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Old 08-14-2018, 11:37 AM   #41
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We own a beachfront condo in Gulf Shores, AL. We have always vacationed down on the gulf coast and may live down there someday. We are probably at our condo 2-3 weeks a year. We do rent our place out when we're not there.

We like having someone else pay our mortgage and expenses. We have always had 1 or 2 rentals at a time - not on purpose, but as a means to an end.

Our expenses:
We do have a property manager that we pay 18%. The going rate in the Gulf Shores area is 25%. Our property mgr collects and pays all of our occupancy taxes, handles cleanings, repairs, bookings, etc
3-4% credit card fees
$10 for starter supplies for each guest.
Deep cleaning 2x/year - $900
Master HOA fees ~50/month (grounds landscaping, security, clubhouse)
Building HOA fees ~ 450/month (bldg flood insurance, water, internet, phone, building landscaping, maint)
HOA-6 insurance (contents)
Flood Insurance (unit)
Property taxes
Electric
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Old 08-14-2018, 01:04 PM   #42
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My wife is retired at 57 and I'm 56 and will retire Aug 31st of this year. Just a couple of weeks away! We purchased an oceanfront 17th floor condo in a more residential quiet part of Myrtle Beach, called the Golden Mile in 2014. We live 3-hours away and we manage it ourselves through vrbo #633092 (shameless plug). Also have a Facebook page for it "The Reach at the Beach". We have an awesome cleaning lady who takes care of that. It stays booked and we net $11,000 per year after all expenses (HOA, taxes, everything), and thats with us using it probably a total of 5-weeks per year. Paid cash for it and did a complete gut job at $13k into it. It's now worth about $125k. A great investment! Very pleased! That said, my wife does put an awful amount of time into it making sure our guests are completely satisfied and it shows with 50 5-Star reviews on VRBO. Tons of repeat renters. She could write a book on how to make the most out of a beach rental. Hats off to her.
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Old 08-14-2018, 02:57 PM   #43
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Originally Posted by Z3Dreamer View Post
Before I begin, I think the answer is that people purchase beach condos for the status, as I don't see that the numbers make sense.

Today, I could rent a 2 BR, 2 BA Oceanfront condo for maybe $900 - $1,200 a week for the last week in August. This is in North Myrtle Beach. A condo that can yield this kind of rent is in the $225,000 range. Of course, you can get condos cheaper and more expensive. I am just trying to match a weekly rental and a purchase price. Condo fees are going to be in the $800 per month range. Management fees run 35% to 45%. Those are the big expenses. You can guess maintenance and repair and utilities.

Lets say that you will rent solid from mid May to mid September. Furthermore, you are going to stay in the unit for 4 weeks in the off season. That leaves 28 weeks. During those weeks, between decreased rates and vacancies, you will pull in an average of $500 a week. Using these numbers and some estimates of other expenses, I get a profit of $2,000. Plus, I get 4 weeks stay, FREE! I have left out appreciation because I don't see enough appreciation in 5 to 10 years to offset the expenses of selling.

OR, I could take the earnings (60/40 AA) on $225,000. Maybe $10,000. And I could rent 4 prime weeks in a similar condo and pocket $6,000.

Again, people must do it for the status of saying I own a condo or they plan on using it a whole lot more than my example. Do not want hate from those that own and use for extended periods. Just trying to understand those that think they are making a profit and getting their vacation for free.
I purchased mine to live in, which I do. Since i have a small circle of friends who have known me for 50 years, the status statement is dumb. Im old don't have to impress anyone. No numbers to show you
Let me add, i'm in a beach town but not beachfront I'm a few blocks away.
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Old 08-14-2018, 04:01 PM   #44
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We own 2 investment condos in Hawaii. The basic math for us is that if you put ~50% down, you will be slightly cash flow positive after all related expenses. Take into acct tax savings (mortgage interest, depreciation, etc) and it gets a little better. I have been looking at a 3rd condo with a CAP rate around 4% and close to the 1% rule (basically gross income divided by purchase price). I'm sure there are better deals out there, but since we enjoy vacationing in Hawaii with family and friends, I am comfortable with these numbers. Throw in 3-4 weeks per year of personal use and the appreciation, our current units have turned out to be great investments. I'm sure there are better deals out there, but since we enjoy vacationing in Hawaii with family and friends it works nicely for us. Your mileage may vary.
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Old 08-16-2018, 01:57 AM   #45
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Plenty say "I'll buy my dream vacation home & just rent in the high season to cover all my expenses" but your family won't want to stay there given the aftermath of weekly renters for those 4-5 months...
That's the problem with not renting year round without a management co. I rent year round with a co. when I am not there. I go there about 10 days every other month and only rent short term. That way if I get a dirty renter they are only in there for a few days. My management fee is 30% which seams high but that is the going rate in Hot springs AR. They handle any damage done to place, advertise, provide linens, clean, and I get checks every month and get a bunch of write offs and depreciation perks.
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Old 08-16-2018, 03:25 AM   #46
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..... We used to own a second home in the desert. Loved going out there but didn’t love the costs involved, plus every time we went out there was a “to do” list that wouldn’t have existed if we were renting. ....

If we had a lot more wealth, I could see owning a second home just for the convenience of having it available to us whenever we wanted to use it. Maybe if we get tired of extensive travel around the world, we will consider buying a desert home again. However it does create more complexity and work to own a second home, even if you have “staff” taking care of it for you.
We own both a single family home and a condo. The SFH is a lot more hassle, even if I hired everything out I would need to manage the vendors (we don't hire everything out).

The condo is easy-peasy.... turn off the water, set the HVAC and close and lock the door.
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Old 08-16-2018, 09:46 AM   #47
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We own both a single family home and a condo. The SFH is a lot more hassle, even if I hired everything out I would need to manage the vendors (we don't hire everything out).



The condo is easy-peasy.... turn off the water, set the HVAC and close and lock the door.


Yes I agree that condos are much easier, which is why we live in one as our primary (and now only) home. However in the desert, we like staying in an SFR so that we have a private pool. We did hire everything out when we owned there, and it was not only expensive but a big hassle managing the vendors.
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Old 08-18-2018, 09:11 AM   #48
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It seems you are missing important things on both sides:

- I don't see vacancy and I don't see capital expenditures;

- On the other hand I don't see anything for tax benefits such as depreciation and tax deductible trips to visit your property.



Also, if I am buying a property for status I will not be renting it out. If I am buying for status it will sit empty 45 weeks a year except when my friends are using it for free. Lol.


You took the words right out of my mouth Calikid!
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Old 08-19-2018, 12:52 PM   #49
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You could use this scenario for just about anything. Why do you buy a new car instead of a used car? why do you go out to dinner all the time at restaurants instead of eating at home? Why do you go on nice vacations that you have to fly to and are expensive instead of staying local?

Nothing I ever do is for status. what I do is what I want if I want a new car I buy it if it bothers somebody that’s their problem. I never worry about her question why somebody buy something or why somebody buys another hole or has a two extra cars that they don’t use that much good for them I say
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Old 08-19-2018, 02:27 PM   #50
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I’m currently selling a vacation condo in Lake Tahoe. I found I didn’t use it much, and I started to feel resentful about the long lost friends who showed up when word spread that I had it. I’m selling at a decent profit (bought it during the downturn) and I’ll carry a seller’s note (ie mortgage) on the property except for 25% down payment by buyer. The interest from the mortgage is roughly what I’d get by having a long term tenant in there. Was hard to justify the condo financially but the appreciation gives me a decent positive return after all expenses so net net it was a decent purchase during the holding period.
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Old 08-20-2018, 02:16 PM   #51
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This is a very interesting thread. Solid points on both sides, as expected. All I can add is this: we own a "middle of the road" (not "luxury", but not "economy", either) 2/2 condo in South FL. On the beach... which we never get to use because we work all day and/or it is always packed with tourists. Very desirable location. The area today is NOTHING compared to what it was a mere 8 years ago. I can not wait to get out of here and buy a house. Yes, the reverse of what most folks do.

I hate living in this place and realized that the condo lifestyle is not for me. Noise, bureaucracy, managers that steal from you, noise, special assessments, rude and inconsiderate neighbors, folks throwing parties at 3 AM when you have to wake up at 5 AM the for work (then you call security and nothing really happens... so you end up calling the police... every other week), noise, sky-high taxes, construction EVERYWHERE (when one building is finished, another one pops out of nowhere... they even built one luxury hi-rise *in front of* another luxury hi-rise that had an ocean view... but not anymore! Value collapsed overnight.), etc, etc... The city approves more and more hi-rise buildings, cramming them in the most unusual of corners... yo go to City Hall and complain, and they do not care, citing the increased tax revenue for them and how it will helps us as well... and yet my taxes always go up, up, up... Did I mention noise?

We are evaluating our options at the moment, and can not wait to move to our own place, where I will not have to ask for permission every time I have friends over, I need to pick up my own mail, or need to bring in a small piece of furniture inside my own home.

I fully see other's points of views, and can understand the appeal. But this type of lifestyle, I found out the hard way, is not for me. Nor do I want to be a landlord. At this point in my life, there is nothing I value more than privacy, independence and *peace and quiet*.
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Old 08-20-2018, 02:42 PM   #52
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. I have been asked to be on the HOA board shortly (Treasurer) as someone is stepping down. Could be a thankless task but at least I will know more about what's going on and I really like the others on the Board. The budget has enough buffer to set aside 25% to 30% into the Reserve Fund every year.
It's not new. The complex is 25 years old, has a track record and I know others that own here.
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I was Treasurer of my HOA for 25 years. It is a thankless job.For example, we were having the complex reroofed, and some wanted all the board members to sign a statement that none of their relatives were involved in the project.
Another time a petition of some 35 pages were being circulated accusing the board of all kinds of things which were not true.
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Old 08-20-2018, 03:50 PM   #53
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Do not doit!
I was Treasurer of my HOA for 25 years. It is a thankless job.For example, we were having the complex reroofed, and some wanted all the board members to sign a statement that none of their relatives were involved in the project.
Another time a petition of some 35 pages were being circulated accusing the board of all kinds of things which were not true.
Souschef, your post was timely! After much thought and speaking twice to an ex-ex treasurer who is a CPA and was treasurer for 9 years, I sent an email yesterday "Passing" on being considered for the board appointment as Treasurer.

I had talked to enough other people to get some of the gist of the politics. The President told me one owner who rents his unit and is a lawyer called her manager at her place of employment and complained about the job she was doing as President of the HOA. She is a director for a property manager company and basically does this for a living. The complaint didn't go anywhere but how personally embarrassing and crossing a line that was! We could not have anyone better. But people there do not like her or her husband and some people are just mean.

I bought this condo to de-stress! What was I thinking even thinking I would want to do it? :face palm:
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Old 08-20-2018, 03:54 PM   #54
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Souschef, your post was timely! After much thought and speaking twice to an ex-ex treasurer who is a CPA and was treasurer for 9 years, I sent an email yesterday "Passing" on being considered for the board appointment as Treasurer.

I had talked to enough other people to get some of the gist of the politics. The President told me one owner who rents his unit and is a lawyer called her manager at her place of employment and complained about the job she was doing as President of the HOA. She is a director for a property manager company and basically does this for a living. The complaint didn't go anywhere but how personally embarrassing and crossing a line that was! We could not have anyone better. But people there do not like her or her husband and some people are just mean.

I bought this condo to de-stress! What was I thinking even thinking I would want to do it? :face palm:
Excellent points. Fully agree. Another reason why I want out of the condo "lifestyle". The truth is (at least in my particular case): the only way to get things done is to be a part of the board, but being a part of the board is a thankless, nerve-wracking, even dangerous job (as stated above). So it's a catch-22. All I can add is that I have done nothing *but* stress out ever since we moved to the condo.
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Old 08-20-2018, 03:54 PM   #55
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... I sent an email yesterday "Passing" on being considered for the board appointment as Treasurer.
Probably one of the wisest decisions you've ever made.
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Old 08-20-2018, 04:07 PM   #56
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Karloff: I really do love my condo but it's probably because of the water front views and being a three level low rise not a high rise. It may also be because I have my other home and can avoid most of the politics and gossip by coming and leaving every week-end!

ReWahoo: I think it was a wise decision too!
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Old 08-20-2018, 07:27 PM   #57
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I managed MIL condo in Daytona Beach, oceanfront for two years. Lost about $3,000 per year. Assume more vacancy - there was always an excuse. Assume more "special assessments". Balcony repair $20,000. New hurricane slider door $10,000. Tennis courts to resurface. Garage and stucco repair. Always something to deal with. Not worth the hassle, so we sold it. Extended family wanted us to keep it, so they could stay rent free for a week.
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Old 08-22-2018, 02:29 AM   #58
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I have owned two homes for 23 years now. For many of those, it was a condo in St Petersburg, FL, where there are very many rentals such as you speak about. We opted to own, as we have an aversion to renting when financially it was unnecessary, and DW is very picky about our home. You don't really want strangers living in your *home*, do you? Well, we did not.


Here is how the financials looked, at least a few years ago. You can buy a waterfront condo on Boca Ciega Bay for around $250K. Because Florida has a homestead law that affects your property tax, it is a little tricky doing the calculations. But I can tell you that if you are not homesteaded, your property gets re-appraised every year. When we were not FL residents, our property taxes reached a high of around $6K per year, with no cap on them as property values went up! Most condos there can only be counted on to be rented for Jan-Mar. There are some exceptions, but that seemed to be the case. At one time, monthly rentals then were around $3K. So it seemed to me that people we knew that rented their condos basically broke even as far as $ go. But if you don't mind that, and 1) don't mind spending (say) Nov,Dec and April there (assuming you have cold winters to escape) and 2) are hoping for long-term capital gains, then it is not a bad idea.


But, although the retirement of the baby boomers may still change this, in the past, many of our neighbors, some of whom had owned for 20 years or more, had *not* yet seen the kinds of capital gains they had expected. YMMV.


P.S. As someone else pointed out, another thing to watch out for with a condo is your condo management, and possible big expenses that could blow your calculations away... Where we lived, we had a good board, but good or bad, you could end up with special assessments for things like a new roof, etc., that could run thousands of $ that you did not expect to have to pay, and you *cannot* avoid paying these.
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Old 08-22-2018, 08:05 AM   #59
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Before I begin, I think the answer is that people purchase beach condos for the status, as I don't see that the numbers make sense.
I have a friend that did this with a house in SC. Your estimates are NEVER correct. Otherwise, everyone would be doing it.

Remember, water attracts idiots. Idiots mess things up. If you buy, then you're stuck with the neighbors. And what if crappy neighbors have an impact on your rentals? With the various on-line rating apps, a problem rental is never secret.

I would pass and rent when I was wanting to be there.
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Old 08-22-2018, 08:26 AM   #60
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Remember, water attracts idiots. Idiots mess things up. If you buy, then you're stuck with the neighbors.
Unless you move.
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