Looking to buy a condo to STR in Cape Coral / Fort Myers

[David Lemont]

I’m trying to find a condo to start short term renting in the Cape Coral / Fort Myers area but the problem I’m running into is all the condos I’ve seen have a 30-Day minimum stay requirement. Does anyone know of any condo associations that are doing 7-day minimum stay? 

Thanks for your help!

David 

[Stetson Miller]

Quote from @David Lemont:

I’m trying to find a condo to start short term renting in the Cape Coral / Fort Myers area but the problem I’m running into is all the condos I’ve seen have a 30-Day minimum stay requirement. Does anyone know of any condo associations that are doing 7-day minimum stay? 

Thanks for your help!

David 

Hi David,

The only property that consistently has units available is The Pink Shell Resort on Fort Myers Beach. Here, they actually allow nightly rentals, but it's tailored specifically for buyers who want a 100% hands off approach, and you don't have any other options. You're required to use their on site management, HOA fees are pretty steep on top of that, and you're limited to using the property yourself to 4 weeks out of the year, 2 weeks during the busy season and another two weeks during the off-season.

With all that being said, these units do have potential to generate a fairly acceptable return, considering that there's no work needed on your end at all, and depending on what your financing choice would be.

There are a few other condos that allow nightly/weekly rentals in Lee County, but they're much smaller and it's extremely rare that you see units listed from those properties, making the Pink Shell one of the only choices if you're looking specifically for STR condos

[John Underwood]

Quote from @David Lemont:

I’m trying to find a condo to start short term renting in the Cape Coral / Fort Myers area but the problem I’m running into is all the condos I’ve seen have a 30-Day minimum stay requirement. Does anyone know of any condo associations that are doing 7-day minimum stay? 

Thanks for your help!

David 

 An excellent reason to buy a house instead. You will make more money off a house also.

[Stetson Miller]

Quote from @John Underwood:

Quote from @David Lemont:

I’m trying to find a condo to start short term renting in the Cape Coral / Fort Myers area but the problem I’m running into is all the condos I’ve seen have a 30-Day minimum stay requirement. Does anyone know of any condo associations that are doing 7-day minimum stay? 

Thanks for your help!

David 

 An excellent reason to buy a house instead. You will make more money off a house also.

I can second this. Like I said above, it's completely up to your preferences, some people really only want the 100% hands off approach. However, if you're willing to suffice for 75-90% hands off for significantly better returns, then SFH's would be your next best option.

The condos can be purchased much much cheaper though compared to the entry level SFH's that you see in Cape Coral, so there is something to be said there

[David Lemont]

Thank you for your reply. 

I agree that the SFH is a better option. The problem we've run into is our price-point is about $350K and it's hard to find a pool home at that price. With non-pool homes, it's going to be hard to find occupancy to short-term rent.

We did find a SFH with a pool at a great price but we found flood insurance was way higher than what we anticipated. We decided to start looking at condos because flood insurance could be included in the HOA costs.

If SFH is the only option, is there anything within the Cape Coral / Ft Myers area at our price-point that we could purchase and have a decent return on? We have about $135K cash to work with for down-payment, closing costs, and reserves.

Thank you all for your help! 

David 

[Stetson Miller]

@David Lemont Have you spoken to a lender about a 10% down vacation loan option? This could allow you to break into the $500-600,000 range for the waterfront pool homes in Cape Coral. If you already know that's not an option though, and you're looking to do STR's specifically in this area, then condos would be the next best option!

[Joshua Messinger]

Hey @David Lemont! 

I would ask yourself if it's really worth it to get a condo given the competition you will be facing and how you won't be really able to set yourself apart from any other condos that are in the building which could be better than yours. 

I agree 100% with @John Underwood on this one and have to say it would be much more worth it to buy an SFH over a condo. Since you're approved amount is only 350K though I would look into houses that may need some renovations done to them if you have the extra cash to put into it. This way you can build up your equity + market value of the home and have several exit strategies vs just buying and hoping for the best.

I hope this helps and if you have any more questions please don't hesitate to reach out! 

All the best,

Josh 

[Stetson Miller]

@Joshua Messinger @David Lemont

That's actually a great benefit of that resort, all of the units are identical and controlled by the in-house management team to allow each individual unit to have the exact same occupancy rates, pricing, and therefore overall income generation

Personally, in my opinion, if you were 100% limited to the $350,000 purchase price, your best bet would be to go ahead and get into the market with the condo option, rather than purchasing a relatively substandard and low-demand SFH that's likely to lose money long term at that price point

[Daniel Murphy]

We have a single family pool home in Cape Coral.  Cape has a 7 night minimum, but it's not enforced.  There are tons of bnb's in Cape, and from what I've heard / experienced, the 7 night minimum is not enforced unless you get reported to the city.  

Our experience has been very good so far.  $400k pool home, 3/2. I'm hoping to gross 55-65k this first year.  Lots of learning mistakes so I think that year two can be 75k or more.  

[Steven Hauser]

Quote from @Stetson Miller:

Quote from @David Lemont:

I’m trying to find a condo to start short term renting in the Cape Coral / Fort Myers area but the problem I’m running into is all the condos I’ve seen have a 30-Day minimum stay requirement. Does anyone know of any condo associations that are doing 7-day minimum stay? 

Thanks for your help!

David 

Hi David,

The only property that consistently has units available is The Pink Shell Resort on Fort Myers Beach. Here, they actually allow nightly rentals, but it's tailored specifically for buyers who want a 100% hands off approach, and you don't have any other options. You're required to use their on site management, HOA fees are pretty steep on top of that, and you're limited to using the property yourself to 4 weeks out of the year, 2 weeks during the busy season and another two weeks during the off-season.

With all that being said, these units do have potential to generate a fairly acceptable return, considering that there's no work needed on your end at all, and depending on what your financing choice would be.

There are a few other condos that allow nightly/weekly rentals in Lee County, but they're much smaller and it's extremely rare that you see units listed from those properties, making the Pink Shell one of the only choices if you're looking specifically for STR condos

Do these units appreciate? Are they liquidWhat kind of return could an investor look at it? Is it usually to get previous years (s) data to get an accurate picture?

[Stetson Miller]

@Steven Hauser These units have shown very strong appreciation in line with averages that we're seeing in the area as a whole. They are fairly liquid, but there is a smaller buyer pool for properties with this many restrictions for personal use, so they do tend to sit on the market a bit longer compared to other nearby condos. It is usual for these units to be listed with past year's performance numbers, so I would be happy to share those for any current/recent listings if you're interested!

[Andrew Steffens]

@Stetson Miller I cannot speak too much about that area because I have limited knowledge, but we stay away from condos in Saint Pete/Clearwater area due to not only having to worry about city restrictions but also the HOA. I saw many people mentioning to consider SFR - have you made that decision yet?

[Stetson Miller]

@Andrew Steffens Think you meant to tag @David Lemont

[Andrew Steffens]

Sorry @Stetson Miller you are correct

@David Lemont

[Barrett Bridgewater]

@David Lemont What if the flood zone designation could be removed off that SFH with a pool? That would remove the lender requirement to purchase flood, then you could decide if flood insurance is needed or not.

When you run into flood zone properties, we can provide a free review of it and let you know if petitioning FEMA for a removal of the flood designation is possible.

If it does qualify, then you may have found an incredible deal!  Why?  Because you could buy it at the devalued flood zone price, then flip the flood designation, and now you have gained property value the current owner didn't know was possible.

Happy hunting!

[Ryan Seib]

Quote from @Barrett Bridgewater:

@David Lemont What if the flood zone designation could be removed off that SFH with a pool? That would remove the lender requirement to purchase flood, then you could decide if flood insurance is needed or not.

When you run into flood zone properties, we can provide a free review of it and let you know if petitioning FEMA for a removal of the flood designation is possible.

If it does qualify, then you may have found an incredible deal!  Why?  Because you could buy it at the devalued flood zone price, then flip the flood designation, and now you have gained property value the current owner didn't know was possible.

Happy hunting!

Good evening Barrett, I am all ears on how one goes about flipping the flood designation. That would be very interesting.
I am assuming it is impossible though with waterfront property right on the river. Thanks for your wisdom on this.

[Barrett Bridgewater]

@Ryan Seib you would be surprised.  It is mostly about elevations.  Just imagine if you live on a 100 foot cliff next to a river then you would never flood.  Same concept applies no matter where you are.  It could be a matter of inches that reclassifies the property out of the high-risk flood zone... which would remove lender requirements.

[Ryan Seib]

Quote from @Barrett Bridgewater:

@Ryan Seib you would be surprised.  It is mostly about elevations.  Just imagine if you live on a 100 foot cliff next to a river then you would never flood.  Same concept applies no matter where you are.  It could be a matter of inches that reclassifies the property out of the high-risk flood zone... which would remove lender requirements.

Oh, yes of course, well that makes sense. I am aware the elevations can cause a single lot to fall in multiple zones. Generally I would assume you would have to either raise the floor level of the structure, or berm it or something in order to flip the classification. The other way I am aware of is by commissioning a flood study. But the second method likely only works on zones that were not surveyed recently. Ie you would need to bring new or better information or something. If you have a way to get elevations changed efficiently without removing or raising a structure, that would be an excellent resource as well. Thanks again.

[Barrett Bridgewater]

@Ryan Seib seems you have some experience dealing with Flood Zone issues already?  Most of the time no actual physical changes are needed.  We normally find that the buildings were built above the flood zone already.  So it is generally less about when it was surveyed and more about who performed it.  Not every survey comes out exactly the same.  It just generally requires a surveyor who knows how to utilize the best reference points to maximize the elevations gathered, plus an engineer who knows what they are looking for.  

There are a few situations where small physical changes can qualify the building for removal (like adding a couple bags of mulch in a low spot against the foundation wall).  

If the building truly is below the flood level though, then there are no physical changes that we can recommend for improving the elevation. Raising the floor level only provides better ratings for flood insurance; that will not work with a FEMA flood zone removal. I did have a client demolish, bring in fill/dirt, and rebuild above the flood level. But that making sense financially is rare.