Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Florida Condo: Rent vs Buy?
Old 10-24-2008, 09:23 PM   #1
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
Florida Condo: Rent vs Buy?

There are some pretty good prices on condos in SW Florida, and we are considering buying one. However, I suspect that the annual cost of condo association fees + property taxes (bend over) + insurance; would be similar to the cost of renting a condo for Jan & Feb. Obviously, a particular deal would have its own particular numbers, but what do you folks think?
If we buy, then some day we might make money when prices rise. Or not.
There are certain hassles with owning, different hassles with renting.
__________________

__________________
Gearhead Jim is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-24-2008, 09:47 PM   #2
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
That is a very nice area if warm sunshine, surf, and relaxation are what you have in mind. Prices are embarrassingly low. If you are in no hurry to sell, you can pick up great bargains - much lower than when we looked 4 years ago. Anything south of, and including, Sarasota is considered tropical and only Fla offers that in the continental US.

You'll have to run the numbers and hurricane risk. The insurance problem seems to be loosening up. And if you can see your way to establishing Fla residency, you will never pay state income tax again.

Worth looking at. We are.
__________________

__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Old 10-25-2008, 06:40 AM   #3
Full time employment: Posting here.
 
Join Date: Nov 2005
Posts: 826
Quote:
Originally Posted by Gearhead Jim View Post
There are some pretty good prices on condos in SW Florida, and we are considering buying one.
This is an understatement. There are so many condos for sale in SW Florida that you can pick up one for a pittance. Personally, I like to keep things as simple as possible, which is why I will probably never own a second residence anywhere. Keeping a primary residence in good shape is hassle enough.
__________________
socca is offline   Reply With Quote
Old 10-25-2008, 09:18 AM   #4
Thinks s/he gets paid by the post
BunsGettingFirm's Avatar
 
Join Date: Jan 2004
Posts: 1,502
Quote:
Originally Posted by Gearhead Jim View Post
There are some pretty good prices on condos in SW Florida, and we are considering buying one. However, I suspect that the annual cost of condo association fees + property taxes (bend over) + insurance; would be similar to the cost of renting a condo for Jan & Feb. Obviously, a particular deal would have its own particular numbers, but what do you folks think?
If we buy, then some day we might make money when prices rise. Or not.
There are certain hassles with owning, different hassles with renting.
Be patient if you're looking at a distressed or bank-owned properties. Those low price don't actually mean that you'll close on that price. I have made 3 bids on condos, but none of them actually resulted in a sale. The banks are too swamped.
__________________
BunsGettingFirm is offline   Reply With Quote
Old 10-25-2008, 12:32 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,031
If you are thinking of buying there is no better time than now . Prices are cheap and everybody is ready to deal . If you only intend to use it two months I would think that renting would be much cheaper and allow you to try out several areas .
__________________
Moemg is offline   Reply With Quote
Old 11-02-2008, 09:49 PM   #6
Full time employment: Posting here.
Urchina's Avatar
 
Join Date: Feb 2008
Location: Central Coast, California
Posts: 891
If you do decide to buy, take a close look at the Association's financial position and books. I don't know about Florida, but here in California the association is required by law to have its reserves fully funded by (I think) 2010, and a reserve study is required every three years.

Also ask about upcoming special assessments (one-time charges for repairs, etc.) A friend of ours is sitting on his condo right now because they have a $95,000 special assessment pending for
major structural work. It's a nightmare.

Poor association management would be a particular problem for absentee owners, I would imagine, since you're not there all the time to keep an eye on things.
__________________
"You'd be surprised at how much it costs to look this cheap." -- Dolly Parton
Urchina is offline   Reply With Quote
Old 11-03-2008, 07:33 AM   #7
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
I'm also thinking that if a particular building has many units in default/foreclosure, those people won't be paying their condo fees and the "good" owners will have to make up the difference.
__________________
Gearhead Jim is offline   Reply With Quote
Old 11-03-2008, 08:40 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,031
My SO's son lives in a rented condo . These condos were built right at the end of the bubble and most of them were bought by real estate investors who have now rented them . The places have gone downhill fast . If I was going to buy a condo in Florida I'd look for an established one with older owners .
__________________
Moemg is offline   Reply With Quote
Old 11-03-2008, 09:27 AM   #9
Moderator Emeritus
Martha's Avatar
 
Join Date: Feb 2004
Location: minnesota
Posts: 13,212
Quote:
Originally Posted by Gearhead Jim View Post
I'm also thinking that if a particular building has many units in default/foreclosure, those people won't be paying their condo fees and the "good" owners will have to make up the difference.
At least in the states that I am familiar with, condo fees take priority over mortgage debt and even if the mortgage holder forecloses, the fees are still owed.
__________________
.


No more lawyer stuff, no more political stuff, so no more CYA

Martha is offline   Reply With Quote
Old 11-03-2008, 09:33 AM   #10
gone traveling
 
Join Date: May 2006
Posts: 1,036
Quote:
Originally Posted by Martha View Post
At least in the states that I am familiar with, condo fees take priority over mortgage debt and even if the mortgage holder forecloses, the fees are still owed.
I believe both CA and Hawaii limit the collection to six months. Associations need to be very proactive if a unit is in foreclosure.
__________________
honobob is offline   Reply With Quote
Old 11-03-2008, 10:06 AM   #11
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
Quote:
Originally Posted by Martha View Post
...
the fees are still owed.
In today's world, there seems to be a big difference between "owed" and "paid". Not sure how that will all work out.
__________________
Gearhead Jim is offline   Reply With Quote
Old 11-03-2008, 10:06 AM   #12
Full time employment: Posting here.
Urchina's Avatar
 
Join Date: Feb 2008
Location: Central Coast, California
Posts: 891
Quote:
Originally Posted by Martha View Post
At least in the states that I am familiar with, condo fees take priority over mortgage debt and even if the mortgage holder forecloses, the fees are still owed.
Not so in CA. It turns out that the association's legal documents spell out whether or not this is so. Our association, for example, does NOT require that fees in arrears be paid when the unit is sold. The association next door does.

Our HOA recently filed a lien on a unit in our association as a means of forcing foreclosure and limiting our losses, but we're still going to eat nearly $7,500 on it.

I can assure you that I'm going to spearhead a change of the governing docs for our HOA pronto. Too bad it's expensive to do.

So, I'd check and read those CC&Rs, bylaws, and articles of incorporation THOROUGHLY.
__________________
"You'd be surprised at how much it costs to look this cheap." -- Dolly Parton
Urchina is offline   Reply With Quote
Old 11-03-2008, 02:43 PM   #13
Confused about dryer sheets
 
Join Date: Jun 2006
Posts: 5
It hardly seems worth it to buy if you're only going to live in it 2 months a year. I've been renting in south florida for 3 years now. 4 months...mid December to mid April, in a 2 bedroom high rise directly on the ocean. Fully furnished and professionally decorated. The cost of the 4 month rental is less than the annual cost of real estate taxes, monthly maintainance and insurance and utilities.
That doesn't take into account the loss of interest on the principal of the purchase price and the furnishing and decorating the unit.
I don't have to worry about an unoccupied unit 8 months a year or have the fear of hurricanes; or assessments either
The only down side is I have to take my clothes and toys with me each year.
Sure there's a chance of capital apprectiation if you buy now and sell later, but with the market the way it is, that's a long way off.
__________________
Roger that is offline   Reply With Quote
Old 11-11-2008, 10:32 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by Roger that View Post
It hardly seems worth it to buy if you're only going to live in it 2 months a year. I've been renting in south florida for 3 years now. 4 months...mid December to mid April, in a 2 bedroom high rise directly on the ocean.
DW and I have been casually considering a 3 -4 month escape from Chicago one of these winters. What is the rent range for a nice place such as you've been renting these days? Has the glut of condo's on the market forced rents down?
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-12-2008, 07:35 AM   #15
Recycles dryer sheets
 
Join Date: Aug 2005
Posts: 480
I'm not Roger that, but I live near Chicago...
A one bedroom condo in Bonita Springs across from the beach (Bonita Beach?) is $3k/month in February. Other units in the area that seemed comparable ran from $2,800 to $3,500. A person who knows the area, does research, and is willing to reserve a year in advance could probably do better. I'm guessing the rock bottom price for similar units by the beach would be about $2,500 now. We did not price larger units.
The woman who owns the place says that condo fees + insurance + taxes run about $9k per year. I'm not sure if that also includes interior maintenance like furniture replacement, air conditioner, etc.
My impression is that the condo glut has not yet caused rents to decrease near the beach, but others with more information might dispute that.
BTW, looking at your sig line: SW Florida isn't as congested as the Miami area, but it's still pretty crowded near the beaches during winter. Fort Myers Beach can have traffic moving slower than you can walk. Of course, you can go inland a few miles and be near a golf course if you like that, or go a few more miles inland and listen to the dueling banjos...
Or go furher north (My MIL lives in Spring Hill) where there are far fewer people but you can easily freeze your buns off in February.
__________________
Gearhead Jim is offline   Reply With Quote
Florida condo...rent or buy
Old 11-12-2008, 08:18 AM   #16
Confused about dryer sheets
 
Join Date: Jun 2006
Posts: 5
Florida condo...rent or buy

[Quote
The woman who owns the place says that condo fees + insurance + taxes run about $9k per year.

Don't know about your area, but real estate taxes average 2-3% of purchase price, so a $300K unit would have about $7500 in taxes. Monthly maintainance for the apartment is about $500 a month or $6k. Don't know what insurance is, but we're well above $9K already.
__________________
Roger that is offline   Reply With Quote
Management from afar...
Old 11-17-2008, 07:42 AM   #17
Recycles dryer sheets
MovingtotheCove's Avatar
 
Join Date: Nov 2008
Posts: 153
Management from afar...

We concluded that managing a 2nd property from a distance was not worth the pride of ownership. My parents rented in the winter for almost 20 years. Good choice...when they wanted to move complexes or units easy to do so and no insurance, no worrry, no fees, etc. Yes, rent did go up over time but the other things would have also. In our case we own timeshare weeks. Good choice so far for us. Five weeks in Ft. Myers Beach and one week in Kissimmee. We can come and go and have no hassle at all...yes, you must drag along luggage and anything you acquire must be hauled "home" again but fees are far less than rental prices so far and for the past 8 years we've had a getaway without the ownership being fully on our shoulders. Again, our decision was based on the challenges of management of a vacation unit from a far vs. the ability to walk away at the end of a trip. Good luck in your search for the right answer...certainly it is a buyers market right now in SW FL.
__________________
MovingtotheCove is offline   Reply With Quote
Old 12-20-2008, 02:11 AM   #18
Recycles dryer sheets
oma's Avatar
 
Join Date: Mar 2007
Location: Tampa/St Petersburg, FLA
Posts: 314
Quote:
Originally Posted by Roger that View Post
It hardly seems worth it to buy if you're only going to live in it 2 months a year. I've been renting in south florida for 3 years now. 4 months...mid December to mid April, in a 2 bedroom high rise directly on the ocean. Fully furnished and professionally decorated. The cost of the 4 month rental is less than the annual cost of real estate taxes, monthly maintainance and insurance and utilities.
That doesn't take into account the loss of interest on the principal of the purchase price and the furnishing and decorating the unit.
I don't have to worry about an unoccupied unit 8 months a year or have the fear of hurricanes; or assessments either
The only down side is I have to take my clothes and toys with me each year.
Sure there's a chance of capital apprectiation if you buy now and sell later, but with the market the way it is, that's a long way off.
From FLA: taxes and insurances alone make me think this is an outstanding plan.
__________________
oma is offline   Reply With Quote
Ego vs. functional
Old 12-20-2008, 07:20 AM   #19
Recycles dryer sheets
MovingtotheCove's Avatar
 
Join Date: Nov 2008
Posts: 153
Ego vs. functional

As in our previous post we just can justify full ownership for a part time 2 or 3 month residence each year. We have no ego that is such we must tell others we OWN our winter or summer retreat. As long as we can either rent from an owner or use our timeshare weeks to get what we want this is our plan. Again, right now we have 5 timeshare weeks in Ft. Myers Beach and 1 in Orlando....plenty of home resort use and plenty of chance to trade to other resorts. We find timeshare gives better ammenities and activities. When we rented directly from owners or through normal real estate channels no bad experiences but not quite as well equipped in the kitchens or with beach chairs, etc. as at the timeshare resorts. Everyone knows right now SW or Central FL has great deals on condos and villas, but do you want the Taxes, Insurance, and HOA fees for only a few weeks of use?
__________________
MovingtotheCove is offline   Reply With Quote
Old 12-21-2008, 03:40 PM   #20
Recycles dryer sheets
 
Join Date: Nov 2004
Posts: 224
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 donít 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 todayís 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, thatís how it looks to me.

Rich
__________________

__________________
Rich is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Sell Condo, buy REIT ETF? Breitling FIRE and Money 13 07-27-2008 02:18 PM
Cost to rent a condo for a week or two? hankster Travel Information 13 03-30-2008 05:40 PM
Retirement 2nd home/condo Rent vs Buy chinaco FIRE and Money 16 03-10-2007 04:14 PM
rent or buy condo for business jakester Young Dreamers 2 07-11-2005 12:34 AM

 

 
All times are GMT -6. The time now is 02:40 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.