OT: Purchasing a condo in Florida

[BlameTheDogs]

OT: Purchasing a condo in Alabama

A friend and I are looking at purchasing a condo together in the Alabama or Florida within the next six months.
We will be financing. <250k.

Anyone have experience? Tips?

 

[Jeffreauxdawg]

Don't be in to big of a rush. Interest rates are not going to skyrocket anytime soon. And there are some headwinds for real estate in general that will likely push prices down nationally, but RE is always local so this forecast may not apply to the PH.

View attachment 16763

ETA: HPI = Housing Price Index

 

[mississippiheel]

I bought 5 years ago in Miramar beach.Regions bank.They are very tough on financing even with very large down payment.Had to get flex rate.Wouldn't do fixed.Don't know about now.Are you gonna use as rental?I use VRBO and do well.My condo is in Seascape

 

[jethreauxdawg]

Get a real good understanding of how the HOA’s will work wherever you buy, what’s included, who controls it, etc. Some are a complete ripoff and someone is making bank off them. Some seem like the owner is actually getting good value. I suspect some of these bigger condo complexes are hiring the landscape company they own at an outrageous price and sending the bill to the HOA because they control it.

 

[eedawg]

A buddy of mine has a couple he bought as investments and rents them out.

Be prepared for assessments $. He had one for a year and they changed all of the windows on the beach side and the assessment was $30,000.00

 

[ronpolk]

I bought 5 years ago in Miramar beach.Regions bank.They are very tough on financing even with very large down payment.Had to get flex rate.Wouldn't do fixed.Don't know about now.Are you gonna use as rental?I use VRBO and do well.

I would think pretty much every bank is going to be pretty strict on condos. Most banks in the southeast got burned really bad from condos in the panhandle starting about 2008.

 

[johnson86-1]

Get a real good understanding of how the HOA’s will work wherever you buy, what’s included, who controls it, etc. Some are a complete ripoff and someone is making bank off them. Some seem like the owner is actually getting good value. I suspect some of these bigger condo complexes are hiring the landscape company they own at an outrageous price and sending the bill to the HOA because they control it.

Some of the "condotels" seem to be the worst from what I can tell from the outside looking in. Not sure if they made money with the original development, but they seem to have turned some of them into a cash cow, with fat, fat management fees for the condos and finding ways to gig owners. One of them I saw charged a reservation fee to owners when they "book" their own condo and take it out of the rental program for a week or weekend. Not a cleaning fee. That gets charged too. But a $75 fee just to come and use the condo you already bought and that you already pay $700+ per month HOA fees for. I assume you don't have to use the resort management company and you can avoid the worst abuse by renting it out yourself or with a different company, but the whole deal looked hairy enough that even with the prices relatively depressed, I was spooked.

 

[dorndawg]

I've always suspected someone makes a killing off the "hey let's buy a condo in Destin!" crowd.

 

[stateu1]

Wife and I are looking at purchasing a condo in the panhandle within the next six months.
We will be financing. <250k.

Anyone have experience? Tips?

I bought in Miramar Beach as well in 2012 at near the bottom. Value has more than doubled. Prices are pretty high right now, so don't expect to flip it and make a ton money. There's also a transfer tax to the seller when you decide to sell. Financed at my local bank w/ 30% down. Don't tell them you are going to rent, so they will give you a traditional mortgage. Do look at the HOA financials to be sure they have strong reserves. We haven't had an assessment since I've owned. We love our place, but I watched the market for several years. Get the right deal and it will work out. We rent through VRBO. It doesn't quite cash flow, but I did a 15 year mortgage. Had I done 30, it would cash flow. Also, we use quite a bit cutting down on the income. This year has really hurt my rentals obviously. Be sure you have enough to withstand the worst.

 

[BigBully]

We purchased a condo as our primary home in Perdido Key area a couple years ago. A couple of things to check out when you're looking. If you're looking on the beach and especially at a "condotel" expect to put down a large chuck of $$ for down payment. Also, getting financing at a "condotel" can be very tricky. If you're looking for a good Mortgage Broker who know how to navigate the FL condo financing, shoot me a PM and I can get you his name and contact info -- I just went through this with a ReFi a couple months ago.

Also, pay very close attention request the Condo HOA doc's, HOA structure (whether the HOA board lives onsite or remotely), request the HOA financials and pay especially close attention to the reserves the HOA has for the building, and most importantly, ask if there are any pending or upcoming capital improvements that would result of a special owners assessment. May want to ask the HOA president how many owner assessments have been imposed over the past 5 - 10 years.

If you are planning on living at the beach full-time, pay close attention to how many owners live in the building as full-time permanent residents. If not, you will have new neighbors every 7 days. If you are planning to have it as an investment and rent it out, make sure to check the HOA documents as to whether you can do short term rentals (i.e., 3 days) or if a 7 day rental is required. Some places don't allow rentals.

Good luck to you and hope this helps.

BB

 

[nsvltndog]

I read in article in Barron's this week about areas most at risk of real estate price decline in the current economic environment. 5 markets were specifically listed, 2 of which were Destin/Ft Walton/Crestview and Fairhope/Daphne/Foley. 2 were in Arizona and the other was Naples/Immokalee/Marco Island. Places where 2nd homes and condos dominate typically dont do well in rough economic seas. There might be some deals to be had if you have the patience to wait.

 

[Arthur2478]

We purchased a condo as our primary home in Perdido Key area a couple years ago.

Since you bought in Perdido Key, I assume you considered Orange Beach as well. What were some of the pros/cons of buying in Florida vs Alabama. I assume since this is your primary residence that the lack of state income tax was a pro for Florida, but also Florida property taxes were substantially more. What other factors of consideration did you notice? Thanks

 

[BigBully]

Yes....We looked at properties from Gulf Shores to Navarre Beach, FL. A couple things factored into our decision: 1) No state income tax in FL; 2) Proximity to an airport since I travel nearly every week -- or did before the Chinese Flu hit; 3) Overall traffic and congestion; 4) Since we live here full-time, having neighbors, friends, and a sense of community that is really difficult to find in a "condotel"; 5) We have vacationed in PK for years before and liked the fact that it is a hidden gem with not the amount of traffic and vacationers as in OB or GS; 6) Just about every placed we looked at in OB we would have to put a substantial amount of $$ to update it -- this is primarily because a lot of owners have condos for use a few times a year and rent it for the majority of the year; and 7) The development we live in has a private beach club and beach, golf course, and a number of full time residents in the building and community.

Property taxes are higher in FL but not outrageous. So, if you consider the off-set of no state income tax with a little higher taxes, in my opinion its not a big deal. Also, living in a condo, you save on home owners insurance since you are only insuring contents. The HOA fees cover building insurance (walls out). Even though our HOA fees appear high, it covers or Internet connection, cable, grounds maintenance, insurance, pool, gym, water, trash service, reserves, etc., this is only marginally higher than what I was paying when I had a single family home.

BB

 

[Arthur2478]

Thanks for the info.

 

[My Bru]

Honestly, I wouldn't do it right now. Buy low, sell high is still the golden advice of real estate. Very simple to say, very difficult to execute. I bought down there during the recession + oil spill. Everyone told me I was an idiot, it would never come back, etc. I thought I was an idiot too. But in the end it worked out. Buying now is buying into a peak market. Not as bad as 2006, but still pretty high. Who knows though, it could keep rolling. Beachin' seems to be a viable option during COVID.

 

[johnson86-1]

Since you bought in Perdido Key, I assume you considered Orange Beach as well. What were some of the pros/cons of buying in Florida vs Alabama. I assume since this is your primary residence that the lack of state income tax was a pro for Florida, but also Florida property taxes were substantially more. What other factors of consideration did you notice? Thanks

FLorida is in much better fiscal shape than Alabama if that matters. Sometime in the next thirty years, many of the state pension crises are presumably going to come to a head. I'd rather be sitting on fixed assets in Florida than in Mississippi or Alabama when that happens.

 

[mcdawg22]

Navarre is in a weird space right now. Locals want to have things to do but they don’t want to be Pensacola Beach. There is a development that was planned a year ago with a movie theater and arcade style restaurant in Navarre but things have been put on hold. I kind of love my location because I’m halfway between the two. If I want to go to drinking partying beach I can go to PCola Beach. If I want to go to the laid back, surf fishing atmosphere I can do that too. I don’t live on the water but I will say there is tremendous value living directly on the water. With a wife and kid you’d think we were packing the car for a weeks vacation.

 

[johnson86-1]

Navarre is in a weird space right now. Locals want to have things to do but they don’t want to be Pensacola Beach. There is a development that was planned a year ago with a movie theater and arcade style restaurant in Navarre but things have been put on hold. I kind of love my location because I’m halfway between the two. If I want to go to drinking partying beach I can go to PCola Beach. If I want to go to the laid back, surf fishing atmosphere I can do that too. I don’t live on the water but I will say there is tremendous value living directly on the water. With a wife and kid you’d think we were packing the car for a weeks vacation.

So they are basically Starkville's sister city? THey want the things tourists bring without the tourists? Just like a large part of Starkville wants the benefits of the university without the students?

 

[My Bru]

I read in article in Barron's this week about areas most at risk of real estate price decline in the current economic environment. 5 markets were specifically listed, 2 of which were Destin/Ft Walton/Crestview and Fairhope/Daphne/Foley. 2 were in Arizona and the other was Naples/Immokalee/Marco Island. Places where 2nd homes and condos dominate typically dont do well in rough economic seas. There might be some deals to be had if you have the patience to wait.

Got to have balls to invest in tourist areas. It's going to be a roller coaster.

 

[mcdawg22]

So they are basically Starkville's sister city? THey want the things tourists bring without the tourists? Just like a large part of Starkville wants the benefits of the university without the students?

They don’t mind the tourists, they just don’t want rows and rows of condo towers. Hurlburt and Eglin are major employers in the area. If we don’t have a major hurricane I could see Pensacola getting a lot bigger. Quint Studer and the mayor have done a fantastic job revitalizing downtown. A lot of Navarre people commute to Pensacola so that economy affects us.

 

[johnson86-1]

They don’t mind the tourists, they just don’t want rows and rows of condo towers. Hurlburt and Eglin are major employers in the area. If we don’t have a major hurricane I could see Pensacola getting a lot bigger. Quint Studer and the mayor have done a fantastic job revitalizing downtown. A lot of Navarre people commute to Pensacola so that economy affects us.

Gotcha. But do they really think Pensacola Beach is overbuilt? I'm always shocked at how little developed Pensacola Beach is. I feel like it's a great density. You can find some high rises, you can find some "mid rises" if that's a thing, and there are tons of beach houses, and you have several hotels, which I can imagine locals not caring about but does provide something different.

Navarre is actually underdevloped to me. I don't want Destin or Orange Beach, but I like having some development and not committed to driving for everything. Pensacola Beach and Perdido Key are about right to me, as long as you get towards the eastern edge of perdido so that you can get north easily without having to go through a ton of beach traffic. Pensacola is a little different because you have to go through the packed area right at the bridge first to get to some of the less dense areas, but as long as you plan well with groceries before you go, it's reasonably easy to get to restaurants and bars from somewhere that's not too crowded.

 

[BlameTheDogs]

We will be using it as a short term rental, but not telling the bank that. We have ruled out Alabama and decided on somewhere in Florida. We are leaning towards the PCB area

 

[patdog]

Be careful about that. That's called occupancy fraud. And don't think the bank isn't going to be completely blind to the possibility you may be renting it out even if you claim you're not.

 

[nsvltndog]

It is fraud and there will be documents you sign as part of your mortgage that require you to acknowledge this. It sets you up to potentially have to repay your entire mortgage balance in full if discovered. I think it also has the risk of criminal charges, but full and immediate repayment risk is very real which sets up possible foreclosure unless you have plenty of readily accessible cash at the moment in time when it discovered. I paid either 1/8 or 1/4% higher interest rate on ours to allow us to sleep at night w/o trying to game the system and have no regrets.

 

[ronpolk]

We will be using it as a short term rental, but not telling the bank that. We have ruled out Alabama and decided on somewhere in Florida. We are leaning towards the PCB area

What do you think the benefit of not telling the bank is? The bank is not going to care that you rent it out. Unless you’re making this your primary residence, trust me the bank is going to assume you’re renting it out.

I would think you’d want this factored in to the appraisal anyway.

 

[BlameTheDogs]

My apologies, I should have said we will not offer the info, however, I’m sure they will ask, which we will tell the truth