Curt

OK who has made the plunge and purchased a condo in Florida as a second/winter home. Interested in any stories and advice on this matter especially areas that are still reasonable and affordable close to water, rentable when not being used, and built to resist those nasty hurricane winds. Tell us all about it please.

stjohnbound

Just remember if you're anywhere near the water it isn't just wind you have to worry about in a hurricane. Most of the damage along the coast is from tidal surge, not wind. And if you manage to find an affordable place right now be sure and share it with everyone else!

j_999_9

OK, always willing to help a fellow plunger. This'll probably be more long-winded than it needs to be.

1. Prices. You may have missed the boat on "reasonable" and "affordable" places near the water. Although I guess it depends on your defintion of the terms. About three years ago, you could have bought a decent place near the water in some nice parts of FL for $160K-$175K new construction. Today, you'll be lucky of you find the same thing for double that. If that fits your idea of "reasonable" and "affordable," congratulations.

2. Hurricances. Ah, we know them well. Disagree with the previous poster about tidal surge v. wind, although it probably depends where you are. On much of the central east coast, most of the damage was from wind (and rainwater that seeped in because of wind damage). We were lucky: minor roof damage that cost about $300 to fix, and no water damage. There was an article in Space Coast Living magazine (I know the publisher) that described what roofs held up best. Tile, if built right, did OK (that's us) if the underlayment is well built and waterproof. The solid metal roofs did best, however. I should mention that our builder, whom we know, has a house on the beach that suffered major wind and water damage, so if the builder can't prevent it to his own house, who can? When you have driving rains and 110-MPH winds, you have a problem.

3. Rentals. We've had good and bad -- but mostly good. Now, we only rent to people we know or maybe close friends of people we know. My advice is that if you have to rely on rentals to own the place, you may want to rethink the idea of ownership. First, a lot of condo developments are putting strict limits on rentals. Second, the market is decent but not lucrative. Since so many people are buying, that tends to keep a cap on rental rates.

4. Would we do it again? Definitely. We love where we are and enjoy staying there in the winter (I still work but telecommute). I should tell you that we had been visiting the area for 15 years before we bought, so we knew it was where we wanted to be. That's important, I think.
Good luck

starrsville

I agree with the comment not to count on the rental to cover the mortgage and costs. If you don't count on the income and are fine with any income being "gravy" you'll be fine.

Consider age and upkeep of the units when before you purchase. I was considering a downtown Atlanta location (close to the Mart with good rental history) but learned they were about to start an extensive update of the building's exterior. I decided I didn't want to gamble on how much my part of the costs might be.

Since then, there's been a lot of new construction in the area. I'm not sure the older unit would have been a very good investment after all.

Patrick

If it is for investment, you need to really do some research on where you buy. My aunt and uncle bought a condo on the water at Englewood Beach about 15 years ago for $98,000. At the time they were looking at some in Naples, but they were about $110,000, which is more than they wanted to spend. Their condo is now worth about $200,000. The one in Naples is now worth well over $1,000,000. It isn't just about the lowest cost!

amwosu

My experience is ongoing and although not in Florida (AZ, another baby boomer and real estate investor hotspot MINUS hurricane season) my experience may be helpful.

Go to the bookstore and pick up a couple of books on second home ownership to get started. Some are directed more to investment purchases and others are directed to vacation home ownership.

Decide what you can afford and how much you are willing to spend (they aren't the same thing as banks love lending more money than what can be safe). We figured out what we felt comfortable forking out monthly and how long it will take us to pay off the loan. Stick to areas where condos in your price range are available.

Be a regular on several Florida realtors' websites where you can plug in your needs and view available properties. Keep in mind that the properties online won't be completely up to date as real estate moves quickly. These websites will give you a good idea of what you can get for your money in various locations.

Consider an interest only loan which is the current craze for helping people get into properties they wouldn't otherwise be able to afford. They can be risky if you can't pay down the loan in the first 3-7 years (depends on the terms). After that, the loan reverts to a standard loan and your payments will jump if you haven't paid down on it. This loan works for us as my husband gets lump sum bonuses that we will use to pay off the condo in four years.

As Patrick pointed out, saving a few dollars shouldn't be the primary concern. I realize none of us has a crystal ball but you can look at trends to decide where to buy for the best investment.

So that you don't waste time while you are on a condo buying trip to the area, set up contact with a lender and realtor prior to your visit. We were preapproved for the loan before we went and had the realtor looking only for properties in areas with mountain and road biking opportunities.

Have fun!

Patrick

Another hint. Let's assume you find a building you want to buy in. The cheapest unit is of course the smallest and/or the one with least view or poorest location. If you buy that one, I can almost guarantee that it will appreciate at a much slower rate than the others. Buying the largest or best in the building is nearly always to your advantage in the long run -- but of course, you need to see that when you buy and be willing to pay extra for the much greater profit potential. In many condos, people who buy the two bedroom unit are often looking to "upgrade" later to a three bedroom unit -- or the penthouse. Those better units are always in higher demand and therefore grow in value at a higher rate.

starrsville

My neighbors at the mountain place bought one in Hallandale last year and have been very pleased. The original owners (or children thereof) are selling them for the first time since the buildings were built. Buildings have been well-maintained. Nice location and more reasonable than Miami or Fort Lauderdale. They are not interested in rental income. They now divide their time between Atlanta, mountains, beach and NYC.

amwosu

I bought the cheapest unit in the building but it was actually the nicest of the three units available. If it had been the most expensive one, we still would have put an offer onit. The out of state owner and his out of town realtor weren't keeping up on quickly escalating prices in the area. Shhhhh......don't tell.

j_999_9

In the spirit of friendly conversation and advice, let me (respectfully) contradict those who talk about appreciation.

First, if you can successfully predict what's going to skyrocket, please come see me. You and I need to go into business together. And past events don't necessarily foreshadow the future. I'd be more concerned about finding a place I like than one that MIGHT appreciate more, unless you're totally in this for the investment and not the enjoyment.

Which leads me to my second observation about appreciation. It's often overrated, unless you're a short-term investor. For instance, we bought a place three years ago that's gone up 150%. So what? If we sold it, we'd just have to buy something else at the same inflated value. And we're not selling anyway, because we like it there. So it's all a paper gain that I'm sure my children will gleefully spend some day.

starrsville

Very well said, j_999_9.

tigerhawk

I bought a beachfront condo in Pompano Beach about 18 months ago. I did it for us, am glad it has gone up in value but so have property taxes, maintenence fees, etc. Insurance is almost unobtainable on condos in South Florida - you can only get it from Citizens which is the insurer of last resort. And there are the yearly assessments for work on the common areas - we are in the midst of an $8000 assessment over 2 years to repair all of the exterior concrete of the building.

Many condo associations in South Florida will not allow short term rentals - mine doesn't. Right now as far as I know you can't get the condo rules until you make an offer, however the law allows you to rescind your offer I think in 48-72 hours if you don't like the rules.

Condo living is NOT like home living - there are many rules about how many can live there, car parking, guests, pets, noise, etc, etc. And the full-time owners aren't always happy with the part-time owners. There are rules about when workmen can come in and work [because of noise] and sometimes even who can do the work.

Am I glad I did it - YES. My parents are using it a couple of months every winter, and I just got back from a long weekend there. Does it take a fair amount of money and planning - YES. I worked with my financial planner for 5 years to make sure I could swing this comfortably. Will it be an ongoing expense even if you can rent it - possibly. You will not have the benefit of Florida's generous homestead laws on property tax, etc. Maintenence fees and assessments must be paid on-time whether you get rental income or not. FL law allows the association to place a lien on your property and foreclose for very small amounts of unpaid [or late paid assessments]. And get a good lawyer - you cannot do real estate transactions in FL without one.

j_999_9

OK, I'm looking like the contrarian here,
but ...
The comment that you need a lawyer to close on a home in FL doesn't square with my experience.

In fact, we closed on our place totally by mail and using a notary here. Our realtor and the bank where we got the mortage handled everything without a hitch. No lawyer.

Maybe others have had a different experience, but for what it's worth, that was mine.

Patrick

Gee, j_999_9, I hope some of those comments you made didn't refer to my comments.
Of course no one can predict fully what will appreciate, but a little education and investigation can lead you to improve your odds greatly. Comments like the ones I made about buying the larger or best unit in a complex, for example, will be right something like 95% of the time.

There's one statement you made that really blares out at me with a jolt:
"And past events don't necessarily foreshadow the future."
Well, maybe not "necessarily" but it sure is the best indication of what will happen.

And although you say it means little or nothing that your property increases 150% as it will cost that much or more to replace it -- so true. But wouldn't you be happier if what you bought had increased 500% instead of 150%? Or do you really not care about it being an investment as well as for enjoyment? Your statement, "Which leads me to my second observation about appreciation. It's often overrated, unless you're a short-term investor" tells me you are one unusual person. The vast majority of people I know would much rather have a property in ten years worth a million dollars than one worth 500,000, no matter which of their heirs is going to inherit it or if they eventually want to sell it, and no matter whether it is temporarily on paper or an actual realized value. I find it amazing that it makes no difference to you!

There's one statement you made that really blares out at me with a jolt:
"And past events don't necessarily foreshadow the future."
Well, maybe not "necessarily" but it sure is the best indication of what will happen. If condos in a complex have always sold for more than their counterparts facing the street, or if golf course facing apartments have always been higher valued and easier to sell than the ones in the same building facing the parking lot, it is impossible for me to figure out why that history would suddenly change.

MaureenB

Our experience owning a condo near a ski area in Colorado was not great for many reasons. We originally bought it for our own use, then we upgraded to a house near the same ski area and kept the condo for a rental property. We would have sold it at the time, but the market had taken a downturn in Colorado and the condo was worth considerably LESS than when we'd purchased it. The good news with that down market was that we got a ridiculously low price on our house on 3 acres.

So, to rent it, we had to use a rental agent who takes 50 percent off the top. We paid the monthly condo fee, all utilities, furnished it, and maintained it, etc. We barely broke even each year, and not without a fair amount of brain damage on my part. Like the Christmas Eve when the dishwasher broke and had to be fixed on Christmas Day. Or the time the tenants upstairs turned OFF their heat and left, which froze their pipes and flooded our condo.

And the developer turned out to be less than honest, and pocketed a good deal of owners' fees instead of making the property improvements as budgeted and promised.

Needless to say, I threw in the towel after 8 years and sold, rather than dump more money into re-modeling. So glad to be rid of it.

My advice: be cautious, be very cautious. Know the property you're buying, investigate the management company and the builder/developer, know the rental market, figure in all the fees and special assessments you might get hit with. In other words, get a house!

razzledazzle

Curt, Please re-read tigerhawk's comments twice and again about HomeOwner
Associations. As a past president and resident, I cannot tell you how many
owners fail to read the CC&R's (rules and regs)and come to a HomeOwners meeting ready to explode about a parking/dog poop not picked up/noise
fine.

Then, there are the more astounded owners, shocked by
a $8K plus special assessment because they didn't read the projected Budget which always has some kind of an asterick *** note at the bottom that says "A special assesment is projected for the year 20__ for
a) new roofs
b) paving
c) etc.

Then, there are the most astounded (typically the same people again) by the delinquincy notice that places a lien against their property when the special assessment is 15 days late.

Talk to your future neighbors, do they think their Board of Directors is doing a good job ? What about the Property Management firm ? Do they have a good attorney for negotiating contracts on the associations behalf? Get copies of past budgets - find out
how much the dues are being raised every year-if there not raised enough
yearly to supply the association with a reserve fund for large maintenance
projects, and someone is bragging that
they haven't raised the dues in 2 years-watch out.

I know you want to be able to rent out
your unit. Many HOA's have limits
and some allow none at all. Do look at the far end of this investment - some future buyer of your condo may find it it hell next to impossible to get a loan
if there are an abundance or rentals-
thus you will find it quite difficult to sell. Sorry, I've heard some stories
from unhappy friends.

I think you've got some gotten good experiences here. It's always about the Pros and the Cons, yes?
R5