How To Identify a Great STR in the Gulf Shores Area

How To Identify a Great STR in the Gulf Shores Area.

Location. Location is very important in determining a successful STR in this market. It’s not as important to focus on the area (W Beach, Fort Morgan, Orange Beach) as it is to focus on BEACH ACCESS. The best performers are walkable to the beach (less than 6 minutes walk). Some properties may look like they have excellent access on a map, but you may have to walk quite a while to get to the beach access. Access is either public or deeded..

Other Important Factors. How many bedrooms? The more bedrooms, the more revenue it can produce (though location affects this greatly). Is property updated? Decorated in a “beachy style”? This isn’t as important as location and bedrooms since it can be updated, but it will affect revenue potential. Does the property have views from the deck or inside? Views help with marketability and can affect ADR. Views are not a must have, but do help boost revenue..

Condo or a House?. The two types of STRs here are condos and houses. They can both yield great returns, but there are some considerations that must be made with each..

Condos. Pros: Lower price points than houses. Less competition for condos than houses. Better location for price point (first tier condos with views can be half the price of a first tier house with the same amount of bedrooms). Amenities In addition to pools they may have indoor heated pools, hot tubs, gyms, etc. Lower maintenance and capex. You still have appliances, HVAC, water heater, but not roof, decks, exterior paint, etc. The HOA fee usually covers some utilities and HOA master policy insurance..

Condos. Cons More condos available for guests to choose from. Financing can be tricky. Warrantable or non-warrantable. There can be assessments. Maintenance/improvement, damage, insurance. Dependent on a well-run condo association. You have to get approval from COA for certain things. What types of locks can be used. Exterior decorations, etc..

Houses. Cons Higher price points and more competition to purchase. Higher capex and maintenance costs. Higher insurance costs. Pros First tier houses are the highest grossing properties here. Fewer houses than condos, so less competition for rentals. No special assessments. Easier to finance..

Insurance. Incredibly variable. Depends on the following factors (houses only): Flood zone (if it’s in “cobra” or CBRS zone it will be higher). Year built (age of roof, HVAC, windows, etc.). Is it Gold Fortified? Condos may have an additional recurring insurance assessment..

Other Expenses. Factoring utilities will be similar to any other market. The age of the house and energy efficiency will affect electricity. Maintenance is higher for houses because there will need to be exterior paint upkeep, etc. Property Tax Formula Assessed Value X 20% X .033.

Seasonality. Busy season is from March-August. Slowest months are Dec-Feb. “Snowbirds” can help offset expenses in the slow season..

Summary. For the most assured returns and best performance, find a property that’s walkable to the beach access. Ask yourself how you could set yourself apart: Get with a knowledgeable and experienced STS agent and they’ll make sure you’re doing the right due diligence. BUY A CASHFLOWING BEACH HOUSE!!!.