The deal numbers
Figures as recorded in the client deal tracker. The return basis and reporting period require confirmation.
- Purchase price$1,100,000
- Down payment$118,000
- Closing costs$16,500
- Design and furnishing$72,335
- Total entry cost$206,835
- Recorded annual cash flow$28,307
- Recorded cash-on-cash11.29%
The tax position
- Purchase price$1,100,000
- Typical cost seg reclassification25% of price
- Illustrative year-one deduction$275,000
- Illustrative tax reduction at 40%$110,000
An illustration, not this client's return: 25% of price reclassified at a 40% marginal rate, the same assumptions as our calculator. Your number depends on your study, your rate, and meeting the seven day and material participation tests. We are not a CPA firm.
The full story
Moving from four bedrooms to five in Destin changes which guest the property competes for. Four bedrooms is a family. Five is two families splitting a beach week, and that guest has roughly double the willingness to pay because the cost is divided across two households.
Tiffany bought at $1,100,000. The premium over a four-bedroom in the same area is meaningful, but the nightly rate uplift in peak summer weeks generally exceeds the proportional increase in purchase price, which is what makes the step up work.
Five-bedroom inventory is also thinner. Most of the Destin housing stock is two, three and four bedrooms, so the properties genuinely competing for a five-bedroom booking are fewer in number. That thinner competitive set supports pricing in exactly the peak weeks when demand is highest.
The operational cost does scale. More bedrooms means more beds to turn, more linen, more consumables, and a longer clean between guests. A five-bedroom's turnover cost is not proportionally larger than a four-bedroom's, but it is larger, and a model that scales revenue with bedroom count while holding cleaning cost flat will overstate the return.
Questions about this deal
What did Tiffany's Destin property cost?
A five-bedroom purchased for $1,100,000 in Destin, Florida.
Why step up from four bedrooms to five?
Five bedrooms serves two families splitting a beach week, a guest with roughly double the willingness to pay because the cost is divided. Five-bedroom inventory is also thinner, so the competitive set in peak weeks is smaller.
Does turnover cost scale with bedroom count?
It rises, though not proportionally. More beds, linen and consumables mean a longer and more expensive clean, and a model that scales revenue with bedrooms while holding cleaning flat overstates return.
Related
- Short-term rental market analysis for Destin
- Fort Walton Beach: the Emerald Coast at a discount
- Santa Rosa Beach and 30A
- Florida short-term rental regulations
- Beach property investing guide
- Peter E., Three-property portfolio in Santa Rosa Beach
- Ashley & Billy, 4BR beach house in Fort Walton Beach
- Mark & Farrah, 4BR beach house in Destin
- Erwin & Lilyana, Beach property in Florida Panhandle
- All client case studies
- The full deal tracker
- How the acquisition process works
- Financing a purchase like this
- The design and furnishing playbook
- The tax strategy behind these purchases