You’re on vacation in Fort Myers (or Naples or Cape Coral or Sanibel) and you fall in love with SouthWest Florida. You know you’ll come back to explore all the things you did not see the first time and to revisit your favorite spots. You and your partner are paying $325 per night for your 350 square foot room and the couple you are traveling with is paying the same ($4550 per couple for a two week stay). While on the beach or the golf course, you strike up conversations with several people and you learn that they live “up north” (undoubtedly you meet Minnesotans and Michiganders), they visit 2 or 3 times every year, and they own vacation condos in the area. The 3 R’s So you talk it over and decide to start exploring the idea of purchasing a vacation condo in SouthWest Florida. Why not, after all, combine the best of all worlds: Rest, Recreation, and Return on investment? Why give the money to someone else when you could be helping yourself with an investment and be vacationing in the comfort of your own home? And how about that difference in space and convenience? A two bedroom, two bath condo with a full kitchen, lanai, and great view is quite a bit more comfortable than a tiny hotel room with a 2 cup coffee maker. It makes sense, you think you’re quite brilliant, and so you dive into the search. It sounds simple at first, but alas you soon discover there are so many factors involved. Buying a vacation condo–even for experienced buyers–can be a bit overwhelming at first. What location is best? Beach? Golf? Boating? What features are most important to you? What about condominium fees and policies? Can you rent out the condo when you are not using it? Can you bring Sparky the family dog? Location, Amenities, View, and Price The first step is determining which type of view and location is the priority for you. You can always drive to the beach or a golf course or a marina or boat ramp or shopping center or amusement park. If your priority is beach, sunsets, and expansive water views you’ll be in the category of beach condo buyer. You of course still go boating or golfing, it’s just that the boat is not in your backyard or the golf course is not in your front yard. Likewise, if you are an avid boater or angler, but just a casual golfer, then your priority is a waterfront property on a canal or in a community with marina facilities. To keep it simple, let’s generalize three classifications of condominium properties: Planned gated communities: There are many gated communities that offer a wonderful blend of all the amenities many condo shoppers are looking for: golf, tennis, clubhouse, fitness rooms, walking trails, and the like. These communities are a mixture of single-family homes, villas, and condos. Some also have marinas, boat storage, and on-premise restaurants. In this category, properties on the waterfront will have views of the Caloosahatchee River, Charlotte Harbor, or a large lake-like saltwater basin. High-rises: In SouthWest Florida, the majority of high-rise condo towers are found in downtown Fort Myers along the Caloosahatchee River and on the beaches of the Gulf of Mexico (Fort Myers Beach, Bonita Beach, Naples). Additionally, some gated communities have high rises among other property types. Examples are Tarpon Point and Cape Harbour in Cape Coral, Gulf Harbour and Mastique in Fort Myers, and Burnt Store Marina on the Charlotte Harbour. Smaller condo complexes: Smaller complexes, say 8 to 100 total residences and 3-5 stories high, are available in centrally-located areas such as central Fort Myers, along the waterfront (canals, the Caloosahatchee River, and the Gulf of Mexico) and are common on Sanibel and Captiva islands. There are also small waterfront complexes on canal systems, often with boat docks for use by residents or their tenants. On the beaches, there are corporate-owned condo-hotels and small owner-association operated condo-hotels. Price is of course a key consideration and will play a factor in the location, view, and amenity options from which you have to choose. There are very nice options in the $200,000 – $400,000 range. The majority of options are in the $400,000 – $600,000 range. Luxury condos range from $700,000 to $4 million, plus. Boating & The Gulf of Mexico For boaters there are several considerations with respect to the boating and water access. Planned, gated communities with marinas offer slips for rent or for sale, often both wet and dry (rack storage) slips. Rental rates average $12 per foot, per month. Condo complexes situated on canals have dock space available one of three ways: deeded, where the dock space is legally attached to the condo unit, assigned space (assigned to the unit), and common space (space is not assigned or deeded to any units). The ideal scenario for convenience of the owner and future value is a deeded dock. But common dock space is okay too, and rarely are these docks full, meaning that dock space any time of the year is not likely be an issue for the residents of the complex. Golf Communities If your priority is golfing, it will be no surprise that there are many golf communities in the area. In fact SouthWest Florida boasts the most golf holes per capita that anywhere else in the nation. Some golfing communities surround semi-private or public courses. Others are entirely private and offer equity golf membership, sports membership (tennis, fitness, swimming), or social memberships. Most common are “bundled” golf communities, where the golf membership is included with title to the property and residents pay an annual membership fee ($1700 – $4000). Association Fees There are two types of association fees: HOA (Home Owners Association) fees and Master HOA fees. The HOA fee covers insurance for the structures, grounds keeping, water, sewer, trash remove, cable TV, and management. Larger communities might have multiple subdivisions, in which case the subdivision association charges the HOA fees and there is in addition a Master HOA fee that covers the common grounds and services for all subdivisions, such as guarded entrance, entryway landscaping, and clubhouses. Generally, HOA fees are reasonable and equate with what you would pay if hiring the services independently. Leasing Policies Most condo associations have a rental policy dictating how often (or if at all) you can place paying tenants into your unit. These policies have two parts: maximum number of leases per year and minimum days lease. For example, a “4-90″ policy means you can lease the unit 4 times per year and the minimum lease must be 90 days. The 4-90 or similarly restrictive policies are good for semi-permanent or permanent resident owners who do not want to be in a community with turnover in tenants. Perhaps the most common rental policy is 12-30, meaning 12 times per year, minimum of 30 days. It is not difficult to find seasonal renters who will stay for a month or more. The 12-30 policy is most flexible, especially if you are counting on rental income to offset expenses. Also available, but less common, are condos with weekly or bi-weekly rental periods allowed. Finally, there are “condo-hotels” that allow nightly rentals. Condo-hotels typically have on-site rental management and are operated just like a hotel: reservation desk and staff, daily cleaning schedules, bell hops, and similar. (If you consider a condo-hotel and plan to finance the purchase, bear in mind that most lenders consider the property uniquely and so you will need to shop for a lender that has a condo-hotel or investor program.) Property Management & Rates In SouthWest Florida, property management firms that handle seasonal rental units are plentiful. The choice of firm primarily depends on the location of your property–firms specialize in regions (Cape Coral, Punta Gorda, Fort Myers Beach, Sanibel) or communities, such as Gulf Harbor, The Landings, and Burnt Store Marina. Property management firms that have connections with European customers are ideal, as they can also find renters during summer off season. During summer months, there are many tourists from Europe (particularly Germany and Great Britain), extending the rental revenue opportunity beyond the typical “high season” of December through May. An additional factor is how hands-on you want to be in the rental process. Absentee owners often prefer to let the property manager do everything: marketing and advertising, collecting security deposits and payments, getting contracts signed, checking the tenant in and out, paying operating bills, arranging cleaning, and handling minor repairs. Fees vary according to the level of service and type of contract (such as whether or not the agreement is exclusive or not). Figure a minimum of 10% of the gross rent for weekly and monthly rentals and up to 45% of gross rent for condo-hotels. Pools, Furnishings, Pets, and Restrictions Pools: Nearly all condo complexes have a community pool (if not several pools). Some also have common outdoor dining areas, tiki huts, shuffle-board courts, and fishing piers. Furnishings: Condos or homes that are currently being seasonally rented sometimes sold furnished, either “turnkey” (furniture, electronics, linens, dinnerware, and cookware), fully furnished, or partially furnished (varies as specified in the contract). Housing for older persons: As in other metro areas, some condo associations are designated 55+ communities, although those are becoming more rare. (Be careful if an agent or association manager tells you that you can get in “early” if you are under 55, as often the by-laws will not allow that, no matter what you are told.) Pet policies: If you want to bring Sparky, be sure to check the pet policy in the association documents. Policies are usually: no pets allowed, limits (a weight or height limit), or anything goes. Some associations allow owners to have pets, but not their tenants. Condo doc review: As a protection for buyers, Florida law requires that sellers deliver current documents and financial statements to buyers once a purchase contract is signed. A buyer has 3 business days from receipt of documents to review association by-laws and can rescind an offer if the rules and regulations or the association’s finances are unsatisfactory to the buyer. Is a Vacation Condo Right For You? If you and your family like the area enough to vacation here year after year, you are interested in making a real estate investment, and you are in the financial position to do so, then buying a vacation condo is a good idea. You get to vacation in the comfort of your own condo and community, make long-term friends with fellow repeat vacationers, and you have a “perk” to offer friends, family, co-workers, and clients. Remember that $4550 you were paying for a two week stay? Think of that money as now going toward your investment. If you decide to lease the unit, you have the added advantage of offsetting expenses with rental income. Assuming you did not over-pay and that you hold onto the property for at least a few years, your investment will appreciate and provide returns down the road should you decide to sell. And last but not least, you get the bragging rights. Which would you rather say to that pompous person at the fitness club: “We’re staying at a hotel in Florida,” or “We’re going to our condo in Florida…”?
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