Buying a Beach Condo - Tips?

#1

volinbham

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#1
My folks and I are considering a condo in Destin.

Any thing to investigate besides the usual home buying stuff?

Any insight on how to investigate the HOA and it's relationship with the developer? I came across one place that looked good but a deeper Google search found a big dispute between the two that is now in court. Insane jumps in assessments and lots of people were bailing on the property.

Thanks in advance and no you can't stay there :)
 
#3
#3
I know what the fees are but I don't know the fee history yet and how common other assessments are.

In the complex we are looking at the fees include the insurance (for the structure and grounds). We'll need insurance for the interior/possessions.
 
#4
#4
My FIL owns a condo in Fort Walton. The one they own is in an older condo complex and the HOA is done by the owns. They vote on anything that needs to be done. And a majority has to carry to get anything done. There is one guy who owns like six units in the complex so a lot of times if he isn't on board it doesn't get done.

Not sure if this really helps, but they seem to be able to get most of what they want done to the complex passed through.
 
#5
#5
piggybacking on the OP's question, is there a general percentage rate of occupancy an owner or potential owner could use to determine a revenue v cost per year estimate?
 
#6
#6
piggybacking on the OP's question, is there a general percentage rate of occupancy an owner or potential owner could use to determine a revenue v cost per year estimate?

Before my FIL purchased his he looked at the condo's VRBO page to see what all dates were booked for the previous two years and used an average per week rental price to figure out and average per month. My FIL is very lucky though because he has some "snow birds" that rent the place for three of the slow winter months.
 
#7
#7
Before my FIL purchased his he looked at the condo's VRBO page to see what all dates were booked for the previous two years and used an average per week rental price to figure out and average per month. My FIL is very lucky though because he has some "snow birds" that rent the place for three of the slow winter months.
Much like the OP, I too saw a place in Destin that I like and looked into it. Price was $195k so I did the math based on one year's worth of asking rent. Using a simple mortgage calculator I found on like and adding the association fees, it came out to be$1185 per month or $14,220 per year. At 100% occupancy and using the rate structure they have in place, that brought in $17,205 per year so the overage is $1,433.75. But that's 100% occupancy at rack rate. Reduce occupancy to 50% and you're overage drops to $124 per year. That concerns me as you havent even paid for any non included expenses (repairs, interior insurance, etc) and there could be some significant out of pocket. Oh sure you make it up on taxes but it has to be paid at some point.
 
#8
#8
Much like the OP, I too saw a place in Destin that I like and looked into it. Price was $195k so I did the math based on one year's worth of asking rent. Using a simple mortgage calculator I found on like and adding the association fees, it came out to be$1185 per month or $14,220 per year. At 100% occupancy and using the rate structure they have in place, that brought in $17,205 per year so the overage is $1,433.75. But that's 100% occupancy at rack rate. Reduce occupancy to 50% and you're overage drops to $124 per year. That concerns me as you havent even paid for any non included expenses (repairs, interior insurance, etc) and there could be some significant out of pocket. Oh sure you make it up on taxes but it has to be paid at some point.

I am not sure how my FIL has done it but he has done well with this place. Enough that he can keep it rented and allow one week for my family, one week for my SIL's family and then he goes any time its not rented and he wants to go. Like I said before his "snow birds" really help him because they pay the monthly payment for those three months they are down there. He doesn't make any money off of them but he doesn't lose money either. I do know that during June, July and August he makes enough money during those weeks to cover payments if something were to happen to his winter renters.
 
#9
#9
Thanks for the info so far.

In our case we are not planning to rent the place at least while my folks are healthy enough to use it. I'm helping out so they can enjoy it then I'll have it as an investment in the future. When they stop being able to use it I'll probably shift over to a rental.

One way to get at rental income potential is to look at listings for like units - often times the RE listing will state previous year's income.

It's probably possible to hit break even or positive cash flow but it has to rent pretty heavily.

Also, check the tax code. You are better off not renting (renting up to 14 days tax free) and taking all the mortgage interest/prop taxes deductions or renting heavy. It's the in between models (rent for some of the year but use it yourself a lot) where you are the most screwed in taxes.

As someone else suggested - look at VRBO to see prices and seasonal rates. Figure 80-90% of that is net revenue (after management costs).
 
#10
#10
Thanks for the info so far.

In our case we are not planning to rent the place at least while my folks are healthy enough to use it. I'm helping out so they can enjoy it then I'll have it as an investment in the future. When they stop being able to use it I'll probably shift over to a rental.

One way to get at rental income potential is to look at listings for like units - often times the RE listing will state previous year's income.

It's probably possible to hit break even or positive cash flow but it has to rent pretty heavily.

Also, check the tax code. You are better off not renting (renting up to 14 days tax free) and taking all the mortgage interest/prop taxes deductions or renting heavy. It's the in between models (rent for some of the year but use it yourself a lot) where you are the most screwed in taxes.

As someone else suggested - look at VRBO to see prices and seasonal rates. Figure 80-90% of that is net revenue (after management costs).

This is very true in my FIL's case. He stays busy with contacting renters and staying in touch but he has a lot of repeat business so it makes it easy. He has about four different renters that have rented the same week for the next three years in advance. He even has one that has told him to put them down until they tell him not too.
 
#11
#11
My folks and I are considering a condo in Destin.

Any thing to investigate besides the usual home buying stuff?

Any insight on how to investigate the HOA and it's relationship with the developer? I came across one place that looked good but a deeper Google search found a big dispute between the two that is now in court. Insane jumps in assessments and lots of people were bailing on the property.

[bold] Thanks in advance and no you can't stay there :) [bold]


Big AL Wilson ruined it for everybody...
 
#12
#12
Give a 60% discount to all VN members and especially thoughs that compliment you. Say, has anyone ever said how awesome all your posts are?
 
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#13
#13
make sure you do background checks on the people living next door - below and above - esp if you hate smokers
 
#16
#16
Don't do it. You would be better off with a stand alone home a few blocks off of the beach. Even with it paid off you can expect at least $500/month in HOA fees that never end. On top of that if the HOA decides to put in a new pool or paint the entire exterior of the building, those expenses aren't covered by the HOA. They are divided equally among the number of units. I'm not even going to mention when 20 frat boys rent the condo next door.
 
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#17
#17
My folks and I are considering a condo in Destin.

Any thing to investigate besides the usual home buying stuff?

Any insight on how to investigate the HOA and it's relationship with the developer? I came across one place that looked good but a deeper Google search found a big dispute between the two that is now in court. Insane jumps in assessments and lots of people were bailing on the property.

Thanks in advance and no you can't stay there :)

My parents are picking one out now. They are working with an agent that I looked up for them. He grew up down there and has been in it since college. I think he's sold 700-800 condos. I talked to him a couple of times and he seems to be a pretty cool guy...answers his phone or calls back pretty quick - that's a plus! My step mom can be a handful sometimes and can require a little hand holding...she's been very pleased with him. Without saying too much, that says a lot! 🙄

Let me know if you want his info.

And I definitely wouldn't buy a condo through the development's listing agent. This guy's a Re/Max agent and doesn't work for any particular developer.
 
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#18
#18
Don't do it. You would be better off with a stand alone home a few blocks off of the beach. Even with it paid off you can expect at least $500/month in HOA fees that never end. On top of that if the HOA decides to put in a new pool or paint the entire exterior of the building, those expenses aren't covered by the HOA. They are divided equally among the number of units. I'm not even going to mention when 20 frat boys rent the condo next door.

If it were just me I'd consider it but this is mainly for my folks who are both 80. Taking care of a house is not in the picture.
 
#19
#19
My parents are picking one out now. They are working with an agent that I looked up for them. He grew up down there and has been in it since college. I think he's sold 700-800 condos. I talked to him a couple of times and he seems to be a pretty cool guy...answers his phone or calls back pretty quick - that's a plus! My step mom can be a handful sometimes and can require a little hand holding...she's been very pleased with him. Without saying too much, that says a lot! 🙄

Let me know if you want his info.

And I definitely wouldn't buy a condo through the development's listing agent. This guy's a Re/Max agent and doesn't work for any particular developer.

Thanks.
 
#20
#20
Are they really wanting Destin proper, or looking more East down 30A, or Santa Rosa
I'd imagine given their age, that the less crowded areas east of Destin, would be better than the spring and summer slam, that the college crowds bring to Destin proper
 
#22
#22
Find a motivated seller...Maybe someone is desperate to unload the property.. Divorce, Death, job loss
 
#24
#24
If it were just me I'd consider it but this is mainly for my folks who are both 80. Taking care of a house is not in the picture.

I'm sure at that age they wouldn't want to listen to frat monkeys next door 24/7 week after week. Turquoise Place in Orange Beach would be one of select options to reduce college punks based on high costs.
 
#25
#25
Are they really wanting Destin proper, or looking more East down 30A, or Santa Rosa
I'd imagine given their age, that the less crowded areas east of Destin, would be better than the spring and summer slam, that the college crowds bring to Destin proper

They love Destin (Miramar area). Santa Rosa would be an option but they prefer Destin.
 

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