With thousands of tourists headed to the Alabama Gulf Coast annually, cities such as Gulf Shores, Orange Beach, Fort Morgan, and Perdido Key are hot spots to invest in a vacation rental property. By getting educated about the region, property owners can learn how to run a successful vacation rental business.
Check out our guide to managing a vacation rental property on the Alabama Gulf Coast.
Familiarize yourself with the area
In order to market your home on the Alabama Gulf Coast, homeowners definitely need to familiarize themselves with the coast area.
First things first, it’s important to understand just how much the cities and state invest in this area. While there’s only 32 miles of shoreline, the coast generates a lot of revenue and therefore supplements a lot of state activity. Because of that revenue, businesses get a lot of attention from the state; investment and marketing happens here on a regular basis. And while it’s true that the coast is a seasonal rental market, there’s a lot going on outside of peak period.
The Alabama Gulf coast is home to several nationally televised sporting events, including the Blue Marlin Grand Championship, USSSA World Series Baseball, SEC Woman’s Soccer Championship, NAIA Women’s National Soccer Championship, the National Collegiate Beach Volleyball Championship as well the World Food Championship—and there’s fun festivals year-round, including the Annual National Shrimp Festival, Hangout Music Festival, the legendary Interstate Mullet Toss at Flora-Bama, polar dips, and the Annual Christmas Lighted Boat Parade to name a few. The Gulf State Lodge just reopened as a Hilton property on the beach, and the Alabama Gulf Coast is home to the South’s newest amusement park, OWA – a 520 acre park with 21 amusement park rides, restaurants, shops, and more. And coming soon, Gulf World Marine Park – which will boast a 16-acre water park with the largest wave pool in Alabama, dolphins, aquariums, a 1,200 seat stadium, and other marine exhibits.
All of these attractions are not only available to homeowners, but can be used to advertise and attract visitors to rent your property.
Gulf Shores and Orange Beach, two major rental markets within the region, are located on the same island. Gulf Shores is on the west side; Orange Beach is on the east side. Both cities are incorporated, meaning they are municipalities with elected officials, whereas neighboring towns including Fort Morgan and Perdido Key are unincorporated and require different licenses to operate than incorporated cities. Fort Morgan, for example, does not require homeowners have a business license.
Folks looking to invest in a home in Fort Morgan should know that it’s a quieter area, bordered by the Gulf on the South and Mobile Bay to the North. There are limited restaurants or grocery stores in the area, and there are more houses than condos in the area. Meanwhile, Gulf Shores and Orange Beach boast majority of the grocery stores, restaurants, and entertainment. Visitors can easily walk around and visit most shops on foot. Because of those benefits, these two cities are preferred family destinations. Both small towns such as Fort Morgan and bigger cities like Orange Beach can deliver a good ROI, however. While the bigger cities may lure families looking for accessibility to stores, couples and retired folks might find the private lifestyle of secluded towns more enticing.
Be aware of and follow area-specific laws
Homeowners with the intention to rent their property must have a valid business license in Gulf Shores, Orange Beach, and Perdido Key—but not in Fort Morgan. All of those cities, however, require you collect lodging taxes. The type of license depends on your location but lodging taxes must be collected and remitted to the appropriate agencies—city, county, and state—monthly whether you have revenue or not. Many property management companies like TurnKey will handle this for you as part of their service.
It’s also highly recommended that homeowners obtain a landlord insurance policy, which is different than a standard storm, wind, hail, and flood insurance policy. This provides some liability coverage and can also cover your contents, loss of revenue, upgrades, and more.
In Alabama, the Real Estate Commission governs vacation rentals and requires properties be managed by a licensed real estate agent. If your “manager” does not fulfill that criteria, they cannot work on a commission basis and therefore must be a salaried employee of the homeowner. If the manager were to be paid by commission, they would be conducting real estate business without a license—which could land both of you in trouble with the law. Homeowners should check with the Alabama Real Estate Commission to ensure their manager has a license, because this could become a tax issue if the state of Alabama finds out your manager isn’t paying your taxes.
Homeowners should also be weary of fixed rent contracts, which is when your manager promises to guarantee you a set amount of rent. Some managers may sell your property for as low as $10/night after they reach your guaranteed amount, and then pocket large fees for themselves. If they just keep the rent above the amount guaranteed, it is considered a net listing, which is illegal in the state of Alabama.
Additionally, it’s imperative that new owners get familiar with the local Homeowners Association and Condominium Owners Association. Before you even purchase a property, you should get access to the latest published meeting notes from the local HOA or COA—check and see if there are assessments coming up or any projects approaching. Associations should be willing to share these notes with a potential buyer; if they’re not, that’s a big red flag that you may want to avoid that property. Most COAs have monthly fees which typically cover standard building maintenance, security, insurance for building, and limited common elements, like water, cable and internet. However, these can vary wildly so be sure you understand what’s included. The majority of HOAs and COAs allow you to select your own property manager, so research your options to understand what they offer, how they market, their commission and fees, etc. be aware of your options.
Respect the environment
Just like any other coastal region in the world, it’s important to learn how to take care of the environment around you and maintain best practices when you interact with the beaches in the region. For legal reasons, it’s also smart to familiarize yourself with the Alabama Gulf Coast’s environmental laws, ordinances, and policies.
Homeowners should familiarize themselves with the Leave Only Footprints campaign that encourages locals and visitors alike to participate in sustainable travels practices that protect beaches, marine life, and wildlife by removing beach gear by one hour after sunset each day. The campaign asks that folks avoid walking on any beach vegetation, explore away from bird nesting areas, refrain from littering, and refill any holes dug in the sand before heading home. Additionally, no alcohol is permitted on the beach during spring break and glass is never allowed.
Folks visiting the area should also be aware that the Alabama Gulf Coast is a sea turtle nesting habitat from July to October. Homeowners can help the 50,000 sea turtles who visit the Alabama Gulf Coast by avoiding the use of flashlights or flash photography on the beach at night, turning off outside patio lights and shield indoor lights from shining onto the beach at night, avoiding sea turtles nests, leaving sea turtle tracks undisturbed, and even participating in Share the Beach’s adopt-a-nest program.
In addition to the sea turtles, Alabama beach mice are also an endangered species and should not be killed. Because of that, pets are not allowed on the beaches in Orange Beach and Gulf Shores, and homeowners should never use poison or snap traps to harm mice.
Be prepared for tropical weather
It shouldn’t surprise any homeowner on the Gulf Coast that they need to have a game plan for hurricane season, which lasts from June 1 until November 30. The most important thing homeowners can do to stay prepared is monitor news from the National Hurricane Center in Florida, but folks should also prep their homes far in advance.
That includes trimming trees, shrubbery and dead limbs; repairing or replacing broken or damaged fences; inspecting roof for loose tiles, shingles or debris; checking and installing hurricane clips to secure roof trusses to side walls; clearing clogged rain gutters and downspouts; reinforcing garage doors and doors to the home; and installing tested/manufactured hurricane shutters onto windows. Folks can read more about hurricane preparedness and creating an evacuation plan on Weather.gov.
Get ready for some fierce competition
With over 17,000 vacation rentals along the Alabama Gulf Coast, potential guests have no shortage of options when considering where to spend their vacation. That means homes must be kept in impeccable condition and clean if a homeowner expects to have a chance at competing with other homeowners. Just one bad review could hurt your business for years.
On top of keeping your rental home in tip-top shape, you will need to keep your rates competitive, as well. Like most beach markets, the Gulf Coast is a very seasonal market. If you want to make a profit during the shoulder seasons, you’ll need to be aggressive with your rates or you will sit vacant.
Luckily, homeowners can streamline both the management of their property and the rates of their property by hiring a full-service property management company. TurnKey Vacation Rentals, for example, both takes charge in hiring the most highly recommended cleaning service providers and uses dynamic pricing to set fair rates for your property that will keep you competitive in the industry.
By both following local laws and getting to know the Alabama Gulf Coast better, vacation rental property owners will find success in this burgeoning rental market.
Want to learn more about how TurnKey can help you with your Alabama Gulf Coast vacation rental? Connect with us here.