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re: What are the ins/outs of buying a beach condo as an investment?
Posted on 7/27/14 at 10:18 am to jmarto1
Posted on 7/27/14 at 10:18 am to jmarto1
I'm guessing you need a minimum of 20% down, but what's the current rate on a NOO Investment/2nd property mortgage for prime credicks and 80% LTV?
I ran some numbers based on the three year occupancy averages for the Gulf Shores/OB/Perdido area broken down by quarter. Year round it's just under 50%. Pricing extremely conservatively on rent and estimating extremely aggressively for HOA/Insurance, if your rate is around 7%, you won't come out of pocket for the note, and you'll end up with a nice chunk of change to put back on principal each year.
In peak season, you still have the better part of a month's worth of time based on occupancy averages and that's thousands saved on vacation rentals is normally be out of pocket on.
I love Bama...I've been kicking this idea around, so I'm interested in how your math matches up. Care to share?
I ran some numbers based on the three year occupancy averages for the Gulf Shores/OB/Perdido area broken down by quarter. Year round it's just under 50%. Pricing extremely conservatively on rent and estimating extremely aggressively for HOA/Insurance, if your rate is around 7%, you won't come out of pocket for the note, and you'll end up with a nice chunk of change to put back on principal each year.
In peak season, you still have the better part of a month's worth of time based on occupancy averages and that's thousands saved on vacation rentals is normally be out of pocket on.
I love Bama...I've been kicking this idea around, so I'm interested in how your math matches up. Care to share?
1
Posted on 7/27/14 at 10:22 am to GFunk
I did this during the housing crash when the numbers were even more depressed than they are now. I had the funds set aside to pull the trigger and spoke with two very good friends who are brokers in Panama City, FL.
We tried to find one that would cash flow that wasn't a POS and were unable.
There are so many risks that come with buying a condo down there. What if a hurricane hits/oil spill and you lose your revenue for 6 months? What if HOA decides to double your monthly fee?
So many moving parts that you need to be cash flowing serious money in order to make up for the unexpected that WILL happen.
We tried to find one that would cash flow that wasn't a POS and were unable.
There are so many risks that come with buying a condo down there. What if a hurricane hits/oil spill and you lose your revenue for 6 months? What if HOA decides to double your monthly fee?
So many moving parts that you need to be cash flowing serious money in order to make up for the unexpected that WILL happen.
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