Thinking about buying a condo or beach house in Perdido Key and renting it when you are not using it? You are not alone. The island’s sugar-white beaches, Gulf access, and proximity to Pensacola draw steady vacation demand. This guide gives you the essentials you need to evaluate a short-term rental purchase with confidence, from rules and taxes to financing, insurance, and operations. Let’s dive in.
Why Perdido Key works for rentals
Perdido Key attracts a wide mix of guests, including families, weekenders, multigenerational groups, and winter visitors. Peak demand usually tracks spring break, late spring through summer beach season, and holiday weekends. Fall and early winter can be quieter, though niche travel tied to fishing and Gulf events can fill some weeks.
Property types that tend to perform well include beachfront condos, Gulf-view single-family homes, and newer luxury condos that command higher nightly rates. Smaller or older units rely more on occupancy and value pricing. To set realistic expectations for occupancy and average daily rate, review recent data from STR analytics platforms and local vacation rental marketplaces.
What is legal: rules and permits
Short-term rental rules exist at several levels. Before you buy, confirm each layer below.
County and local rules
Escambia County sets permits, business tax receipts, and operating standards for short-term rentals. Requirements can include registrations or inspections. Regulations can change, so verify current ordinances and any permitting steps with county offices before you close.
HOA and condo restrictions
Private covenants often control rental use more tightly than county law. Many associations set minimum stays, limit the frequency of rentals, require approved rental agents, or set parking and occupancy rules. Obtain the full governing documents and recent board minutes to confirm current policy and any proposed changes.
Noise, parking, and safety
Local noise ordinances, parking limits, and property maintenance codes affect guest conduct and your liability. Build clear house rules into your listing and guest communications, and make sure the property has required safety features like smoke detectors and compliant egress.
Taxes you will collect and file
Florida taxes transient rentals. You can expect state sales tax and county-level tourist development or discretionary surtaxes. Rates vary by jurisdiction and can change. Platforms may collect and remit some taxes on your behalf, but you are responsible for verifying which taxes are covered and filing any required returns.
Action steps:
- Confirm current transient rental and sales tax rates with the Florida Department of Revenue and the Escambia County Tax Collector.
- Determine whether a business tax receipt or county registration is required for your address.
- Decide who will handle tax filings if a platform does not remit all taxes for you.
Financing your STR purchase
Financing differs based on how you will use the property.
- Primary residence loans typically have lower rates and down payments, but you must occupy the home as your primary residence.
- Investment property loans for non-owner-occupied use usually require larger down payments and carry higher rates.
- Lenders vary in how they count short-term rental income. Some want documented rental history or will only underwrite longer leases. New STRs can be harder to qualify on projections alone.
Consider conventional investor loans, portfolio loans from local banks, or specialty vacation-rental lenders. FHA and VA programs generally do not apply to investment STRs. Speak with mortgage pros who know vacation rentals early, and ask exactly what documentation they require.
Insurance, flood, and hurricane realities
Standard homeowners policies often exclude or limit short-term rental exposure. Work with an insurer that understands coastal STRs.
- Property coverage: Obtain a policy or endorsement that allows short-term rental use. Expect higher premiums than for owner-occupied or long-term rentals.
- Wind and hurricane: Coastal properties face high wind risk. Policies may include separate hurricane or windstorm deductibles.
- Flood insurance: Much of Perdido Key lies in FEMA flood zones. Lenders may require flood coverage, and it is strongly recommended for all. Premiums depend on flood zone, elevation, and construction details. Review FEMA flood maps and obtain an elevation certificate when available.
- Liability: Consider commercial general liability and an umbrella policy sized for guest activity. If you hire cleaners or maintenance crews, confirm they carry proper insurance.
Wind mitigation features such as shutters, reinforced doors, and roof tie-downs can reduce both storm damage and insurance costs.
Operations and cash flow basics
Short-term rentals are hospitality businesses. Your revenue and expenses will vary based on property type, management approach, and season.
Revenue drivers
- Nightly rate and occupancy
- Minimum-stay rules set by your HOA or local code
- Cleaning fees and extra guest fees
- Seasonal pricing adjustments and promotions
Use current local STR analytics to set pricing and to plan for busy and shoulder periods.
Expense categories
- Management fees
- Platform host fees
- Cleaning and turnover
- Utilities, internet, and supplies
- HOA or condo dues
- Insurance and property taxes
- Routine maintenance and reserves for repairs
Operating expense ratios can vary widely, often between 30 and 60 percent before debt service depending on property type, seasonality, and whether you self-manage.
Management options
- Self-manage to keep more revenue, but plan for guest communications, pricing, scheduling, and vendor coordination.
- Professional managers typically charge about 15 to 35 percent of rental revenue. Many handle marketing, booking, cleaning oversight, maintenance coordination, and guest messaging.
Choose vendors who can turn units reliably on peak-season timelines.
Turnover logistics
Build a dependable rotation among cleaners, inspectors, and handymen. Stock consumables, document checklists, and align check-in and check-out windows with your vendor capacity.
Simple cash flow worksheet
Use the framework below with current local data and actual quotes.
- Annual gross revenue = Average Daily Rate × 365 × Occupancy Rate
- Subtract operating costs: management, platform fees, cleaning, utilities, HOA dues, insurance, property taxes, supplies, maintenance reserves, and any local taxes you remit
- Subtract debt service if financed
- The result helps you estimate cash flow and potential cash-on-cash return
Buyer due diligence checklist
Before you write an offer, work through this list to reduce surprises.
- Confirm county rules with Escambia County planning or code enforcement.
- Obtain full HOA or condo documents, including rental caps, minimum stays, platform rules, registration needs, parking and guest policies.
- Ask the seller for rental history: booking reports, profit and loss, bank statements, and any future reservations.
- Verify which taxes platforms collect and what you must file.
- Order a title report and review for use restrictions or easements.
- Arrange a physical inspection focused on hurricane and flood vulnerability, roof, HVAC, pool or spa safety, and code items like smoke and CO detectors.
- Get insurance quotes for STR-appropriate property coverage, wind, and flood. Confirm the policy permits short-term rental use.
- Speak with at least one experienced local property manager about expected occupancy, pricing, and typical expenses for your unit type.
- Review competitive listings for amenities, rates, calendars, and reviews.
Key risks to plan for
- Regulatory risk: County ordinances or association rules can change, affecting rental rights and economics.
- Weather risk: Hurricanes and flooding can cause closures and higher insurance costs.
- Market risk: New supply or softer travel demand can pressure occupancy and nightly rates.
- Operational risk: Inconsistent cleaning, poor guest communication, or safety issues can lead to bad reviews, fines, or claims.
Next steps with a local guide
Perdido Key rewards careful planning. Your best first moves are to confirm permissibility with the county and the association, validate taxes and insurance costs with real quotes, and underwrite income using current local data and any existing rental history. If you want help lining up lenders, insurers, and proven managers, tap a team that lives in this market.
As coastal specialists with cross-border experience in Florida and Alabama, we combine data-driven pricing, hands-on service, and listing-to-stay insight to help buyers and investors make smart, confident decisions. Ready to talk through a specific building or run numbers on a unit you are eyeing? Reach out to CoateConnection to schedule a Free Consultation.
FAQs
Is a short-term rental legal in Perdido Key?
- It can be, but it depends on Escambia County rules and your HOA or condo documents. Verify all three before you buy and again before you start hosting.
What taxes apply to a Perdido Key vacation rental?
- Expect state sales tax plus county tourist development or discretionary surtaxes. Confirm current rates and filing duties, and check what your platform collects versus what you must remit.
How do I finance a short-term rental purchase?
- Most investors use non-owner-occupied mortgages with larger down payments and higher rates. Lenders vary in counting STR income, so documented rental history helps.
Do I need special insurance for a vacation rental?
- Yes. You will need a policy that allows short-term rental use, plus wind and flood coverage given the coastal location. Consider liability and umbrella protection as well.
How much can a Perdido Key STR earn?
- Earnings vary by property type, seasonality, management, and competition. Use current local STR data and, if available, the seller’s booking history to build your projections.
