Vacasa, a vacation rental management firm, named St. Augustine one of the best places to buy a vacation home in U.S. markets where the firm has a presence.
The listing comes as local governments are trying to strike a balance between the popularity of vacation rentals and quality of life for full-time residents.
Vacasa ― which is connected to more than 30,000 properties in 34 states in the U.S., and in Canada, Mexico, Costa Rica and Belize ― recently released its list of the “Top 25 best places to buy a vacation home” in 2021.
St. Augustine ranked No. 2, behind Gatlinburg, Tennessee, and ahead of Gulf Shores, Alabama. St. George Island is the only other Florida location mentioned.
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“To determine its ranking of top vacation rental markets, Vacasa analyzed home sales and vacation rental performance data from the last 12 months for vacation destinations throughout the country where Vacasa and its licensed subsidiaries manage vacation rentals,” according to the listing.
According to Vacasa, demand from people seeking to rent vacation homes is high nationwide, and more people are looking to invest in real estate or rent out second homes.
About 36% of buyers studied in a 2021 Vacasa report said they want to spend less than about $400,000, and 46% said they wanted to start earning money immediately on their investment.
This is the first time St. Augustine has appeared on Vacasa’s report. The list cites the city’s beaches and natural beauty, history and tourist attractions.
The report says the median home price in St. Augustine is $365,576; the rate of return on investment is 7.4%; and the annual gross rental revenue is $46,557.
To calculate average gross rental income, Vacasa “used actual performance data for the market as a whole, where available, except that Vacasa-only data was used for markets where Vacasa manages more than 50 units and actual Vacasa rental performance beats the market average by at least 25%,” according to the business. Vacasa calculated average rate of return on investment by using the averages of property taxes, utilities, HOA fees, insurance, and property management fees in each market.
Endless Summer Realty’s clients include people looking to buy vacation homes for use as rental properties. But the return on investment varies, said Jonathan Chapman, a realtor with the firm.
“There’s so much that goes into a vacation rental that makes it profitable. … it’s not a very simple equation,” Chapman said.
That includes providing the right kind of décor and creating an experience that keeps people wanting to come back, he said.
And it’s not as simple as buying a property and turning it into a vacation rental. Local governments and homeowner’s associations have restrictions on how properties can be used to help keep areas from being oversaturated with transient visitors, Chapman said.
“They try to temper the environment with regulations and rules that are set in place. For example, there’s only a limited amount of permits in St. Augustine Beach,” he said.
Tension over vacation rentals
Some say vacation rentals have changed the character of their neighborhoods by cutting down the number of permanent residents and introducing parking, noise and other challenges.
To help strike a balance between the interests of long-term residents and the rights of property owners, local governments have a variety of rules in place.
The city of St. Augustine has north of 600 vacation rentals, city short-term rental program manager Barry Fox said. After a long and controversial process, the City Commission voted in January 2020 to implement regulations for vacation rentals that include annual registration and inspection for safety and code compliance, and occupancy and parking requirements, among other things.
In May, St. Johns County commissioners adopted vacation rental regulations for properties east of the Intracoastal Waterway, with some exceptions. Also, St. Augustine Beach allows up to 100 transient lodging facilities, rentals of less than a month or 30 days, in medium-density residential land use areas.
A rental near the dunes in St. Augustine Beach
Realtor Craig Dupler has seen demand from buyers looking for a vacation home to rent out or live in part of the year. Dupler, who spends most of his time in Gainesville, works in St. Augustine as well, and is selling a vacation rental in St. Augustine Beach that he owns with partners.
He said he often sees people he knows in Gainesville staying in St. Augustine part time.
“We’ve always called this ‘East Gainesville,'” Dupler said.
Dupler spoke from the vacation rental home that he has listed for $1.7 million just off St. Augustine Beach. The duplex, which is licensed as a vacation rental in the city, is booked frequently. He’s negotiating an offer for the property.
“It’s only been on the market about three weeks,” Dupler said.