Florida condo rentals?

Question

I've stayed in condos in Florida a few times that are individually owned but rented out like hotel rooms with on-site management.  Does anybody have experience with these?  I'm looking for more hands-off investments.  I noticed some are up for auction in Panama City Beach, but the property has terrible reviews.  I guess that's a risk with this type of investing.  I'd appreciate hearing any experiences in this type of property.  Thanks!

Joey Morea · Answer

@Amy A.

They are called condotels. I own one in Panama City beach most of them there you can either manage yourself or use a PM that will charge around a 20% commission With a condotel they do not qualify for a standard mortgage so you need to look into that with mostly at least 20% or more down. I have been pretty happy with mine. I own at the sterling breeze. Panama City beach can vary depending what size property you are looking at and what area weather being the order east side or newer west side by pier park. Message me if you have any question I can help with.

Kurt Alder · Answer

Most of the condos there are grossing about 1 bedroom = $25K per year, 2 Bedroom = $35K per year and 3 Bedroom $45K per year. It most defiantly depends on the complex and location but this is a good rule of thumb right now on beach front. The key is the HOA and what you get, utilities, cable, internet etc along with the common amenities. The numbers above are also gross so consider the management fees at about 15%-20%.Things to consider are if it is furnished, updated, age of complex etc...

Some investors will not buy a property unless it has a "Rental History" rather than "Rental Projections".

I can refer you to the realtor I use. I tried to post his number and email but the forum won't let me. I dont want to break any rules on here!

Peter G. · Answer

@Melissa Jolley Yes the property is nice and at the right price it may be worth a shot.   But they are asking for a buyer to pay the 10% auction price and you will need to furnish the condo.   So the auction prices for the ones not selling with no limit prices are not great and the HOA takes away much of the profits.

Joey Morea · Answer

@Amy A.

The hoa just takes care of the common areas and building maintenance . You chose your own property manager or self manage etc they are different. I had a property manager for a year but decided to do it myself. It’s not that hard if you have the right people in place. You will probably break even if you use a property manager most of them charge around 20%. Shores of Panama I have heard bad things about it and the hoa had lots of issues. I much prefer the newer west side of PCB around pier park. PCB has been making great strides In changing their reputation from a party place to a family place but shores of Panama still seems to have a bad reputation from what I hear. Can you post the link you are referring about?

Damian Seguen · Answer

@Amy A.

If you put the unit into the “Hotel Program” they handle everything as long as your unit fits their Cookie cutter look. That means most customization to your unit can be forgotten about.  New buildings will come furnished and they handle ALL the tenant turnover, marketing, cleaning and basic repairs. But like I said, these buildings are FOR PROFIT buildings. Most if not all profit is soaked up by buildings maintenance and Hotel Program Split. With the Hotel program you will need nothing else. I’m actually meeting people looking to rent my units and explaining they expect to AirBnb it, and will handle everything. They just often ask for a lower rent, but on a secure lease/contract.

What does your end game look like? Selling condos in general is hard, but Condo-Tel’s will almost offer no  conventional financing, limiting your market to strictly investors to sell to.

And the closer to that 40 Yr inspection you get you’ll see a slight drop in sale prices because most buildings will require a special assessment for something.

Amy A. · Answer

@Joey Morea  @Damian Seguen    Thank you for the information.  Can the HOA handle all of the maintenance and turn-over, buying new furniture and linens as needed, or is a property manager required?  Does the HOA fee cover any of the cost of renting the unit?  I'm looking to simplify my investing.

@Peter G.  @Melissa Jolley  Yes, Shores of Panama is what I'm talking about.  I saw the ad in the Wall St. Journal.  It must be pretty bad if they're auctioning off 99 units if those units haven't paid HOA fees.  There are many complaints about the property online, but it looks beautiful!  I also read that the HOA now has control of the restaurant, so there will be revenue from that.  If I lived in the area I would investigate more, but it seems to have too many moving parts for a long-distance investor.  I bet at the right price it could be an incredible opportunity.

Damian Seguen · Answer

@Amy A.

Hello Amy,

I own Own And Self Manager Multi families in Nj, and live in So. Florida in a colleagues “Condo-Tel.” He owns the unit in a building which doubles as a resort style Hotel.

I was fascinated by the concept and this particular building, Each unit is a 2/2, but one bedroom is Hotel room style with private entrance, balcony and bathroom, the other is living room and kitchen bedroom bathroom with connecting door.

It Seemed like a very Solid concept for investors, so I moved into the building I hope to buy in, to do some hands on research and learn the day to Day.

Like everything else there are Pros and Cons. As any condo you are a prisoner to your HOA(Not always a bad thing). The condoTel will usually offer a Hotel program that allows you to sign over your unit to the hotel to book your room. They give you a certain amount of days for personal use.  (What I have seen in my circumstance) The profit from rentals is usually heavily split in the hotels favor and goes toward your Monthly maintance first. Maintance $$$ are very high but everything is always being maintained. A lot of utilities are included, insurance as well, staff always available.

If you were to self book guests, All guests will have to be registered with the front desk and you usually pay a per day fee for each tenant,( disguised as a Key tax) which eats at profit.

Under most condo Guidelines, they will not allow longer than 3-6 Month tenancies (Short term rental requirements), and some units are deemed Residential for Long term only. Be sure to ask.

Definitely do your research, One unit is not a cash cow and requires a lot of turn over maintance, a solid Local Manager will make things a lot easier for you.

I have began to manage and look over several vacation rentals in Broward and Dade County. If there is anything I can help you with let me know.

Best of Luck!

Peter G. · Answer

In my opinion i would stay away from Shores of Panama especially the auction they are having in December.  HOA fees are extremely high and will probably head higher in the future as maintenance issues need to be addressed

Melissa Jolley · Answer

@Amy A.

You must be talking about Shores of Panama. The condo/hotel type thing you are referring to is just a short term rental. Some condos are classified as condo-tels....that makes financing a little more challenging.

Shores of Panama had some legal issues with the developer a while back. It is a popular spot for tourists because of the pool layout.

Florida condo rentals?

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