The 5 Main Costs of Owning a 30A or Destin Vacation Rental Home

Many dream of owning a 30A or Destin vacation rental home or condominium, but it’s important before you purchase Destin real estate to understand the revenue potential as well as the costs associated with owning a vacation home. Unexpected expenses such as the breakdown of an appliance or A/C system can be costly as well as interrupt rental revenue. Here’s a breakdown of the top 5 costs to consider when owning a beach vacation rental:

Mortgage Payments

Unless you are paying cash, your biggest expense is likely your monthly mortgage payment. While you may be able to use your primary residence as collateral, the lender may require a 25-30% down payment on a 30-year fixed mortgage. While there are benefits to a larger down payment, including waiving the need for Private Mortgage Insurance (PMI), you’ll also want to have cash available for unforeseen expenses. It’s important to find a balance between using your cash for a down payment and keeping some available for unforeseen expenses.

Costly Homeowner Insurance

In addition to the monthly mortgage payment, the cost to insure a second home may be higher than a primary residence. In addition, Florida home insurance rates have shot up in recent years due to frequent natural disasters and litigation expenses that insurers pass on to customers.  In the face of heavy losses, many insurers have raised rates or stopped selling policies in Florida all together. It is important to confirm the rental property you are looking to purchase is insurable and have an estimate of the annual premium is calculated into your annual budget.

Property Taxes

As with a primary residence, property taxes are levied on a vacation rental home as well. Click here to view how local property taxes compare to other parts of the state. Learn more about local property taxes from the Walton County Tax Collectors Office here and Okaloosa County Tax Collectors Office here.

Repairs & Upkeep

A vacation home needs upkeep just like any property. From a fresh coat of paint on interior walls and lawn/pool for homes to deep cleans on floors and upholstery and to repairing broken cabinets, towel racks and handles, there is no shortage of expenses when owning a vacation rental.  The labor and maintenance required to maintain your residence can add up quickly. Generally, experts recommend setting aside 1 percent of the total purchase price of the property for home maintenance each year. In addition, appliances and HVAC systems can go out without warning costing homeowners’ hundreds in repair/replacement costs plus loss of rental income while parts and/or equipment are on order to be replaced.

Upgrades & Improvements 

Unlike investing in the stock market, a vacation rental investment requires constant attention and reinvestment to remain looking its best and remain competitive with other vacation rental options in the area. Here’s a list of items that will need your attention and how often.

1. Every 10 years, plan to upgrade the kitchen, bathrooms, appliances, etc.
2. Every 3 years or less, plan for fresh interior paint (if a single-family home, plan to paint the exterior every 7-8 years).  
3. Every 1-2 years, plan to replace your pillows.
4. Every 5-7 years, plan to replace mattresses.
5. Every 8-10 years, plan to replace your living room furniture.  
6. Every 10-12 years, plan to upgrade your kitchen and appliances.
7. Every 3-5 years, plan to upgrade technology, including televisions and electronics.
8. Every 5 years, plan to upgrade your patio furniture (unless you have POLYWOOD); This is especially important in Destin, Florida where harsh coastal conditions degrade outdoor furnishings more quickly than in other places.   

What Is Your Vacation Home’s Revenue Potential?

Now that you've considered the costs, it's a great idea to get a rental revenue projection from a reputable company with experience in the local market. For more than 38 years, Newman-Dailey Resort Properties has been providing expert management and care for 30A and Destin vacation rental homes and condominiums. Bringing decades of local market experience combined with the latest technology tools to predict rental income, Newman-Dailey's predictions are realistic and trusted. We invite you to complete the form at the bottom of our property management page to receive a customized rental revenue projection for beach homes and condominiums located within Santa Rosa Beach, Miramar Beach, Crystal Beach, Destin, and Okaloosa Island, Florida.

If you’re looking at purchasing real estate in the Destin area? We invite you to talk to one of our experienced real estate sales professionals.

Not ready to purchase a vacation home yet? Plan your next Destin vacation by viewing our collection of premier 30A and Destin vacation rentals.

Published on Friday, November 10, 2023