Buying Condo in Fort Myers for Family That Lost House to Ian

[Jim Windgassen]

I am considering the purchase of a condo or a single family home in Fort Myers, FL in order to provide temporary (1 year ??) housing for a family member whose home was very badly damaged in hurricane Ian.  After the family uses the property for temporary housing, I will probably keep the property as either a long term rental or I may try my hand at short term rentals with it and use it myself sometimes.

I am an experienced landlord (16 years) who normally specializes in LTR SFH properties in senior citizen communities in other parts of FL, and I am not very familiar with the Fort Myers / Cape Coral market. One of the things that gives me great pause about purchasing a home in the Fort Myers area is the astronomical price appreciation that has occurred in this area in the last few years. When running the numbers on properties in this area with present interest rates, few are going to come close to approaching breakeven, much less cash flow as LTR's. I have never done short term rentals before, but have always been interested in this. My biggest concern is that that with the huge run up in prices in this area, there is going to be a pretty significant correction, and I will be left holding the bag if a correction occurs.

I really want to help this family member as they have a young child (4 yrs old) and a spouse who have been displaced from their home. That said, I also don't want to lose my shirt on this deal. My strongest instinct is to purchase a 3/2 condo in a nice part of Fort Myers selling for around $250k as this seems like a limited risk option which should be easy to rent as either an LTR or an STR and the rent would be manageable by the family member. I also put in an offer of on an almost new construction (2021) single family home yesterday being sold by a divorcing couple, but they want full asking price and the wife is being weird trying to stay in the home after the sale which does not help me as the family needs immediate housing.

I would really appreciate perspective from this group with experience in the Fort Myers / Cape Coral area. I am open to different types of homes (condos, SFH, etc.) . The only special requirement I have is that the home needs to be accessible to someone who is having two knee replacements within the next year. If it is a condo, then it either needs to be a 1st floor unit or have an elevator; for a SFH, a 1 story home would be preferred.

Any general advice about the area, pricing or this situation would be appreciated. Thoughts on investing in a condo vs. SFH in this area are also appreciated. All of my other properties are SFH, so I am less familiar with condos.

[Jason Wray]

Jim,

I am in Pinellas County which is only around an hour away. I can tell you your gut feeling is pretty much on the money and Cape Coral is somewhat over priced in certain area like most states. Due to the Hurricane there will be a small window where sales are not as abundant and the market analysis will reflect lower numbers again due to the storm and lack of sales. So factor in disaster areas, rebuilds, clean ups, and that time frame and it will not benefit Charlotte or Lee County.

I would say if they can look into Pinellas we have a lot of great options for condo's and townhomes all around Largo, Seminole, and Clearwater. Again Pinellas is just north of there right over the Skyway Bridge. You can still find a decent 3/1 condo/townhome in this area for under $200K and HOA's will vary depending on close to the beaches you look. I know some great realtors in this area so feel free to send me an email.

[Yvonne Gallegos]

@Jim Windgassen condo for short term rental would be successful as long as you are able to rent out immediately after closing some HOA make you wait a year or 2 maybe they will be lenient now cause of the disaster but that would be a risk. Also, most HOA don't allow true short term rental minimum lease must be 30 days in most or could have to be seasonal cause some only allow 3-4 leases per year. Just some factors to keep in mind. But this is very nice of you to help your family out!

[Jim Windgassen]

Quote from @Yvonne Gallegos:

@Jim Windgassen condo for short term rental would be successful as long as you are able to rent out immediately after closing some HOA make you wait a year or 2 maybe they will be lenient now cause of the disaster but that would be a risk. Also, most HOA don't allow true short term rental minimum lease must be 30 days in most or could have to be seasonal cause some only allow 3-4 leases per year. Just some factors to keep in mind. But this is very nice of you to help your family out!

Yvonne,

Thank you for the heads up on the potential condo rules; I will definitely do my due diligence and read the condo rules carefully.  The first "tenant" will be my partner's family, so I would think we should be OK for the first year.

Jim

[Dan Maciejewski]

Condos haven't been great for STR since the price appreciation of the past few years. If you're in a building that allows STR, most of the other owners will be also using their condo for a vacation rental. And those owners will mostly have purchased at a much lower price. They will be making good money with lower rents than you will have to charge. And since all the units are basically the same, you will be competing mainly on price. That puts a big downward pressure on rates. Unless all the owners get together and decide to raise rates, the only people that try to raise will have their units rented last.

And the Condo fees usually hit cash flow pretty hard.  I usually only advise (at least in my area) to buy a condo if you have another reason, like you want to be on the water, or want to use it for your second home more than as a rental.  Your situation might be one of those, but I would keep looking at single family homes, too!

[Stetson Miller]

Hi @Jim Windgassen,

Like @Yvonne Gallegos mentioned above, condo minimum lease periods and maximum leases per year allowable are going to pose a challenge to the STR strategy

Since the family you're initially renting to will be in the property for roughly a year or so, and you're interested in running a true STR model without any restrictions, a single family home in Cape Coral is likely to be your best bet. The year that the primary tenants will be in the property will likely provide more than sufficient time for the vacation sector to recover in this area, so that should be a very smooth transition back into that strategy

One thing to note is that whether you're looking at doing a condo or a single family, it's unlikely that either of these will even come close to cash flowing as LTR's, so STR is really your only option for either of these. If you're wanting to keep options open for both strategies, a multifamily property might be better suited for the situation