Wanting to buy rental income condo. Will like to rent out 11 months of the year and use the other month or less for my young family. Any recommendations on where to buy, and whether or not I can come out even? Not trying to make money as I will not live nearby and will not be able to manage/clean/maintain on my own. New to this, any info is appreciated.

We are currently in same boat. We've narrowed it down to Cinnamon Shores or Palmilla Beach in Port A. They are growing the resorts big time and basically building everything you need within the resort.

Hopefully helpful info re: taxes… from https://www.irs.gov/taxtopics/tc415

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Rental Property / Personal Use
If you rent a dwelling unit to others that you also use as a residence, limitations may apply to the rental expenses you can deduct. You're considered to use a dwelling unit as a residence if you use it for personal purposes during the tax year for a number of days that's more than the greater of:

- 14 days, or
- 10% of the total days you rent it to others at a fair rental price.

It's possible that you'll use more than one dwelling unit as a residence during the year. For example, if you live in your main home for 11 months, your home is a dwelling unit used as a residence. If you live in your vacation home for the other 30 days of the year, your vacation home is also a dwelling unit used as a residence unless you rent your vacation home to others at a fair rental value for 300 or more days during the year in this example.

A day of personal use of a dwelling unit is any day that the unit is used by:

- You or any other person who has an interest in it, unless you rent your interest to another owner as his or her main home and the other owner pays a fair rental price under a shared equity financing agreement
- A member of your family or of a family of any other person who has an interest in it, unless the family member uses it as his or her main home and pays a fair rental price
- Anyone under an agreement that lets you use some other dwelling unit
- Anyone at less than fair rental price

Minimal Rental Use
There's a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don't report any of the rental income and don't deduct any expenses as rental expenses.

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I have a better perception of Palmilla because it's less crowded and the construction appears nicer from the outside and a few pictures I've seen. Also closer to town and, although I haven't played, the golf course. Also nice restaurant on property.

All of the other older homes are insanely priced, I don't see how you barely break even, even by doing it all on your own.

There might be better value in new construction at Palmilla, but I haven't compared prices in that area.

SPI just seems so far to attract a regular enough crowd - IMO.

ETA: Nevermind on Palmilla better value, the prices I just scanned are insane even with the nicer quality.

agreed. I was looking at the asking prices at Cinnamon Shores in their little magazine, plus the maintenance fees, and just don't get how anyone makes any money off those places. At least the tax rates are relatively low.

but $800/sqft for the homes....are you kidding me?

Wait for the crash, prices went up literally 50-100% in just a few years. They'll reverse.

Port A

Do you really believe this? People are paying 100% premium from 2.5 years ago. I don't think they will sell for less so I can't see a world where they go down, this is just the new norm unfortunately. People are paying these prices and have set the new standard.

Many of the folks that bought based on aggressive STR income growth estimates will have to sell if/when those prices come down.

I expect there will be some people washed out by this frenzy, but don't think prices are going to reset back to pre-Covid levels.

Diggity said:

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Many of the folks that bought based on aggressive STR income growth estimates will have to sell if/when those prices come down.

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I belong to a couple of STR groups in Galveston and have noticed a lot of people recently advertising openings for Memorial Day and throughout the summer. Seems late for that. Softening of the rental market?

EclipseAg said:

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Diggity said:

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Many of the folks that bought based on aggressive STR income growth estimates will have to sell if/when those prices come down.

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I belong to a couple of STR groups in Galveston and have noticed a lot of people recently advertising openings for Memorial Day and throughout the summer. Seems late for that. Softening of the rental market?

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Bloomberg: Airbnb Tumbles After Giving Muted Travel Outlook

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Airbnb Inc. shares fell the most in six months Wednesday after the vacation home-rental company gave a cautious outlook for revenue, suggesting rising prices and a murky economic outlook are beginning to weigh on consumer appetite for trips.

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htxag09 said:

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EclipseAg said:

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Diggity said:

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Many of the folks that bought based on aggressive STR income growth estimates will have to sell if/when those prices come down.

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I belong to a couple of STR groups in Galveston and have noticed a lot of people recently advertising openings for Memorial Day and throughout the summer. Seems late for that. Softening of the rental market?

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Bloomberg: Airbnb Tumbles After Giving Muted Travel Outlook

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Airbnb Inc. shares fell the most in six months Wednesday after the vacation home-rental company gave a cautious outlook for revenue, suggesting rising prices and a murky economic outlook are beginning to weigh on consumer appetite for trips.

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Interesting ... thanks for sharing.

When I took RE development classes, the CRE guys remarked that the hotel biz was so tough because your expenses were fairly fixed and your revenues reset every day. When they market takes off like a rocket ship, that can be great. When it goes in the other direction, not so much.

People are going to start figuring out this dynamic pretty quickly.

Cash flow will be tough at 8%, insurance rates rising, massive HOA fees at Palmilla and Cinnamon Shores and reservations are off 510% from the last 3 record years.also not a lot of differentiation possible between you and other homes in the hood. CS is too far out of town for me, we spend most of the time cruising in the golf cart

I do love both those neighborhoods but we bought in town to avoid the HOA and be able to differentiate. Town is getting better and better amenities but you need your own pool

I don't see many people selling because most people properties pay for themselves

Vacation rental on the small scale is a different than a hotel. Your fixed cost is really only the mortgage, taxes and utilities. Management cost which include your staff, advertising and your cleanining fees all are all a percentage of revenue so as revenue drops so do those expenses

I get what you're saying about the rental management fee being variable, but the PITI + condo fees on those units are a huge chunk of the total costs.

If ADR's and/or occupancy rates drop significantly, it doesn't take long to be under water.

The folks that bought 3-5+ years ago, and have the lower cost basis will likely be fine, but I would not want to be one of the more recent buyers.

Right but most business pay mortgage or rent for their space

The growth of Houston and Austin will keep these spots growing in my opinion. Inflation will keep travel costs high while that PITI stays consistent assuming you aren't on an arm. People who can afford to beach travel will be looking for cheaper (driveable) locations the state of airfare right now as well helps Port A

Agreed the fixed condo fees especially at Palmilla are high and those don't translate to more rent. If they rachet up taxes that will hurt people as well, but if values fall then taxes fall

This spring has been a bad weather spring in Port A and the tide has been real high which hasn't helped either


Definitely need to be able to afford it if rents fall 30%

Prices is palmilla and CS is higher than the older homes others costs include
electric average $250 per month (1800 sq ft)
Cable/internet $120 per month
Water/trash - 60 per month
Port A registeration fee $250 per year
Airbnb registration - $500 per year
VRBO registration- $500 per year