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Gulf Shores/Orange Beach condos - good or bad idea to buy?
Posted on 3/6/17 at 1:33 pm
Posted on 3/6/17 at 1:33 pm
Looking at maybe buying a beach condo, would use it to rent out. Anyone here with any tips, thoughts, advice? We would be financing the purchase, not sure of lender options.
Posted on 3/6/17 at 1:43 pm to Captain Want
Make sure to run the numbers with condo fees and insurance included. From what I hear those costs can actually be greater than the financing costs.
Posted on 3/6/17 at 1:58 pm to WhoGeaux
quote:
condo fees and insurance
Can be unreal especially after a storm
Posted on 3/6/17 at 2:06 pm to WhoGeaux
I insure several condos in the area, and if you are buying newer construction (90's-now) and above the third floor, your insurance will be around $600/year for your personal belongings/liabilty/loss of rents or use/improvements/etc.
As for your fees and what not, I cannot help.
But, people purchase condos all the time.
I have a client that does not own a personal home but has two condos for rent. She makes back her mortgage/insurance/fees within three months of renting and uses the proceeds to purchase other condos.
As for your fees and what not, I cannot help.
But, people purchase condos all the time.
I have a client that does not own a personal home but has two condos for rent. She makes back her mortgage/insurance/fees within three months of renting and uses the proceeds to purchase other condos.
Posted on 3/6/17 at 2:07 pm to fatboydave
I've read from older posts on here that some have experienced that rent is a break even at best scenario. True or false for those who know?
Thanks for the info re insurance and condo fees post storm.
Thanks for the info re insurance and condo fees post storm.
Posted on 3/6/17 at 2:11 pm to Captain Want
Condos are in general not great investments.
That doesn't necessarily mean it is a bad idea to buy. If you're going to the beach 10 times a year with the family and you're going to rent it out the rest of the year, go ahead and buy a beach condo. If you never go to the beach but just think it'd be a cool thing to buy and try to make money on rent, do not buy a beach condo. There are hundreds of better ways to make money than buying a beach condo. The way you can "make money" on a beach condo will be rent saved on not renting out other condos if you go to the beach a lot.
That doesn't necessarily mean it is a bad idea to buy. If you're going to the beach 10 times a year with the family and you're going to rent it out the rest of the year, go ahead and buy a beach condo. If you never go to the beach but just think it'd be a cool thing to buy and try to make money on rent, do not buy a beach condo. There are hundreds of better ways to make money than buying a beach condo. The way you can "make money" on a beach condo will be rent saved on not renting out other condos if you go to the beach a lot.
Posted on 3/6/17 at 2:47 pm to yellowhammer2098
quote:
The way you can "make money" on a beach condo will be rent saved on not renting out other condos if you go to the beach a lot.
I know a number of people who say the same thing, basically.
They use the condo a number of weekends a year and a couple of weeks a year, and rent out the rest. The rent they get basically covers all of their expenses including the note, so basically they get "free" beach accommodations.
There is also the opportunity, like any other real estate, for building equity and price appreciation.
Posted on 3/6/17 at 2:49 pm to Captain Want
Seems like values down there are pretty high these days. I would be worried about timing the market wrong
Posted on 3/6/17 at 3:05 pm to notiger1997
Need at least 25%, most likely 33% down to break even or cash flow a little month to month. This can vary depending on HOA dues, insurance, property management rates, etc.
Posted on 3/6/17 at 3:08 pm to LSUFanHouston
quote:
The rent they get basically covers all of their expenses including the note, so basically they get "free" beach accommodations.
Another thing to keep in mind is the amount of time spent managing it, distracting from other things that you'd rather spend your time doing.
Posted on 3/6/17 at 4:09 pm to Captain Want
When people say the insurance on a beach condo is insane I am just confused. I own a pretty pricey oceanfront place in Florida and my insurance is $2100/year I just paid it and they actually took another $300 off bc I had sprinklers inside and sent them pics. I don't see how a $500k or less condo in orange beach can have ridiculous insurance.
Posted on 3/6/17 at 4:14 pm to dabigfella
My insurance on the island in Gulf Shores increased 80% in 2007. Home was a mile in from the beach, never flooded - Ivan or Katrina. Insurance was over $8,000 for a $500,000 home.
Posted on 3/6/17 at 4:21 pm to Serraneaux
quote:
Need at least 25%, most likely 33% down to break even or cash flow a little month to month
Not all that much of a stretch considering the minimum down on this type of property is 15% and could be higher considering it's for a condo purchase.
*Unless someone buys a unit with owner financing and then the minimum down payment requirement is up to the owner/lender.
Posted on 3/6/17 at 9:21 pm to VABuckeye
We own two beach condos, from your OP I would not buy one. There is money to be made, but beach houses are no different than any other rental in returns. You simply can't just pick out any place and expect it to have a return whether it's short term, commercial, beachfront, city, etc.
Honestly, unless you have $50,000 or more above and beyond your downpayment I wouldn't recommend a beach rental either. A vacation property can require $15k easy some years in repairs whether that is an assessment, damage, or just upgrading. Ac systems need to be replaced about every 7 years on the beach for example, you can push that but if your system goes out in the summer it's bad news and very pricey.
The main key really is appreciation. Either buy at the right time or the right price, but preferably both.
Lastly, you can't use it a lot during peak times. The 10-11 weeks of summer generally are about 50% of your gross rent. Our two properties peak summer is about 40% but we are very lucky and we are local so we are able to rent them very well. Some beach houses 2-3 blocks from the beach for example, peak summer could be 60%+ of your gross rental income. You use 2 weeks of summer and that could be 10% of your gross rent. But you'll also have 50-100+ nights that are almost impossible to rent that you can use all you want for not loss.
Honestly, unless you have $50,000 or more above and beyond your downpayment I wouldn't recommend a beach rental either. A vacation property can require $15k easy some years in repairs whether that is an assessment, damage, or just upgrading. Ac systems need to be replaced about every 7 years on the beach for example, you can push that but if your system goes out in the summer it's bad news and very pricey.
The main key really is appreciation. Either buy at the right time or the right price, but preferably both.
Lastly, you can't use it a lot during peak times. The 10-11 weeks of summer generally are about 50% of your gross rent. Our two properties peak summer is about 40% but we are very lucky and we are local so we are able to rent them very well. Some beach houses 2-3 blocks from the beach for example, peak summer could be 60%+ of your gross rental income. You use 2 weeks of summer and that could be 10% of your gross rent. But you'll also have 50-100+ nights that are almost impossible to rent that you can use all you want for not loss.
This post was edited on 3/6/17 at 9:24 pm
Posted on 3/7/17 at 3:39 pm to Captain Want
Like a previous poster said. Break even at best
Posted on 3/7/17 at 5:56 pm to baldona
Two threads up dude is making bank on his beach rentals. rented out 200 days a year. But yea, people hate staying in their own rentals because its work once they get there, and see the damage has been made.
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