Valley Lee, MD · Member since 2016 · 10 posts · 2 votes
My husband and I live in Maryland, but want to retire in Florida . We bought a condo about 6 years ago, we have had 2 really good renters the last has been there 5 years and does not plan on moving.
We are now in the process of purchasing a Vacation condo in the Florida Disney area. I am starting to worry about our deal, it is a short sale, so we have a good price, but we are taking the money for the down payment out of the condo 30K. With HOA fee's and morgage we are breaking even.
I would really like to hear some opinions on our plan, or direction. We are looking for guidance and things to watch out for.
Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
9y
@Joy Buell
Welcome to Bigger Pockets. Make sure to listen to the podcasts. They are very informative, and contain ample information. https://www.biggerpockets.com/blogs/
Naples, FL · Member since 2016 · 37 posts · 25 votes
9y
Hi Joy. I was given good advice as an early investor and draw on the same advice repeatedly. Before moving forward, we always ask "if your plan doesn't work out and the worst case scenario happens, can you live with it?" This is an important question because that worst case scenario will happen with enough deal volume. Worst case isn't "the place burns down" - insurance takes care of that. Worst case is likely a market value change, rental rate decrease and/or sharp expense increases from front loading of repairs and capital improvements. Model it out with all of those happening - how are your cash on cash returns Can you live with it?
JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
9y
Good advice, @John Verduzco. We always do three scenarios--best case, worst case, most likely case. Just the exercise helps refine your forecasting skills, over time.
Plus, revisit this EVERY year, in case you need to make decisions to sell or refinance. Learn the early warning signs of a bubble. There are many well-reasoned articles on the Internet about this. When the last bubble collapsed, experts who studied the data could see clearly it was coming. They couldn't time the market and predict exactly when, but it was a "for sure." Don't be in the same boat as all the consumers and amateur invests who used the Greater Fool Theory of investing.
Naples, FL · Member since 2016 · 37 posts · 25 votes
9y
There are much more scientific ways to analyze market value changes and rental rate changes, but an eye opener is to look at your contracted property in Zillow. Yes, I know, Zillow is Zillow, but the 10 year Zestimate history is typically the same "shape" - a sine wave (with a peak and a trough). Denise Evans is correct - every year we need to know the current value AND where are we on that wave. The real advantage of disciplined buy and hold cash flow investing is that you don't need appreciation to be happy. If your cash flow returns make you happy, you can always wait out the wave and hold for the next peak (market cycle) before you sell (exit). Keep in mind, that market cycle peak/trough is not as pronounced in all parts of the country (many areas see small changes from top to bottom). Florida markets, on the other hand...