Olathe, KS · Member since 2018 · 4 posts · 0 votes
I"m wanting to purchase a condo in Florida. Preferably on the gulf coast, but open to anywhere. Looking to rent for vacations. Not sure where to start...property management, insurance, and anything else. Any help is appreciated. Thanks
Investor · Grasonville, MD · Member since 2017 · 453 posts · 415 votes
8y
@Wesley A Sanderson I don't have any experience purchasing in Florida yet, but my GF and I were looking at some condo's on the Atlantic Side north of Miami. Hallandale Beach area is quite inexpensive and you might have a great shot at buying under market value. To my knowledge, public schools in that county are poor so the property may be very slow to appreciate.
It's a perfect area logistically, right in between Fort Lauderdale Airport and just a little North of Miami to keep costs down.
Olathe, KS · Member since 2018 · 4 posts · 0 votes
8y
I'll have to take a look at that area. Not sure if it would be easier to start local and generate some income first or just dive right in the Florida market. Thank you
I believe that as long as the numbers work where your expenses are less than your income, it doesn't matter where you start and you might not get a huge turnover rate in Kansas for vacation rentals. I would do research on the population and the expected tourist statistics. Property managers are not hard to find, I would put an ad out as well as contact local property management companies and compare rates. For insurance and lending information I would go ahead and look for agents (mortgage brokers and insurance agents will guide you through step by step). It's a big decision to make but you will get a vacation home that will pay itself off... and who doesn't want that?
If this will be in Florida, know the peek season for short term rentals near the beach is from December through April. To be most profitable, know that you shouldn't stay at your property during those times.
The easiest route for you would to buy a Condo-Hotel. Which is exactly what it sounds like, you're essentially buying a condo that's rented like a hotel. The in-house management markets, leases, cleans and deals with all the headaches. Short term renters are an even bigger pain, and they constantly want refunds for small things that may go wrong. They charge in the area of 35%, which is expensive, but you're really paying for the convenience when you're not in the area to manage it. If you were to go for outside management, it would be similar price, with the possibility of more issues because they aren't in house. Condo-Hotels also go on a daily rate, and therefore charge more, and have the potential to make you more money.
Condo-Hotels are also difficult to finance, so be ready for a large downpayment for a portfolio loan, but you can get favorable terms buying it as a 2nd home. A big question for you would be how long can the owner stay for? Some places will allow the owner to stay between 30-90 days in a year. I was looking into a new construction condo-hotel in Treasure Island, FL so they couldn't produce financials, but comparing the property to financials of similar buildings nearby, the potential was ridiculous. I could have bought it as a 2nd home for 10% down.
If you'd rather go with a condo, I recommend looking out for the following. Are there any leasing restrictions? Some places will require # of years prior to leasing, applications, leasing term limits, and number of leases in a year. A shortcut would be best to buy a condo that is used the same way you wish to use it. That way you understand already how the prior owners have rented it out, you can ask for their financials to justify the purchase, you can also hire the same management because they already have the clientele. A lot of people who rent short term in the high end condos rent every year, and typically have right of first refusal to book their time for the next year.
Since it's a condo, you only have to get a contents insurance policy aka HO6 policy. Your ownership of the condo is from the drywall in, so you only have to insure the interior, rather than the exterior(the HOA covers the exterior). HO6 policies are rather cheap, and depending on the property, should be roughly $50-$80 a month. I'd just get more general liability coverage.