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Gulf Shores/Orange Beach condos
Posted on 2/20/24 at 2:29 pm
Posted on 2/20/24 at 2:29 pm
I'm wondering for those of you who own a beach condo in Gulf Shores or Orange Beach, how the condo market is doing and how much insurance and assessments/maintenance and HOA fees are increasing and whether it's worth your while. From an outsider's perspective, the entry cost has considerably increased to where it appears like it is not a worthwhile pursuit, even if you're only wanting for the unit to pay for itself through rentals without really profiting from it. Looking for honest takes and insight, and maybe thoughts on the direction of the market over the short term future. Thanks all.
12
Posted on 2/20/24 at 2:37 pm to Captain Want
We own at Turquoise Place. Last year after all costs and paying a realtor to manage it, we showed about a $10k profit. This is year 5 of 7 and it was our best year. We will sell in year 7 and 1031 into something else.
We bought for $700k and similar listings are $1.5MM now. That's where we make our money. HOA fees are $18,600 per year. That covers insurance and maintenance. My realtor charges 20% of gross rents for general maintenance and property management.
It is crazy right now. No way I would get in with the prices the way they are. Destin is a better buy right now, in my opinion.
We bought for $700k and similar listings are $1.5MM now. That's where we make our money. HOA fees are $18,600 per year. That covers insurance and maintenance. My realtor charges 20% of gross rents for general maintenance and property management.
It is crazy right now. No way I would get in with the prices the way they are. Destin is a better buy right now, in my opinion.
This post was edited on 2/20/24 at 2:41 pm
Posted on 2/20/24 at 3:07 pm to anc
anc, based on those figures it doesn’t seem remotely possible for someone buying the same unit for $1.5M to rent and cover their costs. Do you think things are maxing out there (in GS/OB) or will continue to appreciate?
Posted on 2/20/24 at 3:17 pm to Captain Want
quote:
anc, based on those figures it doesn’t seem remotely possible for someone buying the same unit for $1.5M to rent and cover their costs. Do you think things are maxing out there (in GS/OB) or will continue to appreciate?
My parents had a condo in Perdido, granted that's Florida and not Alabama but very similar markets, and they sold about 2 years ago and my dad told me he has doesn't think there's any way the people who bought it are going to make money renting it.
It was a pretty small 2/2 and they bought I think for around $250 in the mid 00's and sold for about $750 I think. I think the new buyers financed most of it, fwiw. He just said he couldn't justify not selling for where the market was at the time.
Posted on 2/20/24 at 3:24 pm to anc
ANC, did you use it at all? If so, how much?
Posted on 2/20/24 at 3:58 pm to Captain Want
Bought one for $400k 3 years ago, and I could probably sell for $650k now. We barely make money and that is with a 2.75% interest rate and self managing. We pay $20k in HOA fees per year (mostly insurance)
Posted on 2/20/24 at 5:26 pm to anc
quote:Crazy that it’s doubled in 5 years, but I can believe it.
We bought for $700k and similar listings are $1.5MM now.
My thinking (moreso hoping) is that when I retire in 20 years, all of the baby boomers who are currently buying up and retiring in beach homes/condos will die off and it will be a buyers market.
Thats my dream anyway
Posted on 2/20/24 at 6:29 pm to anc
quote:
My realtor charges 20% of gross rents for general maintenance and property management.
20%?! That’s quite a healthy management fee. How is “general maintenance” being defined here?
Posted on 2/20/24 at 6:57 pm to Jag_Warrior
quote:
20%?! That’s quite a healthy management fee.
I think 20% is pretty standard isn’t it? Alys Beach charges 40%.
Posted on 2/20/24 at 7:00 pm to SloaneRanger
20% is pretty standard. Even 25%.
You really get what you pay for. Don’t skip on prop management if they are truly handling everything and keeping the 5 star reviews going.
You really get what you pay for. Don’t skip on prop management if they are truly handling everything and keeping the 5 star reviews going.
Posted on 2/20/24 at 7:37 pm to Im4datigers
I’m hoping for a buyers market too. It just doesn’t seem feasible, or wise even if paying cash. Is there an influx of California buyers?
Posted on 2/20/24 at 8:00 pm to LSUtoOmaha
quote:
ANC, did you use it at all? If so, how much?
My agreement with the management company is that I got 2 weeks a year. We usually utilized one week during the summer and one long weekend during the winter.
If owners are occupied, management companies don't make money.
I think we will clear about 1.4MM when we sell. In order to not pay $400k in taxes, we'll buy something else in that range and do it again. Another cycle and I can probably pay for whatever with cash. If I didn't have a mortgage, I'd clear about $50k.
I didn't mention the tax savings. Add roughly another 4-5% to the return there.
This post was edited on 2/20/24 at 8:06 pm
Posted on 2/20/24 at 8:02 pm to Jag_Warrior
quote:
20%?! That’s quite a healthy management fee. How is “general maintenance” being defined here?
In five years, I have paid $300 in repairs. They do light paint touchups, change light bulbs, air filters, water filters etc. as part of their fee. A 10 day rental put a hole in the wall and it cost me $300 for a handyman to repair and patch it.
Posted on 2/20/24 at 8:14 pm to Captain Want
My goal is to own 50 doors. "Bigger Pockets" language.
Right now we own 8.
The Turquoise Place property in OBA.
A local rental
3 in Starkville
2 in Oxford
1 Turnkey in Memphis, Tennessee
The beach property is going to win out in appreciation, but the others produce more income (and headaches). College kids break everything and run the HVAC at full blast.
Net income in 2023/purchase price
Turquoise Place Condo: $11,033/$680k (mortgaged)
Local Home: $13,450/$130k (no mortgage)
Starkville 2BR: $9600/$89k (small mortgage)
Starkville 3BR: $12,400/$120k (no mortgage)
Starkville 4 BR: $16,700/$200k (no mortgage)
Oxford A: $9800/$119k (no mortgage)
Oxford B: $9200/$119k (no mortgage)
Memphis Turnkey: $7200/$109k (small mortgage)
There is some value in the LTR market if you can stand it. The one in Memphis I have is the best management company I have. Shitty houses upgraded in good school districts attract good families.
What I do is this. Everyone is different. 40% of profits go into a high yield savings account to cover repairs. This is probably overkill, but it helps me sleep at night.
The other 60% goes to various investment vehicles - Solo 401k, my children's IRAs (employees), taxable brokerage, etc. I am thinking about buying a Tundra Capstone, if I do, the property business will buy it.
I grew up poor as shite. My strategy in life has always been to try to be the dumbest person in the room. When I become the smartest, its time to find a new room. You'd be amazed at the people willing to mentor you. The guy that I talk to about Bigger Pockets stuff owns 200+ properties and lives in Delaware. I messaged him on a forum and we text and chat regularly. Guy is worth $50 million and talks to a dumbass from Mississippi like me.
Right now we own 8.
The Turquoise Place property in OBA.
A local rental
3 in Starkville
2 in Oxford
1 Turnkey in Memphis, Tennessee
The beach property is going to win out in appreciation, but the others produce more income (and headaches). College kids break everything and run the HVAC at full blast.
Net income in 2023/purchase price
Turquoise Place Condo: $11,033/$680k (mortgaged)
Local Home: $13,450/$130k (no mortgage)
Starkville 2BR: $9600/$89k (small mortgage)
Starkville 3BR: $12,400/$120k (no mortgage)
Starkville 4 BR: $16,700/$200k (no mortgage)
Oxford A: $9800/$119k (no mortgage)
Oxford B: $9200/$119k (no mortgage)
Memphis Turnkey: $7200/$109k (small mortgage)
There is some value in the LTR market if you can stand it. The one in Memphis I have is the best management company I have. Shitty houses upgraded in good school districts attract good families.
What I do is this. Everyone is different. 40% of profits go into a high yield savings account to cover repairs. This is probably overkill, but it helps me sleep at night.
The other 60% goes to various investment vehicles - Solo 401k, my children's IRAs (employees), taxable brokerage, etc. I am thinking about buying a Tundra Capstone, if I do, the property business will buy it.
I grew up poor as shite. My strategy in life has always been to try to be the dumbest person in the room. When I become the smartest, its time to find a new room. You'd be amazed at the people willing to mentor you. The guy that I talk to about Bigger Pockets stuff owns 200+ properties and lives in Delaware. I messaged him on a forum and we text and chat regularly. Guy is worth $50 million and talks to a dumbass from Mississippi like me.
This post was edited on 2/20/24 at 8:24 pm
Posted on 2/20/24 at 8:34 pm to Im4datigers
quote:
20% is pretty standard. Even 25%.
Maybe in the area that ANC is talking about. But not in the areas where I’ve operated over the past 40 years… neither residential nor commercial.
On a mixed use commercial property, we’re currently paying the management company 8% of gross. And I’ve never paid (nor charged) more than 10% of gross rent.
Maybe on these beachfront condo rentals, that is more standard. Can’t say. Not a market I’ve ever played in.
Posted on 2/20/24 at 9:17 pm to Jag_Warrior
Yeah, beach condo management is usually 20-25%. I have never priced Alys (someone above said 40%), but Rosemary is 35%.
My college town properties are both 10%. Memphis is 12% and I manage my local myself.
My college town properties are both 10%. Memphis is 12% and I manage my local myself.
Posted on 2/20/24 at 9:59 pm to Jag_Warrior
I own 3 total in different areas… and I am in tons of STR groups. 20% is fairly standard, maybe even low
Posted on 2/20/24 at 11:14 pm to Captain Want
quote:
anc, based on those figures it doesn’t seem remotely possible for someone buying the same unit for $1.5M to rent and cover their costs. Do you think things are maxing out there (in GS/OB) or will continue to appreciate?
I can’t speak for GS but I own in Destin. The general trend I see since I have been watching is atleast in my development they sell for about 12 times annual gross rent. So rents have increased significantly in the last few years and appreciation has followed.
That being said - buying at 12 times gross rent - you will not cash flow if you have a mortgage. When we bought we knew that- this is a retirement condo in the future. However - we got lucky and given the increase in rents since our purchase do cash flow nicely. We wouldn’t if we bought now though
Posted on 2/21/24 at 2:38 am to anc
quote:
You'd be amazed at the people willing to mentor you.
What would you recommend to read for someone interested in getting started in rentals?
Posted on 2/21/24 at 7:13 am to anc
quote:
Rosemary is 35%
We had been looking hard at Rosemary but the prices are just retarded right now
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