Florida Condo: Rent vs Buy?

[honobob]

Quote:

Originally Posted by Rich I put the numbers (own vs. rent) on a spreadsheet and they come up with renting every time. Indeed, if you rented a place for twelve months out of the year the numbers still show rent wins over owning. Rich

Rich. What number are you using for appreciation? Take Sarasota, Fl for example. The city as a whole experienced 11.25% annual average appreciation over the last 18 years. That includes the last couple of years that have not been so good. Obviously a better NBHD will beat that, but even $11,250 gain each year goes a long way against $20K down on a $100,000 property. If you rented when not in use using a property manager you'd be even better. Would definitely like to see your figures that would support renting over owning.

[lazygood4nothinbum]

between 2000 & 2005 sarasota county population grew by about 2.35% per year***
between 1990 & 2000 by about 1.6% per year*
between 1980 & 1990 by 3.2% per year*
between 1970 & 1980 by 3.33% per year*
between 1960 & 1970 by 4.6% per year*
between 1950 & 1960 by 10.3% per year*
between 1940 & 1950 by 6% per year*
between 1930 & 1940 by 2.62% per year*

projected sarasota county population growth 2008-2026 is about 1.44% per year**. so the next 18 years might look very different from the prior 18 years or from the previous 70 years for that matter.

*source http://www.bebr.ufl.edu/system/files/Hist_Census_Counties_0.pdf

**source http://edr.state.fl.us/population/web10.xls

***source http://en.wikipedia.org/wiki/Sarasota_County

[honobob]

Quote:

Originally Posted by lazygood4nothinbum between 2000 & 2005 sarasota county population grew by about 2.35% per year*** between 1990 & 2000 by about 1.6% per year* between 1980 & 1990 by 3.2% per year* between 1970 & 1980 by 3.33% per year* between 1960 & 1970 by 4.6% per year* between 1950 & 1960 by 10.3% per year* between 1940 & 1950 by 6% per year* between 1930 & 1940 by 2.62% per year*

So I'm guessing that the time period that I'm looking at that has resulted in 11.25% average annual appreciation has had only 2% population growth that probably it will have a greater population growth resulting in a greater appreciation rate. It's all good.

[lazygood4nothinbum]

zillow shows sarasota from about dec 1998 to date appreciating at about 6.88% per year (and falling).

during that time population increased by about 2.25% annually.

population is projected to increase by about 1.54% annually over the next 10 years, a 32% decrease in the rate of population from when property values were increasing by the aforementioned 6.88% per year.

but aside from less demanding population growth, also, wouldn't character changes of an area over time spike appreciation rates to new and sustainable plateaux which might never be repeated again. for instance, i bought into my area when it was a dilapidated cracktown which we transformed into a gayborhood so desirable that even str8s with children have moved back in. probably that's not gonna happen again this lifetime. so likely i received gains that a subsequent owner might not.

i remember sarasota from the late 1970s because a friend bought a hotel there where we used to play. it was pretty backwater back then. but try driving along tamiami trail now during rush hour. what a mess. sarasota has come into its own already. when is that going to happen again?

[socca]

FWIW, some folks thought it was worth gambling around $1 billion on new development in downtown Sarasota:

Sarasota Proscenium Project Locks In Waldorf-Astoria

The latest scuttlebutt is that this deal is starting to fall apart. After all, there's already a Ritz-Carlton downtown. I'd be willing to bet some of the Paulson bailout money on Proscenium, but not my own

[Rich]

Quote:

Originally Posted by honobob Rich. What number are you using for appreciation? Take Sarasota, Fl for example. The city as a whole experienced 11.25% annual average appreciation over the last 18 years. That includes the last couple of years that have not been so good. Obviously a better NBHD will beat that, but even $11,250 gain each year goes a long way against $20K down on a $100,000 property. If you rented when not in use using a property manager you'd be even better. Would definitely like to see your figures that would support renting over owning.

Honobob:

I'd be pleased to send you my Excel spreadsheet. If you have an email address attached to you on this site I'll check it out and send it along. If not, not sure how to do that.

Rich

[Zoocat]

Quote:

Originally Posted by Rich I put the numbers (own vs. rent) on a spreadsheet and they come up with renting every time. Indeed, if you rented a place for twelve months out of the year the numbers still show rent wins over owning. One reason this is so is that most folks don’t take into consideration the cost of the money used to purchase the unit. If you buy a $100,000 dollar condo outright, that money would earn around $3,000 dollars a year (at 3%) even in today’s soft interest rate environment. Then there are the property taxes (high in Florida) and high insurance rates. Also, you might well face unanticipated assessments for repairs at your facility, which can be quite steep. Anyway, that’s how it looks to me. Rich

The opportunity cost of the investment of the lost investment at 3% is important but also important is the cost of renting a similar housing unit. In my town the rents for identical units are the same as what I'm paying for mortgage, taxes, insurance and HOA fees. In addition rents increase (as do HOA fees and insurance). I'm sure you thought of this, Rich, but I thought I'd include it .

Also, for most of us, the quality of life issues are important. Being a tenant and at the mercy of a landlord (especially a pain in the ass one who lies and won't fix things) has got to be one of the most annoying situations of life.

[Gearhead Jim]

I'm going to make a guess and say that real estate appreciation will cover the opportunity cost of the money used for a vaction home/condo, if you don't need to sell for at least 5 years.
That doesn't change the fact that for those of us who spend only a couple of months there, renting looks cheaper and less hassle than buying.

[Kelly]

Quote:

Originally Posted by Rich I put the numbers (own vs. rent) on a spreadsheet and they come up with renting every time. Indeed, if you rented a place for twelve months out of the year the numbers still show rent wins over owning. One reason this is so is that most folks don’t take into consideration the cost of the money used to purchase the unit. If you buy a $100,000 dollar condo outright, that money would earn around $3,000 dollars a year (at 3%) even in today’s soft interest rate environment. Then there are the property taxes (high in Florida) and high insurance rates. Also, you might well face unanticipated assessments for repairs at your facility, which can be quite steep. Anyway, that’s how it looks to me. Rich

Thanks Rich,

I would love to get a copy of your spreadsheet. Being from Canada, I'm sure it will help immensly with understanding the costs of Condo ownership in Florida.

[In-control]

Quote:

Originally Posted by Rich I put the numbers (own vs. rent) on a spreadsheet and they come up with renting every time. Indeed, if you rented a place for twelve months out of the year the numbers still show rent wins over owning. One reason this is so is that most folks don’t take into consideration the cost of the money used to purchase the unit. If you buy a $100,000 dollar condo outright, that money would earn around $3,000 dollars a year (at 3%) even in today’s soft interest rate environment. Then there are the property taxes (high in Florida) and high insurance rates. Also, you might well face unanticipated assessments for repairs at your facility, which can be quite steep. Anyway, that’s how it looks to me. Rich

Ditto - I did the same thing and came up with the same conclusion. I would rather own one good house and then rent for 3-6 months anywhere that I want - feedom is a wonderful thing!