [00:34:38]:
Yeah, hurricanes are not the norm. And I think that’s a lot of people overlook Florida and like, or coastal areas in general because they don’t want to deal with hurricanes. But it’s really like a very small percentage of the time and you’re not always going to be affected. Every time there’s a hurricane in the Gulf, it’s not ne. It’s not always coming directly to this area. You know, they go different places.

January Johnson [00:34:59]:
Every market has something, right. You’ve got fires or you’ve got earthquakes. I mean everybody, everything’s got something you got to deal with. But if you have insurance, as Brandon Turner said, it’s just a project. And then now, you know, you manage it like a project, you’ve got money to deal with it. It’s not that much of an emergency as it is a project.

Aaron Gardiner [00:35:17]:
Yeah. When we, when we looked. Sorry. When we looked, it was. To your point, Jan, it was the roof. So how new is it? What type of material is it? And then as well what flood zone are. Is the home in? And we searched and searched and then priced out the insurance for quite some time before we landed on the.

January Johnson [00:35:35]:
Right.

Aaron Gardiner [00:35:36]:
The, the flood, the flood component was a huge difference.

January Johnson [00:35:40]:
Yes. And if people, if the owner has a federal flood insurance policy, most of the time it’s transferable to you at the same rate. So. And it’s much cheaper if they transfer it. Then you try to go get a new policy or a private policy.

Austin Lewis [00:35:54]:
Yeah, we get a lot of people that have never been here or spent much time here worried about hurricanes. And I’ve lived here my entire life and I’ve been through what I would consider two serious hurricanes. And everybody’s definition is going to be different of that. But like Hurricane Michael, you. It hit Panama City hard. It. We didn’t get much damage at all over here. The hurricane that just hit Tampa, the Orlando market last year, we didn’t get, I don’t think we got any rain from it.

Austin Lewis [00:36:19]:
So people don’t really realize how big Florida is. And, but, but insurance I mean, you’re going to have to factor in, I mean, just kind of point blank it’s going to be expensive. I normally tell people about 1 1/2% of the purchase price is kind of an average that I’ve seen, but there’s a lot of variation in that. I think the roof is like Jan said, is probably one of the biggest things. But you know, you can spend that like, like you said your client, the owner was going to have to replace the roof. So hey, you get a brand new roof in the purchase, of course, if they’ll agree to it. But you know, there’s some, some positive aspects to it too.

Patrick Andres [00:36:55]:
And one thing I would say is, you know, even if you’re buying not in a flood zone, you’re going to want to buy flood insurance because it won’t be escrowed if you’re buying depending on what the type of mortgage you’re getting or anything. But you’re going to come out of pocket for the flood insurance. Just protect yourself. So I’ve got one that’s not in a flood zone, but I buy extra flood insurance just to make sure I’m covered if the water comes in first. That’s the way the insurance work. If the water comes in first, it’s not wind damage. They’re not paying for the damage to the property. So I want to be covered both ways.

Avery Carl [00:37:24]:
Oh, good to know. Good tip. Good tip. All right, now let’s talk about property taxes. So while Florida is not super high on the list by state of high property taxes, it is a lot higher than other markets the short term shop operates in. I believe somebody correct me if I’m wrong, the Florida property tax rate is like 0.98%, I believe so less than 1% of the assessed value. But you know, if you’re buying a really high dollar property, that can be, you know, significantly, that can be a good chunk of money. So keep that in mind.

January Johnson [00:38:02]:
So one of the mistakes people make when they’re analyzing numbers is they look at last year’s taxes on the MLS and you’re like, okay, that’s a whole different basis than what you’re buying this property at. So you can’t use that number. So they, you know, I teach them how to go to the property appraiser website and use the tax estimator. And that’s a very conservative number that you’re going to get on the tax estimator because you don’t, you know, it’s, it’s not, you don’t, you know, Anyway, that’s just an estimate, but definitely get that estimate. Don’t assume that somebody who bought this property 20 years ago and paid 500 a year in taxes last year is what you’re going to pay.

Avery Carl [00:38:37]:
Yeah, yeah.

Patrick Andres [00:38:38]:
Because the assessor, when you buy it’s going to change their basis to what the new price was that’s on the contract. It’s going to double maybe.

Avery Carl [00:38:48]:
Yeah. So keep that in mind. And let’s talk about state sales tax and local occupancy tax, if any, that you’re having to pay on your rentals. Who wants to start?

Patrick Andres [00:39:00]:
I was going to say Bay county. You know, it’s 6% for the state, 5% for Bay County. They got a 1% lodge tax and I think they’re talking about another 1%. So. But that’s all taken care of through my lodge tax and transferred onto the guests. So it really doesn’t come through my pocket.

January Johnson [00:39:20]:
Yeah, the city of Panama City just added that 1% merchant fee. City of Panama City beach has had it for a long time, but in Panama City it did not apply to short term rentals and now it does. And so that we’re just getting equivalent with Panama City beach is what I’m saying. They’re both in Bay county, but yeah.

Avery Carl [00:39:38]:
I think it’s, I think we’re 4% in Walton county and we’re 5% in Okaloosa county, which is Destin. Walton county, guys, is miramar beach and 38. And then state sales tax. What’s the sales tax in Florida? I don’t even know. Pay attention.

January Johnson [00:39:54]:
Seven percent.

Austin Lewis [00:39:55]:
Seven, Seven and a half. Yeah.

Patrick Andres [00:39:57]:
Okay.

Avery Carl [00:39:58]:
And again, we, I, we use my lodge tax so we don’t ever pay attention to calculating all that. It’s just done for us. Definitely. And get, get avalara my lodge tax. Guys, it’s so much easier than, than trying to just calculate all that and remit it yourselves. Anything else related to taxes that you guys want to hit on before we move on? All right, good deal. So last, last thing that I want to hit on before we close out is added amenities and their costs. So what I mean by that are some people will provide bicycles, some people will provide paddle boards, some people provide golf carts.

Avery Carl [00:40:39]:
So any of those things, do you guys do any extra amenities?

Patrick Andres [00:40:44]:
No, that’s an extra liability for me that I don’t want.

Avery Carl [00:40:48]:
Yeah, and that’s a really good point that I wanted to make too. So in one of our houses we do rent them bikes, but they are not our bikes. So the way we Shift. Some of that liability is instead of us buying the bikes and saying, here, use our bikes. We have. There’s a company that delivers the bikes and they’ll stay there all year. But if the bike has a flat tire or needs something, then they’re calling the number on the bike. They’re not calling me.

Avery Carl [00:41:13]:
And then it’s the company’s bike that they had a wreck on and that they want to sue and not my bike. So, again, that doesn’t. I’m sure there’s some kind of way somebody could be litigious about that. But the same thing with golf carts. So I would prefer we don’t do it with golf carts. We don’t really have a need for it. But there are some properties that are just a little too far for people to want to walk. And people love golf carting around here.

Avery Carl [00:41:38]:
So it’s really fun to just, you know, go half mile down the road on the golf cart to eat dinner or whatever. So there are companies who you can call them and let them know when the guest is coming, and they’ll come drop the golf cart off and pick it up when they’re done. So we put it on the guests and say, like, you know, if you want these things. Again, we don’t allow golf carts, but if we did, we would say, here’s the company. It would be in our guidebook. Call them, they’ll deliver it. They’ll pick it up when you leave nothing to it. So I would recommend doing that rather than going and buying a golf cart.

Avery Carl [00:42:09]:
Paddleboards, typically, I think a lot of people think that paddle boards are a lot lighter than they actually are. They’re not surfboards. So what you’re gonna find is that people probably aren’t going to drag them to the beach, but they probably are gonna, like, let their kids play around with them in the backyard and, like, on the hard ground and scratch them up. So I. I mean, it can be a good amenity, but I think it’s just something that’s more maintenance that I. Than I would really want to deal with. We do provide beach wagons and ice chests and then a few umbrellas and chairs and beach towels that are separate from our actual towels. So we do that stuff.

Avery Carl [00:42:49]:
Anybody else do anything crazy, we don’t get too crazy because it just adds too many things to break and mess up your system.

Aaron Gardiner [00:42:56]:
Now, just like you mentioned, I mean, we’ve got beach chairs, towels, and. And we do recommend specific companies that rent the. The golf carts, as mentioned. So that’s it.

Avery Carl [00:43:07]:
Yeah.

January Johnson [00:43:09]:
Cool.

Avery Carl [00:43:10]:
Well, anything else? So I think we’ve hit on everything that I had that I wanted to make sure was mentioned. Anything else you guys think that our listeners could benefit from hearing about this market?

Patrick Andres [00:43:21]:
Well, I was just going to say I think we didn’t talk anything about furniture you’re going to have to replace because I mean, you’re going to have to replace a couch every, you know, two to three years maybe, depending on what kind of wear and tear it’s getting on it. Mattresses, just think about that.

Avery Carl [00:43:39]:
And in terms of furnishing, like I would say a good 90% of the properties in this market will come fully furnished. So you probably won’t have to budget a huge line item for furniture expenses. My rule of thumb that I use for furnishing a starting from Scratch house is 10,000 per bedroom, but that also includes the common areas like kitchen and living room. So for example, a three bedrooms, 30,000, a five bedrooms, 50,000. But when you’re buying a fully furnished property, you know, I would budget 2 to 5,000 on replacing things that you don’t like or that were grandma or that are out of date. You know, just things that are worn out that you might want to change. I recommend budgeting 2 to 5,000 for that. You may not need it.

Avery Carl [00:44:23]:
But I think something that’s important to remember when you’re buying furnished properties is there’s no such thing as truly turnkey. It’s, I hate that word because it’s so subjective. It means different things to different people. Like I’ve had brand new constructions that come fully furnished with a very well stocked kitchen. And the clients are mad because the deck wasn’t stained, because treated wood you have to let sit out for several months before you can stain it. And they’re like, well, I was told this would be turnkey. I’m like, well, do you want to wait to close another six months so they can stain this deck for you? So again, everybody has a different idea of what the word turnkey means. So just assume that nothing is.

Avery Carl [00:45:03]:
Turnkey is the way to never be disappointed and just know you’re going to have to go in even on a brand new construction and tweak some things.

January Johnson [00:45:10]:
So keep that less furniture than, than people think you do. Yeah, I see a lot of properties day in and day out and you know, yeah, I want a nightstand on both sides of my bed, but I don’t need a dresser and you know, necessarily a chair and an ottoman and a, you know, whatever. I don’t need all that furniture and yesterday I was in a condo where there were in, in the two bedroom condo there were three giant armoires with the TVs in them. I mean we’re talking about the TV that can hang on the wall. They just kept the armoire from 1985 and one bedroom. You had to like scoot between the bed and the armoire. I’m like, people hang this on the wall and get rid of this giant piece of furniture that nobody’s using, you.

Austin Lewis [00:45:49]:
Know, and don’t think about it like you’re furnishing your own house. Like you people don’t want to see the modern look. They want to see those bright blues and, and, and you know, bright colors whenever. At least in my market I’ve seen a lot more higher revenue come out of, you know, some, some stuff you definitely wouldn’t put in your own house.

Avery Carl [00:46:07]:
Yeah, over in this market I see a lot of all white everything. I think that’s coming from the whole Alice beach thing. But then, sorry, in the Emerald coast I see in Destin and 30 a a lot of all white. But then if you move over to the forgotten coast I see a lot more like bright colors and more fonts stuff. So I agree with you. Well, thank you guys so much for coming on. I really appreciate it. And for those listeners who want to buy something with us in the forgotten coast or Emerald coast, email us at agents at the short term shop.com if you have more questions.

Avery Carl [00:46:38]:
Lots of ways you can get us. The main two ways would be joining our Facebook group called short term rental, Long term wealth or we have an office hours open zoom every Thursday. You can sign up for that@strquestions.com thanks guys.