First time buyer 2/2 condo Palm harbor Florida

6 Replies

Hi guys, just looking to get some opinions on a potential idea. looking at a 2/2 condo in palm harbor Florida 34683 for 100k. I plan on living there for a year to two and after renting it out currently, similar units are renting for 1250 a month. I would do a 3.5% FHA loan and would est a 150-200$ cash flow.

A little over a year ago now, I purchased a condo in my hometown and planned on doing exactly as you just explained.  Buy it as a primary, live there for a year, maybe 2 max, then rent out my unit and cashflow!  Since living there, I learned a few things that I will share...

1.  Try to notice how old is the condo community is. - My condo was built in the late 70s so the community is at the point where many things need to be replaced.  The roof was re-done prior to me buying the place which I knew but being young and naive and didn't realize what else needed to be replaced.  Balconies, stairs, concrete, retaining walls, etc.  My condo community has enough reserves in place where it doesn't directly impact us in terms of a special assessment but my HOA dues have increased 2.9% for the last two years.

2. By-laws can change over time.  My community is FHA approved and in order to maintain that status, you need less than 1/2 the community to not be rentals.  Therefore my HOA is trying to restrict the amount of rentals we have.  What happens if you are restricted and can't rent out your unit later down the line? 

3. Living in close quarters and having someone live above you can cause damage to your unit.  I have not personally experienced this but I have heard stories where leaks occurred in the unit above and trickled down to their unit causing issues the owners just couldn't avoid.

I'm not saying its a good or bad investment.  All I'm saying is make sure you due diligence on EVERYTHING!  Best of luck!  

I am with @Christopher Giannino on many of his points. I live in palm harbor and am renting a 3/2 condo and I am not sure how the owner makes money. HOA went up 14% over the last couple of years and for me it prices me out of the investment.

I don’t think you will have any issues renting the condo for that amount and Palm Harbor is still a desirable place to live.  

Read the by laws and make sure you check on things that the HOA covers to make sure they have funds to cover them. I have a buddy of mine who bought a condo and now the HOA doesn't allow renters. Do you want to stay in Palm Harbor? Also why not a SFR that does not have HOA or fees. The extra cash flow might offset the need to have a staff on site or the amenties they provide. Hire good property management or hire a excellent tenant and most issues never come up. I am a agent as well if you need me to help you with anything getting this deal put together.

Hi @Patryk Sommer ,

Save the extra 1.5% down to reach the 5% down minimum on a conventional loan. In order for a community to be FHA approved, the community association must apply to HUD. (that application is expensive) That allowance also only lasts 2 years, so now that the market is high again, a lot of associations don't apply and therefore you won't see many communities that accept FHA loans. I just searched HUD's website for FHA approved condos in Palm Harbor and there is just 1 community that's FHA approved and that is Landmark Oaks.

If you do a 5% down conventional loan, you will then be able to purchase in several communities. But, when financing in a condo, the most important thing is that the association must be saving greater than 10% of their income and placing it in their reserves. That's probably the  most common reason why financing on primary loans in condos fall apart. Get a good condo lender, who knows how to read the budget and insurance requirements properly. 

The responses above do mention good points. Make sure you understand that there isn't a rental cap, what the leasing restrictions are (tenant applications, background checks, minimum lease length etc). They are also right, things can change (but it's uncommon), so when you write up your offer, make sure that you require the owner to provide you with the last 12 months of board minutes. Read those minutes and see if they are proposing any plans that will influence the owners financially, like a special assessment, changing rental requirements, etc etc. 

I'm a condo expert across the bay, and a partner agent with Let me know if you have any questions. 

Hi @Patryk Sommer . I had a townhouse on the water in Dunedin that I initially purchased to live in. Decided to move on and rent the unit out. While it was rented out, the HOA increased so that impacted my cash flow big time. (It was the first time I was renting something out and didn't quite know what I was doing). In addition, the association did not have enough money in their reserves so I couldn't do a HELOC on the unit. It was the start to my investing and I learned a lot, but I did sell it and moved on to a multi family instead.

Thank you for the pointers, the strongest factor towards why I'm concerning a condo vs an SFR or multifamily is for the initial investment required. in palm harbor, there are plenty of condos in the lows 100s and even some under 100.

@Patryk Sommer I'm always weary of condo investments because you have little control of capital expenses. If you were buying cash it wouldn't be as much of a factor but, being so highly leveraged makes it much riskier. There are plenty of SFRs in the palm harbor, new port richie area at that price point. They may need some updating but are perfectly livable and afford you the opportunity to force some appreciation.