Depends how you look at it. One really needs to have an accurate apod done if their objective is investment. So for example in the post above, is the owner really 4-5K negative every year? I don't know. What's the cash on cash, what's the return on equity? Cap rate?

For years I never had positive cash flow on my South Florida resort properties, but I wouldn't go so far as to state I "lost" money every year. That is a fairly simplistic way to look at it.

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Posted by wheelr

Member since Jul 2012

5147 posts

Posted on 7/28/14 at 4:50 pm to GeeOH

quote:
Meh...not knowing his numbers, it's not enough to call him wrong...but he probably is.

Condo in Orange beach brought in an extra $8k last year over the loan payments and shared leasing co fees. Of course I don't take it, I put it back into the loan and keep some cash on hand for furniture/maintenance issues. It's a brand new tower and will keep being an attractive destination for quite a few years to come.

Yes, you have to be able to identify inflated pricing. But, if you get a solid deal, drop $25k down payment and let leasing customers pay your retirement for 15 yrs, I cant see how it's a bad investment.

And the often overlooked factor, for a family like mine that goes to the area anyway a few times/year, I save thousands in $$ I would have spent somewhere else on housing....it is a # to be factored in for me!
But not far all

Are you my uncle?

He just did the same thing. Bought a condo at Orange beach in a tower, rents it out, and uses it every few months.

He is an experienced homebuilder/seller so I'm sure he ran the numbers before diving in and it seemed to be a worthwhile investment.

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Posted by Ole War Skule

North Shore

Member since Sep 2003

3409 posts

Posted on 7/29/14 at 5:47 am to TJG210

Beach condos on the panhandle are terrible investments. The only way you can make money is if there is another bubble/boom or you 'steal' it. I bought one cash in 2009 at 50% of the peak values. I have more rentals than 90% of the units there and the net income (after insurance, utilities, dues, commissions etc) returns about 5% or so. My unit has low dues and I've had no assessments. The vast majority won't even return the little I make on mine.

I bought it hoping for appreciation and as a place for the family to hang out, but it's a very poor investment as virtually all of them are.

I did a TON of research before I bought and unless you virtually steal one, it's not going to be a good income producing investment...and even in that case, you're better off financially selling it at market price and investing in 'real' real estate.

I think you have a mistake in your analysis if you think you're going to finance it and pay it off in 10 years...unless you put down a BIG down payment which you'll get zero return on for 10 years.

What's the cost of the unit, your down payment, and what you think you'll get in rental income?

ETA: I found the cheaper places I wouldn't want to spend time in had better returns. Slum lords always seem to get better returns. The bottom end properties MAY cash flow a little, but then you have to worry about repairs, assessments, foreclosures ruining your building etc.

This post was edited on 7/29/14 at 5:56 am

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Posted by I Love Bama