The single biggest mistake new STR investors make in Destin is assuming gross revenue is the return. It is not. This guide walks through the formulas an actual underwriter uses, with real numbers from a $850K Miramar Beach condo as the worked example.
Start with realistic occupancy and ADR (average daily rate). Pull both from AirDNA for your specific zip and bedroom count. Do not use the listing agent's "potential."
NOI strips out operating expenses but excludes mortgage debt service. This is your true property-level return before financing.
Cap rate normalizes return against purchase price. Useful for comparing across properties at different price points. In Destin, expect 3.5-5.5% on quality STR product.
The metric that matters most to leveraged investors. Measures cash returned annually as a percentage of cash actually deployed (down payment + closing + furnishing).
This is why most "great deals" in Destin are not great deals. At today's rates, you need either significant cash down, sub-market acquisition, or above-comp ADR to break even on cash flow. Appreciation alone is a hope, not a strategy.
How full does the property need to stay to cover all costs? If your break-even occupancy exceeds the market's actual occupancy, the deal does not work.
Destin market occupancy averages 53-62%. A 67% break-even on this deal is a red flag.
When you bring me a property, you receive a one-page proforma with all five metrics above, plus:
Send the address. You will get the full underwriting model back within 48 hours.