Why to Buy a Short Term Rental in Galveston and Crystal Beach

Avery Carl [00:00:02]:
Hey guys, welcome to the short term show special episode series. 10 episode deep dive on the Galveston and Crystal Beach, Texas markets. Couple notes before we dive in. If you guys are looking for current income and current prices of properties in this market, you can get all of that info on our website@theshorttermshop.com you can set up searches just like you do on Zillow or realtor.com all those places and we do have all the income data as well, so be sure to check that out. Also make sure you check out our other special episode series. So we have 20 markets that we operate as real estate agents in and we have 10 episode series just like this one. On all of those, make sure to check out the short term show as well as the short term rental management show. And be sure to join our Facebook group.

Avery Carl [00:00:45]:
It’s called short term rental, Long term wealth. Same title as my book. Now let’s go ahead and dive in. Hey guys, welcome back to another short term show miniseries, Deep dive. This time 10 episodes on the Galveston and Crystal Beach Texas market. So super excited to get going on this one. We have one of our amazing agents in that market. Kelsey Kelsey, you want to introduce yourself really quick.

Kelsey [00:01:22]:
Ah, yes. I’ve been working in this market for about two years and I have have two short term rentals in this market and I have one in the Smokies. And I’m excited to talk to you guys about why this is a good market. Excuse me, to invest in.

Avery Carl [00:01:34]:
And you’re also the top agent in that market, aren’t you?

Kelsey [00:01:38]:
It’s true. Sorry to clearly tell that, but yeah.

Avery Carl [00:01:45]:
Just wanted to throw that out there because I know you probably wouldn’t say it about yourself. So yeah, let’s talk about this market a little bit. So for those listeners that we have that might not be familiar, where is Galveston? Slash, Crystal Beach? Where are Galveston and Crystal Beach?

Kelsey [00:02:02]:
Okay, so just as a quick overview, Houston, Greater Houston area, 7.21 million people as of the latest census. We are. Galveston is about one hour south of all those people. Galveston is an island. You take a, you drive there. There’s a causeway bridge that gets you there. And Crystal beach, you can either travel east across a ferry, free ferry operates 24 7. Probably see a dolphin.

Kelsey [00:02:31]:
It’s a good time. There are tourists who are, who will even ride the ferry just for a free boat ride. They won’t even drive their car and go to Crystal Beach. They’ll just walk on, experience the ferry and go back. You can also go around. It’s Really a wash in terms of getting there to get to the Bolivar Peninsula. The Bolivar Peninsula is just that. It’s a peninsula.

Kelsey [00:02:52]:
You can get there on land. You’ll have Port Bolivar, Crystal beach and Gilchrist. It’s spelled like Gilchrist but said Gilchrist. That’s where all of those cities are. On Galveston island you have Galveston and then there’s this tiny village called Jamaica beach that has a lot of canal front properties and a short term rental. Almost everywhere in this market is very short term rental friendly.

Avery Carl [00:03:18]:
Awesome. So let’s talk about. So who, who comes to this market and what’s kind of the, the seasonality. What are, who comes and why are they coming?

Kelsey [00:03:27]:
They come. It is a easy weekend trip for a lot of people. A lot of people might book, you know, even as little as two weeks out. You know, if I’m traveling across state lines, I probably, you know, make some further out plans. I know that sometimes surprises new owners in this market. They think that they’re going to be booked out, you know, super far. And for big holidays. That’s true.

Kelsey [00:03:51]:
But a lot of times if it’s especially in the off season, lower season, you’ll have somebody booking two weeks out and they’re just coming for the weekend or a long weekend during the summer, it’s wall to wall bookings. You know, it’s mostly Texans. You’re marketing to mostly Texans. But you’ll also get the random person who has some connection to Texas. They may. We’ve had people come from Canada and stay in our short term rental, which I was surprised about. But they have friends that live in Houston because they used to live here. And so they’re basically having like a small reunion at a beach house with their friends.

Kelsey [00:04:33]:
So that happens a lot when we have out of state guests. A lot of times it’s a. They’re meeting up with someone they know in Texas, whether it’s Dallas, San Antonio, Houston and anywhere in between.

Avery Carl [00:04:44]:
Gotcha. So it’s mostly in state guests. This is very much a regional, drivable weekend destination for people in the greater Houston area, which I think Houston just passed some other city I think as being the third biggest metro area now. I know it was fourth for a long time, but I think it did pass some. I can’t remember which city, but it passed one. To be like the third biggest metro area in the country.

Kelsey [00:05:06]:
Yeah, I think this is, I think this was supposed to happen in the latest census.

Avery Carl [00:05:10]:
Yeah. So it’s a really big city, guys. Houston is huge. And I don’t think people think about that. I don’t think they realize how big Houston is. Like, when you think of New York or Los Angeles, you think, oh man, that is a huge city. Or Chicago. But Houston is almost as big as those.

Avery Carl [00:05:25]:
It’s not just like, you know, Chattanooga, Tennessee, you’ve heard of it, but it’s, it really is huge. So there’s a lot of people in Houston. So. And this is where they go for the beach. Just like, you know, different areas of the country. Like if you’re in the Northeast, you’re probably going to Cape Cod. Maybe that’s your beach. I don’t know.

Avery Carl [00:05:43]:
I’m not a northeasterner. But when people take beach vacations in Texas, a lot of times it’s going to be to the Galveston, slash Crystal beach area. So something important to remember. So you said lead time on bookings is not super far out. We’re going to get to that in a later episode. So let’s talk about the, how old this market is in terms of tourism. Is this something that people have just started coming to in the last few years or has it been around for decades and decades?

Kelsey [00:06:11]:
No, this is decades and decades and decades. In fact, I was just decorating my latest short term rental and I have a swimsuit contest picture from like 1929. I mean, tourism and Galveston and Crystal beach go hand in hand in Crystal Beach. That city doesn’t survive without tourism. Galveston has other things. How I often describe the two cities for people who have never been or haven’t been to both. I usually say that Crystal beach has everything that you need and some of what you want. So a handful of restaurants.

Kelsey [00:06:45]:
There’s places to get a snow cone, places to get ice cream. You can go parasailing, you can get a helicopter ride. Some things are newer than others. You can go on a fishing charter. Galveston has everything that you need and more than you could possibly do in five days. There’s got Moody Gardens, they’ve got the Pleasure Pier, the Strand. Strand is a bunch of like older shops. They’re the kind of shops that have like a Christmas store all year long where you buy ornaments when you visit kind of thing.

Avery Carl [00:07:17]:
Luke loves those. Makes me go to a Christmas store everywhere we go.

Kelsey [00:07:23]:
Like they have Schlitterbahn, which is a water park, regional. So you may not be familiar with it, but there’s one in New Braunfels, one here. So there’s lots of things to do. It’s Galveston is a lot more, I think, attractions focused for a lot of people who visit there. And the way people set up their short term rentals kind of mirrors that. So in Crystal beach, the house provides a lot of the entertainment. You might spend like 90% of your time at the house or at the beach. So people really amenitize the properties and those are the properties that lend.

Kelsey [00:07:56]:
In Galveston, I really feel like it’s low hanging fruit to do some of those same sort of amenities, but people look around and they don’t see their neighbors doing it and so they don’t do it. Like they don’t add tiki bars and things like that to the underside of their houses most of the time. But those things are not expensive to do and they have essentially they have other attractions to go do. So they could hang out at the house and have a relaxing week, but they’re, you know, 20 minutes from Moody Gardens and they’re ready to spend money, so.

Avery Carl [00:08:28]:
Okay. Okay. And I read somewhere recently that Galveston is the busiest port in America. So there’s like, it’s Galveston. Even though it has a lot of attractions, it’s an actual city. Right. It could, it might not survive well without tourism, but it has other industry there besides tourism.

Kelsey [00:08:46]:
Yes. Yeah, there are definitely things that would go real south real fast if just stopped. But they could survive. They’ve got, you know, a big hospital, they have, you know, college. They have other means of industry. And you talk about it being a port city. I’ve taken multiple cruises out of Galveston. We were actually talking about taking one yesterday.

Avery Carl [00:09:09]:
Oh, okay. So I didn’t even think about that as being a point of tourism.

Kelsey [00:09:12]:
That it.

Avery Carl [00:09:14]:
You could have people who aren’t necessarily just like, okay, I’m going to go to Galveston for the week. They might go stay at a beach house in Galveston or Crystal beach for a couple days, take off on a cruise or, you know, maybe recover from the cruise in a beach house for a few days. I know every time I’ve gone on a cruise, I’ve come home with some kind of horrible, horrible, like the worst illness I’ve ever had. Like every time it’s been, well, I’ve been on four and every time I come back it’s like some horrible, like can’t get out of bed thing, I guess, because, you know, cruises are kind of gross when you think about it.

Kelsey [00:09:46]:
But a little bit. Yeah, but so you built in child care, so there’s that.

Avery Carl [00:09:51]:
Yeah, I don’t know, man.

Kelsey [00:09:56]:
So my opinion on the cruise thing. So the cruise terminal. Terminal. If you look at a map of Galveston, the cruise terminal, I guess it’s reversed, but it’s on the far east side of Galveston Island. And the true beach houses start about 20, 25 minutes from there, probably 25 minutes from there. So you have what I call the in town houses that are around, you know, utmb. That’s the hospital and, you know, the schools and the different things like that. And then as you travel west along the coast, you’re not in front of the seawall anymore.

Kelsey [00:10:35]:
You have, you know, beachfront properties that are. That are right there along. In Galveston, I use the Spot, just a hamburger place, but it’s in the center of where there’s multiple other restaurants. I use that as a waypoint, just like in the Smokies. When I was buying the Smokies, I used Dollywood as a waypoint. So I want to know where I was west, east, how many minutes away? So I use the Spot as a waypoint. And your first beach house, true beach houses that are beachfront are about 18 minutes west of the spot. So how that relates to a cruise is that I think people will like, let’s say your cruise leaves on like a Sunday, but you got off on Friday.

Kelsey [00:11:17]:
So I think you might spend like, let’s go to Galveston before we go. I don’t have work, so I think they might take two days. Just go ahead and travel down. I don’t think those people are spending a ton of money outside of their cruise. So I do think some of the people who buy in town probably get more of the I’m about to leave on a cruise people. Because it’s so conveniently located, it would be closer to 10 minutes from the port than 25 for a short stayover and closer to some of the attractions. If they’re wanting to hit up attractions, like if they flew in from Dallas and they want to do the Galveston things and they’re not there for very long, they may choose to do it that way instead.

Avery Carl [00:11:56]:
Okay, and let’s touch on attractions again. I know we already kind of talked about it. So you got the beach, obviously. You’ve got Schlitterbahn, You’ve got the Strand, which is just kind of acute shopping area. Is that on the beach?

Kelsey [00:12:09]:
No, it’s in a historic area away from the beach. But not. And then there’s shops all along, a lot of walking traffic, all the different fun restaurants that you can see the beach from.

Avery Carl [00:12:21]:
Gotcha. Do you have any, like, piers or anything like that that people walk out on and fish or.

Kelsey [00:12:26]:
Yes, there’s a huge pleasure pier. That’s what they call it. And It’s a, like a big Ferris wheel. There’s, I think Bubba Gump Shrimp Company. There’s restaurants along it and lots of other, you know, it’s like, it’s rides and restaurants. Yeah.

Avery Carl [00:12:41]:
You know, you’re buying in a true vacation beach market if there’s a Bubba Gump Shrimp Company because it’s a great place to get the worst shrimp ever in a place that has the best shrimp ever when you’re on the Gulf Coast. But every single beach town has above a Gump and it’s like gross. But that always cracks me up that they move in and you know, they’re selling these like frozen shrimp from, you know, imported from wherever. When you can actually go somewhere local and get the best shrimp of your life in a place like this.

Kelsey [00:13:13]:
Yeah, for shrimp, I much prefer stingery and Crystal beach. You can. That’s. I like to recommend a place to people because you can sit on the back deck and so along the backside of the peninsula, there’s an. The intracoastal waterways there and you can watch huge barges go by while you eat your fresh caught shrimp.

Avery Carl [00:13:34]:
Awesome. So, okay, any other major attractions? Do you have stuff like. What’s another thing that’s in like every tourism city? Like a Titanic museum or Ripley’s Believe it or not or like a go kart track. All of those are all.

Kelsey [00:13:47]:
I feel like big moody gardens. And there’s another one that I’m not thinking of. I’ll get back.

Avery Carl [00:13:53]:
What’s Moody Gardens? You mentioned that a couple times. And I keep.

Kelsey [00:13:56]:
It’s a. It’s a combination of things. They have like an aquarium. They have a, like high schools hold their proms there all the time. They have like big banquet rooms. There are hotel. It’s a hotel. There’s like a wave pool, water park type thing.

Avery Carl [00:14:14]:
So it’s kind of like a theme park slash water park thing.

Kelsey [00:14:17]:
Yeah, it’s almost like a nature themed water park. Like part zoo, part aquarium, part water park and you. But each one is a different, like ticketed experience. Okay, awesome.

Avery Carl [00:14:30]:
That’s something you could definitely kill half a day with with a few kids.

Kelsey [00:14:32]:
Yeah, definitely.

Avery Carl [00:14:34]:
Okay. And so this market, in my opinion is significantly cheaper than many other markets that are along the Gulf coast. So are there without bleeding. I’m trying not to get too far in the weeds because we’ve got a whole other episode on this. On the next episode. What. What do you have to add to that? So I know in Crystal beach pretty much everything is new construction, but it’s still significantly Cheaper than buying something in Gulf Shores or Destin. So can you elaborate on maybe why that is?

Kelsey [00:15:06]:
Why is that? You know, Crystal beach is a sleepy beach town. When people come in and not to get too far into it, but when people come in and they want to spend something like 500k, you can get a beach house property like a 3, 2 beachside, true beach house, something weird like 2012 construction for around 500,000. Now if you want to spend, if you have the budget for like 750, Galveston or Crystal beach are good choices. You can just essentially you get closer. So in Crystal beach you could get probably like around row three, row four in there. It’s definitely possible. Galveston, there’s on the Crystal beach side, the area between the southernmost highway and the Gulf is wider in most areas than on Galveston Island. There’s many parts other than Pirates Beach.

Kelsey [00:16:05]:
In Galveston, mostly you have an area that’s probably between one and four houses wide. So the people who have that one house between them and the Gulf, that’s a million dollar plus. Like that’s not even a million. That’s multiple millions of dollars. It’s a mansion. And those just don’t come up for sale very often. They do sometimes. But those ones that are, there’s one house between the highway and the beach.

Kelsey [00:16:33]:
Those are kind of forever houses for, for families a lot of time. But you can get beachside starting around 750 in Galveston. A lot of times those houses are a little bit older. What happened in Crystal Beach? Crystal beach is kind of a sleepy beach town. And you know, this coming from, you know, hunting, fishing, you know, camps kind of thing, people would basically set up like a beach shack. They call them beach cabins. And it was basically a nice way of saying like a poorly constructed, thrown up, you know, house with, you know, no real standards that it was built to. And there was a hurricane that came through in 2000.

Kelsey [00:17:16]:
Gosh, when was it? 2008. And destroyed all of those very poorly constructed, constructed houses. My, my house was built in 2002, my first one that I bought and it survived and it’s absolutely fine. And there are many houses that did. All of the ones that were built by my same builder in my neighborhood survived. So houses that were built, that’s not across the board, but houses that were better built did survive.

Avery Carl [00:17:41]:
Okay, so it knocked out.

Kelsey [00:17:43]:
That’s why you see a lot of the new construction.

Avery Carl [00:17:45]:
Okay, so it knocked down all the crappy fishing shacks. And then what we have in the place now is a lot of new construction. Like a lot of cute, bright colored beach houses that have been built in the past 10, 15 years after rebuilding from. Was that Hurricane Ike?

Kelsey [00:18:00]:
Yes.

Avery Carl [00:18:01]:
Okay, gotcha. Okay, so if you’re looking more new construction, then Crystal beach has a lot of that because everything got, got knocked down. The fishing shacks got knocked down.

Kelsey [00:18:12]:
It’s true. But I would also say that. And you know, not to go too far into the weeds on that, but we, we definitely. We have a hurricane season, but I can’t remember, there’s been like Hurricane Ike and there’s been Hurricane Harvey that just rained a whole lot and that was like in Houston. But we don’t get it the way Florida gets it. I feel like Florida is like our hurricane wingman. It’s like it’s coming to the Gulf. It’s like Florida’s like, I got it.

Kelsey [00:18:39]:
Like, I feel terrible for Florida sometimes, but we don’t get. We don’t get the frequency. So this summer we had nothing. And Florida had like three actual hurricanes that touched and did damage.

Avery Carl [00:18:52]:
Yeah, I feel like a lot of times if you don’t live in an area that gets hurricanes, which I do, and you only watch the news and they’re like hurricane such and such hurricane ABCDE that they make such a big deal about it. But unless it’s a category, I would say three and a half. It really is just like a lot of rain. Unless you’re getting. Unless you are direct in the. I mean, I’ll say even we had. What do we have here? Not Sandy. That was in New York.

Avery Carl [00:19:19]:
It was Sally a couple years ago. I was pregnant with Nash and we, we couldn’t leave. We couldn’t go anywhere because I was about to have a baby. So we just stayed through it. That was a category three and it was really just like torrential rain for.

Kelsey [00:19:34]:
Three or four days.

Avery Carl [00:19:34]:
And now it did. It did cause some damage to some condo buildings and stuff over in Gulf Shores. But a lot of times if it. And it’s not often a category three or above. So a lot of the stuff that you see on the news all the time isn’t something that was really necessarily a. I hate to say any hurricane isn’t a big deal, but not necessarily something that was catastrophic. It was just like, okay, it rained a lot, some wind damaged a few things, but not like Katrina level or anything like that. But I think that people expect all hurricanes to be Katrina level or Michael level, and they’re just not.

Avery Carl [00:20:07]:
It’s just a once in a blue moon kind of thing. So whether Any, wherever you are on the Gulf coast, it’s not always a major deal. It’s very rarely a major deal when it, when a hurricane happens.

Kelsey [00:20:17]:
I mean, for US that’s been 15 years. I mean, it’s been 15 years since Ike. So another thing I want to say was that the, you know, for me, I have two properties in a market that does get hurricanes and I get the right coverage and then I don’t worry about it until I, until I have to. So if something does damage, as long as I know that I’m properly covered in the event that happens, I’m not going to worry about it anymore. That’s not a concern for me. You know, you have to make sure in this market you, you get hazard, which everyone gets windstorm and flood insurance and you can get flood insurance and the other things that have rental replacement. So as long as I know I’m not going to be stuck with, you know, an empty property I can’t rent out, I can get that rental income replaced, then I don’t think it’s a good use of my time to sit around worrying about it.

Avery Carl [00:21:14]:
Yeah, it’s not. It’s not. Because most of the time it’s not a big deal. You make sure you have the right insurance and then don’t. My mom calls it borrowing trouble. Don’t borrow trouble. Like don’t worry about it until it’s actually something that you have to deal with.

Kelsey [00:21:26]:
Yeah.

Avery Carl [00:21:26]:
All right, so let’s talk about regulations in this market. What does the regulation look like overall?

Kelsey [00:21:32]:
So in Crystal Beach, I often tell people that it’s like Crystal beach is like Outback Steakhouse. No rules, just right. Like it is very much like welcome to the Wild West. You know, there’s lots of freedom there. Very little restrictions. There’s very few areas where you can’t short term rental areas. And even some of the named areas really small. Like there’s Rancho Cribe, which is one gated neighborhood.

Kelsey [00:21:59]:
There’s a portion of, not even the whole thing, but a portion of a neighborhood called Waterways that is, it’s a canal. It’s on the Bayside anyways, where they have restrictions on it. By restrictions, I mean it’s not allowed. They have a street called Gulf Cedar and a neighborhood called the Dunes for sure. On these two dunes and Gulf Cedar, those restrictions, deed restrictions were put into place over 20 years ago. And those are actually like sunsetting. There’s no active HOA that’s keeping this thing going. And according to some lawyer on, you know, a seller side of things I’ve heard from more than one source that these, that they aren’t enforceable after, you know, a certain number of years.

Kelsey [00:22:43]:
And for those two, they’re expiring in the next year or two. So there’s, there’s very little restrictions in Crystal Beach. In Galveston, there are more because more people live there full time. So there’s areas, but they’re not usually areas that you want to like primary. They’re primary homes. They wouldn’t really be places you would want a short term rental anyways. You’d probably be done to buy in there. There are, there are a few neighborhoods.

Kelsey [00:23:10]:
There’s like Lafitte’s Cove and a few others. That’s one on the Bayside. There’s a handful of others. I think what’s actually the most important to know in Galveston in terms terms of restrictions is that there are neighborhoods will, where, where you can short term rental. It’s kind of like there’s a fine print. So there’ll be one neighborhood that has you can short term rental it, but seven days is the, is the minimum. Like you can’t have a guest in there for less than seven days. You can short term rental it, but you’re capped at 12 guests regardless of how big the property is.

Kelsey [00:23:45]:
I maintain a list of all of these things to make sure that somebody doesn’t end up in a bind. And I give it to my clients and my buyer’s guide. There’s a variety of those. There’s even one that has a restriction that talks about you can short term rental it, but it has to be managed by someone who has a Texas real estate license and has a Galveston office. Yeah, that’s not what I typically recommend. So that’s a smattering of ones. But that’s not, you know, there’s, there’s a handful.

Avery Carl [00:24:14]:
That’s such a great word. Okay. So overall, very friendly regulations. Few places in each main area that you can’t do it or there’s some other restrictions. If you’re going to buy in one of those couple neighborhoods that you mentioned that the HOA or the restrictions are kind of sunsetting. Make sure you talk to a local attorney to confirm all of those things. Of course, if you’re, if you plan to try and go that route, I would recommend maybe just avoiding that altogether, as I’m sure you do too, Kelsey, and just, you know, letting someone else be the pioneer on that front. I’m not into trailblazing.

Kelsey [00:24:51]:
There’s other deals to be had. Yeah, Another point I wanted to make. And I’ve in my big description of that I forgot to mention. So in Crystal beach, you do not need a license of any kind. You don’t need to register anything. Crystal beach is an unincorporated city. My favorite fun fact about Crystal beach is that they are so uninterested in someone restricting them that they chose to unincorporate themselves.

Avery Carl [00:25:18]:
Yeah, they were incorporated and they said, wait, never mind.

Kelsey [00:25:22]:
We don’t even want to be in charge of us. Never mind. So there’s nobody to enforce anything there. Despite that, there’s been a, it’s a strong rental market and has been for absolute decades. It’s just welcome to Texas. Crystal beach is the most Texas place. And then in Galveston you do, you don’t need a business license, but you do have to register your Airbnb or VRBO and your short term rental. And you, you have to include your number, your registration number in your listings.

Kelsey [00:25:54]:
Okay. And you pay like a fee. I can’t remember. They, they raised it recently, but it’s still somewhat reasonable. And you just pay it yearly to renew it. It’s not really anything super strict. I think they can send somebody out. I don’t know that they actually do yet.

Kelsey [00:26:11]:
Send somebody to make sure that you know your place is safe and passes muster. They just reserve the right is my understanding. And then if you cause a problem and you have big parties, they can yank your license. But I haven’t heard of that being a big problem.

Avery Carl [00:26:25]:
Okay, gotcha. So I think that we have pretty much covered all of the basics of why this may or may not be the right market for you to invest in. I haven’t really heard too many cons, to be honest. So pretty cool market, very well established vacation market, totally reasonable restrictions right there by Houston, which we establish is the third or fourth biggest area, big metro area in the country. And next on the next episode, we’re going to dive into what to buy. So stay tuned for that. Guys, if you are ready to dive into this market and buy a short term rental with Kelsey, you can email us at agents at the short term shop.com and we will connect you with her. Or if you just want to learn more, hang out and talk about short term rentals.

Avery Carl [00:27:11]:
Kind of get your feet wet, you can do that. In our Facebook group it’s called Short term Rental, Long Term Wealth. Same title as my book behind me. And we also have a live Q and A every Thursday that you can join and you can sign up for that@strquestions.com we’ll catch you guys on the next episode.