Destin Florida Condo Purchase

9 Replies

Hello everyone,

I am new to the BP and new to real-estate investing. My husband and I are in the process now of trying to buy a Destin, FL condo. We had no idea that all of the coastal condos there are considered "Condo-tels" even if they are owner occupied and are only eligible for 20 year financing, not 30, and require 30% down, not 20%. Just learn this today after being in the process of purchasing this for 3 weeks. So much to learn.....advice?

A lot of the local banks offer some condo only loan packages that are pretty good. I remember that when I was calling around banks a year ago. My advice is to make a list of the local banks then call them up and ask what they can do for condos.

What are your plans for the unit?

I find it hard to believe that any significant percentage of the condos there are set up as condotels. They likely have some sort of “vacation rental management co.” available, but I think there is some misunderstanding.

Condo tell is not a bad word here in Destin.  It is strictly a condo that is managed like a hotel with a front desk, short term rentals, etc,  90 % of the condo's here are condotel's.  regarding financing, there is money available but not a 30 year fixed product.  I know ARMS have gotten a bad rap lately but they are actually a good deal considering most folks don't hold onto a unit for over 5 years.

Hi @Cristy George ,

The idea behind it is the bank is giving you money to buy ownership of a box, within a building owned and managed by someone else. Condominiums are not a style of property, but rather a definition of ownership, meaning in most cases, you own from the drywall in. The bank wants to make sure the community fits into a box appropriate for Fannie Mae financing. That is, no litigation, saving 10%+ in reserves, high owner occupancy, low renter concentration, and no one entity owning more than 10% of the total units. So if you buy a condotel, there are likely very little primary residents, which is a requirement for Fannie Mae financing in a condo. So it's a riskier loan for the bank. Your main option would be a portfolio loan, which comes with higher downpayment and 

I would personally live elsewhere if I planned on living there for most of the year. It's main thing is being a hotel, and I rather not live in a place where there's a constant turnover of residents who don't treat the property well, or respect quiet hours. The fees can be higher, and they're tougher to sell, so keep that in mind if you need an exit strategy. If it's a place for you to snowbird, it's an excellent property. 

It also takes 2 seconds to look at the subdivision name and legal description to realize it's a Condotel, so your Realtor and lender obviously have zero experience in condo sales. That's the very first place I go to find out ownership, and to look at comps. 

Good luck!

@Cristy George I would try a broker for this product.  Let the broker find the lender for you so you are not calling every small bank in town.

I really appreciate everyones input and advice. Peter, what you said is exactly what our new lender said. she is actually local, our ignorant one was from back east. We had gone to him based on a referral. Live and learn :) Tom, it is a place to snowbird but also want to use it as a rental to offset the expense of owning it. The HOA fees on these Destin properties are unbelievably high. I do want to continue to pursue acquiring vacation rentals but I seriously doubt we will buy another one in the Destin area. I'm told that Panama City beach is much more reasonable and just as beautiful. I may look up there next. Thank you for the advice Zach, that sounds like a great idea as I move forward.

I actually bought the pro membership today even though I am a beginner so I could have access to ALL the tools!

Thank you everyone!

@Cristy George As an investor and agent here in Panama City Beach FL I would love to help you and your husband find a property you will both enjoy and achieve excellent returns on. Feel free to reach out for any and all advice on the area. 

Thank you Cain, I appreciate it!

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