Host, Christine Karpinski: I'm Christine Karpinski. Thank you for listening to the How to Rent Vacation Properties by Owner podcast.

Christine: Now in Destin, do most people rent by owner, or do they use a property manager?

Guest, Shannyn Stevenson: That's become a very competitive market actually. It used to be more of rental companies; they were the hottest things going. And they were starting to charge more and more, and they were taking advantage of the situation, which, you know, they're making money.

But a lot of owners, and a lot of renters, are becoming very aware, and they are going to Vacation Rental by Owner, for example. They are booking with the owners now, because they are getting better rates, they are getting a little bit more one on one attention. So, the rental companies are actually reducing some of their rates now.

Christine: Really?

Shannyn: Now that they are in competition with a website like VRBO.com.

Christine: Right.

Shannyn: Or any of the other owners. Even some of the rental companies are even working with some of the owners, saying: OK. If you want to advertise it on your own, you send us the renters, we'll take care of them, and you'll get a break on the price.

Christine: That's interesting.

Shannyn: And it used to be they wouldn't even touch anybody who was doing it on their own, but now they've learned-- they have got to work together.

Christine: Very interesting. Now, what is the average property management commission down in that area?

Shannyn: Most of it now, is anywhere between 28 percent and 30 percent of the gross rental income.

Christine: Really?

Shannyn: Yeah. Some areas, however, still charge 40 percent.

Christine: Forty. Right. So that's definitely gone down.

Shannyn: It has.

Christine: Wow. In the past, there were some of the property managers that were charging all the way up to 52 percent.

Shannyn: Yes, it was becoming a bit ridiculous. And it's been unaffordable for a lot of investors.

Christine: Right. Yeah. It's hard when you have to give away half of your money.

Shannyn: They [investors] are here trying to make money. They're providing the property themselves. They bought the property. They want rental income. And they are doing what they need to do for the rental company, like to upgrade whatever the rental company suggests, and yet they are still not making a whole lot.

Christine: Interesting. Destin is such an easy market to rent. So many people know about Destin. A lot of renters come from Georgia, Tennessee, Alabama, Mississippi, Louisiana, Texas, Indiana-- I even get some people from Michigan. People are coming from all over, especially the Southeast, and renting. I know, with me, especially, I could rent a hundred places with all of the inquires I get from one place.

Shannyn: Right.

Christine: So it's a really easy market to be able to list your property and rent it by owner. I mean, that's certainly not true in all areas, but Destin is definitely one of the hotter areas. People are asking me every day: "What about the real estate bubble? Is this still a good time to buy? We saw the market was hot, hot, hot a couple years ago, is it cooling off? Is it slowing down? Has the bubble burst?" What is your take on all of that?

Shannyn: This is definitely not your typical market. First, I mean, we are along the beaches. There is not a whole lot of property left available along the beaches in the price range we are dealing with down here still very affordable. And yes, we've seen the market change a little bit down here. The prices have dropped a little bit.

We did go through a change like everybody else; however, buyers are starting to come down. They are starting to look, they are starting to fully purchase again. And they are taking advantage of some of these prices, which they should. Now, the prices are slowly going to stop going down, because inventory is definitely thinning out. Sellers are becoming confident of their properties again. Buyers are becoming confident of the market, and we are seeing a lot more interest. The interest rates have still remained pretty OK.

Christine: Now, when you say the prices are going down; based on that $400,000 property [the 1BR condo], how much has that gone down? Has that gone down like $100,000 or just 10 or 20?
Shannyn: If you were to buy the same property two years ago, you would have probably been paying $500,000.

Christine: OK. So, anywhere from $50,000 to $75,000?

Shannyn: Right.

Christine: OK.

Shannyn: But that's not true of all properties, because the only people who can afford to take that kind of hit are the original owners.

Christine: OK.

Shannyn: A lot of the owners are not the original owners, but they remain to hold on to their property prices, as they should. So, there are really only a handful of properties out there that are able to come off those prices. So the buyers really do take advantage of that while it still exists, because it won't exist very long.

I want to go back to owners renting on their own. When you are able to do that, typically you are going to be able to make your property come very close to cash value.

Christine: Right.

Shannyn: And that's the ultimate goal for a lot of people looking to invest down here. A lot of prospects say, "Well it's not really going to generate enough income to pay for itself." But, if you do it on your own, chances are it will come very close. Especially with the prices gone down, they are able to get all these good deals; they have an even better chance of getting it to pay for itself.

But now we are starting to see prices stop going down. They are holding out, and if they continue to hold out, buyers are going to become aware that they need to jump on these while they can, and then they are slowly going to go up again. It will become a buying frenzy, and everybody is going to get in the market. Rentals are increasing every year. So, it's all a cycle.

Christine: Right. You know, it's funny, because I know a lot of long time owners in that area, and I know people that bought those little one bedroom places, that paid less than $100,000 for them. Some people only paid $98,000 or maybe $120,000. I know there have been a fair amount of owners who have said, "Well, I don't really want to sell it, but if the thing has gone up so much in value, I may as well put it on the market." So, I think there are a lot of sellers out there that are just sort of feeling it out and going, "Well, if it sells at this price, I'll sell it at this price, but if it doesn't, I'm not even going to sell.”

Shannyn: And a lot of the sellers start to take their properties off, because they don't want to feel the market out right now due to the fact that they are going to start generating income.

Christine: Right.

Shannyn: They are going to have a lot of money coming in and they don't want to have to worry about selling it. I just did a deal last week, and the guy just got an unbelievable price. I mean, the seller bought it a long time ago; he bought at a real cheap price. And the guy [the buyer], we didn't put it on the contract, and he paid about $180,000 for it-- a gulf view property that sold three years ago for $400, 000.

Christine: Wow.

Shannyn: So he got an unbelievable deal.

Christine: Then why would an owner sell it?

Shannyn: There could be many different reasons. If he is retiring, breaking out of the market, maybe he owns a ton of property and this is the one he can take a hit on.

Christine: Right.

Shannyn: Or maybe he's not even talking a hit, because he got it at such a great price. I mean, it';s an older property, it was built in 1985.

Christine: Right.

Shannyn: So it is an older property. And back then, the prices were pretty desirable.

Christine Karpinski: I know there's going to be a bunch of buyers wanting to call you and go, "Hey I want to find another one that was $400,000 that I could buy for $180,000.” Do any more of those properties out there exist?

Shannyn: You have to watch the market, and when they do, I have a buyer information list. If I see a good deal, [I';ll let them know].” I'm always looking for a good deal, just like everybody else. And it's not always just the price-- it's the price plus the rental income that makes it a good deal. So I email it out to my buyer saying, "Here, I found one", and it might be once a week, it might be once a month, it might be twice a week... it depends on the market. It's not every day.

Christine: Now, how would I get on your buyer's list? [laughs]

Shannyn: If you go to the web site, www.KnowTheGulfCoast.com, it does a preferred buyer program, and if you click on that preferred buyer program you just add your email address to that list and you get on my list where I will update you as good deals come on the market. And once again, it's not just the price, it's also the rental income versus the price that makes it a good deal.

Another example is: there's a property on the market right now, which I just think is an absolute steal. It's a two bedroom, even though it's five square feet-- it's true Golf Front-- it generated $29, 000 in gross rental income. It was listed at $375K, but the guy reduced it to $350K. It's a great buy and I know it's still $300,000 mark, but with that kind of rental income you can get it to very close pay for itself.

Christine: Interesting.

Shannyn: It is. It's a great little buy. I'm keeping my eye on that one. I've got a couple of buyers, and that's another thing I'm finding is I've got a lot of buyers right now just hanging on, they're wanting to buy it but they're trying to sell their existing properties in other areas, and they can't get them sold. So until they've sold those, they can't invest and we've got all this interest. Everybody wants to get into [Destin]. Everybody's trying to sell their properties elsewhere to come down here.

Christine: I know, I love it.

Shannyn: It's great. It's such a great area.

Christine: Yeah, I think that I'll always keep a property in Destin. I'll never get out of that market, just because there's not a beach that's any more beautiful in the whole United States as the beaches in Destin. Everybody says that, but you go to Destin and you see that white sand and sugar white beautiful beach, and I always say you could go in the water all the way to your nose and still see your toes! There are not many waters in the United States where you can still do that, and you can absolutely do it in Destin.

Shannyn: And they're always improving on our beaches, they're always looking to improve this area which is nice. What you want to get into is an area that cares about itself.

Christine: Right.

Shannyn: It's funny because I took a picture the other day. I'm trying to update my web site before the season kicks in because once the season kicks in I won't have a chance to do any of my marketing. And I went and took a picture on the beach the other day with the background of the water, and I'm looking at the picture going, "Gosh, the people are going to think that I altered this picture!"
The water was so green, the sand is so white-- they're not going to believe that this is the beach!
Maybe I need to go in a house and take a picture instead with the background of a house instead of the beach.

Christine: I know, it is funny because you look at it and you go, "It looks surreal, they put a filter on that camera, or it's Photoshop-ed or whatever,"

Shannyn: I should go in there and darken everything a little bit so it doesn't look so fake...

Christine: Yeah!

Shannyn: It's not, but maybe people [wouldn';t] take it seriously.

Christine: It's pretty funny when you go, "Yes, okay it's real..."

Shannyn: I promise it is!! And that's another thing I do for my clients... a lot of investors buy property as site unseen. And so what I'll do is... I offer this to all of my clients... I say, "If you need me to, I'll go take a lot of pictures as though you're walking through the property yourself, " and that seems to really help, and a lot of realtors don't offer that down here and they really should because it's amazing having those pictures for your buyers or for your investors.

They really enjoy that. I enjoy doing it myself, actually because I like to hear them say, "Wow isn't this great.” I don't do the little trick that a lot of realtors do, "Oh gosh it looks better in the picture than it does in real life.” I take what I see, and if it doesn't look great, I'll say, "Look, I'm looking at this in real life right now and... maybe we should look somewhere else.” Very seldom do I have to say that, though, because a lot of the properties are in great shape and doing what they need to be doing.

Christine: Well I suppose if they're being rented then they need to be in good shape because renters don't look...

Shannyn: And if they're renting, then that's the property. [If an investor asks] "Is this a good property for me to invest in?" I say, “Well, let's look at the numbers. If it generates the income, then it is definitely the property.”

Christine: Where do they get these income numbers from?

Shannyn: From the rental company.

Christine: Okay, so if they rent by owner?

Shannyn: If they rent by owner, what I like to do... and I did this for all my other properties that I'm trying to sell to a client... I went on a web site that the owner is renting his property [on], and there is a calendar that shows all the bookings. And I copied it and emailed it to him to show him what the future bookings look like.

Christine: Right.

Shannyn: That way he knows what he's getting into and chances are that owner's definitely going to want to provide those to the buyer when he applies to buy the property.

Christine: So transferring the rentals... Well very good, Shannon. Is there anything else? We're kind of running out of time here. Anything else that you'd like to add before we finish?

Shannyn: Well, it's a great area. If you're looking to invest in a good investment, and a pretty solid investment, this is definitely the area. We are still growing; we are just starting to get off the ground. We're still a fresh, hot area.

Christine: And to contact you, again your web site is?
Shannyn: www.KnowTheGulfCoast.com Or you can email me at Shannyn at KnowTheGulfCoast.com Or you can feel free to contact me directly at 1 800 596 7006.

Christine: Again, 1 800 596 7006 and that's Shannyn Stevenson. Thank you so much for joining and I really appreciate this. Destin and the Golf Coast are definitely hot markets, people are always asking about it, people always want to get into those markets, and I chose Shannyn because she seems to know the market pretty well.

There are certainly hundreds or if not even maybe thousands of real estate agents that could assist you in that area, but Shannyn is definitely one that I would recommend, she knows her stuff, she knows the rentals, and she knows the rental by owner market and the property management market. So feel free to give her a call. Thank you so much for joining, and have a great day!

Shannyn: Thanks a lot.

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