Are you perhaps looking for a new investment to add to your real estate portfolio? In this post, you’re going to learn why you should set your sights on investing in a Panama City Beach Airbnb property.
During the past couple of years, there’s one thing that made the US real estate market stand out more than anything. It’s the fact that home prices are pretty much rising almost everywhere. They were on the rise before 2020, but house prices have gone through the roof since the pandemic hit.
Across the entire country, the median existing property price rose to more than $350,000, almost double what it was a decade ago. In the past twelve months, the cost of an average home increased by nearly 20% nationwide. In over 125 metropolitan areas, it was even higher.
Of course, there are fears that this will be just another housing bubble moving forward, but The Washington Post says this isn’t the case. Nevertheless, this house price phenomenon makes it more of a challenge for those looking at real estate investing.
Such competition, when it comes to investing in real estate, makes it all the more important to be very careful when choosing an investment property. If you’re considering a short term rental strategy, you want to be sure the property you buy will bring a solid return on investment.
In this post, we’re going to help you come to the best decision by looking a little closer at the profit potential of a Panama City Beach Airbnb.
If you’re looking to invest in the Florida real estate market, let’s show you why you should consider Panama City Beach, FL.
Why You Should Invest in a Panama City Beach Airbnb
To help you decide whether Panama City Beach is worth investing in for short term rentals such as Airbnb, we’ll look at three factors:
- Location and why you should visit
- Historical performance of existing Airbnbs in the area
- The Florida real estate market
What Is It About Panama City Beach, FL That Makes People Visit?
Panama City Beach, FL, is the ultimate dream vacation destination for so many people. Its sugar sand beaches are lined with swaying palm trees, and you can see why so many consider it the ideal getaway.
The waterfront town is an outdoor playground full of activities and adventure for every type of traveler. There are tons of things to do in Panama City Beach, Florida. You can choose between hiking or cycling through the wilderness regions of state parks, kayaking, or swimming through the blue lagoons and shallow bays.
Some of the must-do things in Panama City Beach include the following:
- Shipwreck diving: Just a short boat ride away from the sugar-white sands of Panama City Beach are more than a dozen wrecks and artificial reefs.
- You can shop till you drop at Pier Park: An open-air entertainment center for the whole family that includes trendy shops, delicious restaurants, and exhilarating activities.
- The coastal shores of Camp Helen State Park: Cater to all types of adventure enthusiasts.
- The many attractions include Gulf World Marine Park, Zooworld, Ripley’s Believe it or Not Museum, WonderWorks, Miracle Strip Amusements, Andrews State Park, and Aaron Bessant Park.
Panama City Beach, FL is expected to be a popular destination for visitors in 2022.
How Airbnb Panama City Beach FL Performed in 2021
Here is a quick list of Panama City Beach, FL housing and Airbnb stats as of January 2022:
- Airbnb Rental Income: $2,705
- Airbnb Cash on Cash Return: 1.66%
- Airbnb Daily Rate: $194
- Airbnb Occupancy Rate: 54.03%
- Median Property Price: $521,760
- Average Price per Square Foot: $377
- Days on Market: 92
- Walk Score: 47
Things have not been good for the average Panama City Beach Airbnb over the last year, thanks to COVID-19 and its various restrictions. The global pandemic has affected people’s travel patterns all over the world. However, with restrictions likely to be lifted in 2022, things have to be looking up for the Panama City Beach Airbnb income property market.
Nevertheless, there have been some good figures recorded, on average, for Airbnb rental income property.
- The average monthly Airbnb rental income was as high as $4,271 (December 2021)
- The monthly occupancy rate of an Airbnb income property was as high as 80% (March and May 2021)
Expectations are that Airbnbs will recover and earn at least this much after the latest Omicron surge is over, and people feel safe traveling again. Also, with the US reopening its borders, more international visitors will definitely book vacation homes.
A Panama City Beach Airbnb allows them to experience the comfort of home while enjoying hotel-like amenities. It also helps lessen their interactions with other people.
2021 Trends and 2022 Forecast for the Florida Real Estate Market
If you’re looking to invest in the Panama City Beach real estate market, you’re going to be curious about the Florida housing market. You’ll be pleased to learn it was great in 2021 and looks set to be a wise investment over the next twelve months or so. But unfortunately, inventory stays low, and prices remain high. To illustrate that point, here are some quick market stats:
- As of January 2022, the median Florida property price is $472,557, an increase of almost 24% over the past year and nearly 69% over the last five years.
- Florida Realtors are saying that the median price of single-family homes sold at the end of 2021 was 21% higher than the previous year.
- On average, single-family homes in Florida spend 77 days on the market before being sold.
- At the end of 2021, active listings for single-family homes were down by almost 34%, compared to the previous year. Inventory was at a very low one month’s supply.
Property prices are ridiculously high at the moment, which is forcing many people who want to live there to put off owning a home, at least for the time being. Instead, those that are able to work remotely are often choosing to rent an Airbnb home for a short while so they can enjoy the local area without making a massive financial commitment.
If you seriously want to become a host with an Airbnb Panama City Beach, FL, a good strategy could be accepting longer bookings and taking advantage of this trend.
Is it Legal to Operate an Airbnb in Panama City Beach, FL?
Yes, it is legal, but there are specific requirements you must follow. For example, anyone who hosts short-term stays (less than 181 consecutive nights) in Panama City Beach is required to register their short-term rental with the city.
Is a Vacation Rental License Essential?
If the aim of purchasing a property in Panama City Beach is making money in real estate by renting it out as an Airbnb host, you will require a vacation rental license, as long as stays are fewer than 181 consecutive nights. However, it should be pointed out that the law can change overnight. Hence, it’s always best to visit Panama City Beach’s website, contact the city’s licensing agencies directly, or consult with a local lawyer or tax professionals for the most up-to-date information.
The registration process is relatively simple:
1. Check your eligibility and start the registration process on the City’s website
Panama City Beach allows properties in certain city zones to register and host short-term rentals. Short-term rentals are permissible in the following zoning districts:
- Commercial – High Intensity (CH)
- Commercial – Medium Intensity (CM)
- Commercial – Low Intensity (CL)
- Limited Multi-family (R-2)
- Unlimited Multi-family (R-3)
- Townhouse (RTH)
If your property is not eligible as a short-term rental, you can switch to long-term stays. If your property is exempt, you don’t need to register, but you’ll need to claim an exemption through Airbnb to keep hosting.
2. Get a short-term rental license
Short-term rental registration costs $50 and is paid during the business registration calendar year.
How to Choose the Best Airbnb Investment in Panama City Beach, FL
The number of properties in Panama City Beach is limited, which doesn’t make it any easier to find the right property. Here is a step-by-step guide to help you in your search.
1. Decide on the best property type
The location has a massive influence on which type of property is best for Airbnb. For example, a more commercial district attracts lots of business travelers, so apartments or condos on Airbnb are likely to get more bookings. On the other hand, Panama City Beach could be better suited to single-family homes as more families are going to visit the area.
If you’re not sure what property type is best in Panama City Beach, Mashvisor’s Real Estate Heatmap can help you zero in on profitable markets to invest in. The map identifies areas with the most affordable listing prices and the highest rental income, positive cash flow, and Airbnb demand.
2. Set your budget
It’s essential to set a budget that you’re comfortable spending and one that won’t put you at risk of defaulting on your mortgage. When deciding on your budget, think about the following:
- The selling price
- Closing costs
- Repairs and remodeling
- Furnishing
- Business registration
- Other initial costs, such as advertising costs and hiring a property management company
If you’re not sure what costs to include, you might find the Mashvisor Investment Property Calculator helpful. It helps you with a ballpark estimate of your costs and presents you with a cap rate and cash-on-cash rates, depending on your desired investment strategy and loan amount.
3. Start searching
When you’re looking for an investment property, make sure you use different sources such as various online listings, local newspapers, and your investment network. Mashvisor also has some very useful resources, such as The Property Finder and The Mashvisor Property Marketplace.
With the Property Finder, you can search different markets across the US. It helps you find top-performing Panama City Beach Airbnb properties for sale that match your criteria and preferences.
The Mashvisor Property Marketplace allows you to find a wide range of off-market properties that are not listed in the MLS. This includes foreclosures, tenant-occupied rentals, and more.
4. Conduct a thorough analysis
Once you’ve identified some properties that are within your budget, it’s time to narrow your options down to the one you want to buy. The best way to do this is to conduct a comparative market analysis. You’ll look at similar properties to the one you’re interested in. They will be in the same area and sold in the last few months.
Comparative market analysis allows you to estimate the fair market value of a house for sale because it’s crucial you don’t overpay. It also helps you evaluate your returns.
To do this, you need to consider the following:
- Estimate the daily rate and occupancy rate for your Panama City Beach Airbnb.
- Calculate your monthly rental income and multiply it by twelve for an annual figure.
- List the one-time and monthly costs (multiplied by 12).
- Subtract the total costs from your annual rental income.
The final figure is the cash flow, at least for your first year. Multiply this by five, for example, and you’ll get a total investment payback. In addition, calculate your cap rate, which is your net operating income divided by the property’s current value. Ideally, you want a 10% cap rate. However, between 5% and 8% is good enough. To help your calculations, use the Airbnb calculator.
Find the Best Panama City Beach Airbnb Using Mashvisor
The aim of purchasing a Panama City Beach Airbnb is to generate passive income. Initially, it will involve a lot of time and effort, but it will be worth it. There are also lots of real estate investment tools, such as those from Mashvisor, that can help you search for properties and provide an accurate analysis based on data gathered from reliable sources.
Mashvisor offers a platform that is for both beginners and experienced real estate investors. Use it as your go-to resource for finding the best Panama City Beach Airbnb properties. To get access to Mashvisor’s tools, sign up for a 7-day free trial, followed by a 15% discount on your annual subsscription.