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Would You Buy A Rental/vacation Home In Anna Maria Island, Florida Now?

jmzf1958

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Hi, everyone. I just visited Anna Maria Island in Florida and loved it. In a few
years, I want to be in the warm weather for a few months. I would like to
rent the rest of the time. I saw a few properties I like, one was a one story
condominium with only eight units with a heated pool. Just across a quiet
road was the beach. Rentals would pay most of the upkeep. The price was
about fifty percent of what it sold for four or five years ago. In this
economy, I'm a little nervous, but I'd hate to pass this up. I have no
mortgage, so I could refi my mortgage to pay for the vacation rental. The rates are so low, 5%. I'm thinking the value will go up in time and it could
be a nice investment if I sell. I don't need to worry about my income. It's
secure. Anyone have any opinions on any of this? Any advice is appreciated!
Judy
 

london

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Second Home

Hi, everyone. I just visited Anna Maria Island in Florida and loved it. In a few
years, I want to be in the warm weather for a few months. I would like to
rent the rest of the time. I saw a few properties I like, one was a one story
condominium with only eight units with a heated pool. Just across a quiet
road was the beach. Rentals would pay most of the upkeep. The price was
about fifty percent of what it sold for four or five years ago. In this
economy, I'm a little nervous, but I'd hate to pass this up. I have no
mortgage, so I could refi my mortgage to pay for the vacation rental. The rates are so low, 5%. I'm thinking the value will go up in time and it could
be a nice investment if I sell. I don't need to worry about my income. It's
secure. Anyone have any opinions on any of this? Any advice is appreciated!
Judy

Go for it...now is a good time to buy. In 5 years you will so glad you did.

The economy and real estate values will come back in a few years.

Our neighbors son, who lives in Indiana just purchased a home in Sarasota for about 65 cents on the dollar. A 480K home for 290K
 

DeniseM

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Rentals would pay most of the upkeep.

I'm thinking the value will go up in time and it could be a nice investment if I sell.


I know nothing about Florida, but because of the economy, the market is flooded with rentals and travel is depressed. Plus, right now real estate prices are falling, not increasing. I wouldn't buy it unless I could afford to make the payments, even if the rentals didn't pan out, for several years until the economy recovers.

Good luck!
 

gmarine

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Having a rental property comes with many issues. Having a tenant occupied home in Florida if your in NY is probably going to require a management company to handle the rent,repairs etc.

You also have the issue of homeowners insurance. It will be MUCH higher for a rental property, especially near the coast in a flood zone.

Dont assume rentals will make it easy to pay for the upkeep. If it was that easy the property wouldnt be so cheap. The peak rental period for Florida is when it is cold up north. If that is when you want to use it then your giving up the easier rentals and leaving the off season as your time to rent.

And most importantly dont assume it will increase in price. Take your time and think it through. Being a long distance landlord is not easy. Trust me on that.
 

gmarine

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Go for it...now is a good time to buy. In 5 years you will so glad you did.

The economy and real estate values will come back in a few years.

Our neighbors son, who lives in Indiana just purchased a home in Sarasota for about 65 cents on the dollar. A 480K home for 290K


He purchased a 290K home for 290K. The previous value has no bearing on current value.The homes in Florida were way overvalued and many still are.

Considering we are in the midst of recesssion the value will likely fall another 20% or more in the next couple years.
 

DonM

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So you just visited this island and you love it. Is this the extent of your experience in the area? (I'm about 10 years away from retiring and I've been visiting the Vermont/ New Hampshire area for over 20 years, and I'm still not sure if I'd like to retire there - even for just several months a year.)

Anyway I have two pieces of advice- rent in the area for a period of time before you buy so that you are better aquainted with the day to day living in the area.

Secondly, and maybe I misinterpreted your post, but I would be very wary of a condo with only eight units- was that eight total- or eight per building. If it's eight total I would stay away. Many banks will not loan to condos with less than 10 units- also eight units would mean an unusually small HOA which could result in policies that you don't agree with.

don
 

Wonka

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Good Question

I live in Parrish, FL. Anna Marie Island is the closest beach area to us. We spend a lot of time there. It's unique, and beautiful. Our home purchased two years ago has lost about 20% of its value (our equity), and the predictions are mixed, but most don't believe we've hit bottom (I hope they're wrong). I wouldn't anticipate any type of fast-track on the recovery here. If you can rent the property, and plan on retiring here it might be a good time. I don't know if a lease/purchase option would be a thought, or not. If I were moving here now, I'd rent and watch the market for a while. Rentals are much less than owner's costs. The other poster was correct...make sure you look into the cost of insurance and taxes on Anna Marie Island. I assume they're very high. The taxes on a $450,000 home are about $5,000 and insurance almost the same (or more) in many island communities.

I should add you may not buy at the low point, but my guess is you'd be buying at a darn good time. Anna Marie Island is a great location. It's doubtful you'd risk much of a loss, unless the doomsayers are correct. Part of the RE problem here in FL is mental. I have neighbors that have been in their house three years (a year before me). They paid $100,000 less for their home. The boom changed peoples expectations. A 5-8% appreciation on a home was no longer acceptable, it had to be in the 30% range, or more. That's changing. the double-digit expectations are unreasonable and that will apply to your situation as well for some time.
 
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Mydogs2big

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I would buy a vacation home, if I loved it and could afford it.

I would buy a rental if it worked out on paper. We have general rules about rentals.
First, the house must have an average value of twice what I'm paying for it once it's fixed up and mortgageable.
Secondly, the house has to demand an average rent of 10%. In other words, if we buy a house for 80,000 rent-$800 per mo; 14,000 rent-$1400.
We've been out of the market for acquiring houses over the last few years, until this month, now we are able to find these investments again.

Remember that rentals are investments, no emotion, just numbers. And like any investment, be sure you know everything you need to know about how to manage it or you may find yourself in over your head (legally)

We buy when no one else will touch (no competition), we use other people's money (leverage) and we always feel like we have to buy (we would be stupid not to). I love space because they aren't making any more of it, people need it and there's always more people.

Purchase cause you love it or it works out on paper, not because it sounds like a good deal. Good luck!!
 

jmzf1958

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Thanks for all of your responses. There's a lot of things to think about.
I've been to Florida several times over the past thirty years. After two or
three years, I would use the condo in January, February and March. I know
this is the prime time for rentals. The rental agent for the real estate
company said this property has only a three night minimum on renting whereas a lot of places require a week or more. She also said with the economy so bad, a lot of people are taking long weekend trips, and summers rent well there. I would have a management company handle rentals and repairs, and I would also advertise it for rent. I could afford the mortgage if it did not rent out.
There are only eight units, not eight buildings. I'll be paying for this
in cash, so there won't be a problem getting a loan. What kind of problems
do you think I could run into with the HOA?
Do you think I should wait the summer/fall of 2009 for a better deal or is
this the bottom in southwest florida? This unit sold for $400,000 three or
four years ago, now the price is at $190,000. Thanks for any and all responses! Judy
 

rapmarks

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Judy, check out insurance rates and if it works go for it. We loved Anna Marie Island. We looked at a 50's shack, about 600 square fet, blocks from the beach, for $350,000 about 6 or 7 years ago. We have a second home in Florida and we love it here, feel so fortunate every day we are here.
 

BocaBum99

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Thanks for all of your responses. There's a lot of things to think about.
I've been to Florida several times over the past thirty years. After two or
three years, I would use the condo in January, February and March. I know
this is the prime time for rentals. The rental agent for the real estate
company said this property has only a three night minimum on renting whereas a lot of places require a week or more. She also said with the economy so bad, a lot of people are taking long weekend trips, and summers rent well there. I would have a management company handle rentals and repairs, and I would also advertise it for rent. I could afford the mortgage if it did not rent out.
There are only eight units, not eight buildings. I'll be paying for this
in cash, so there won't be a problem getting a loan. What kind of problems
do you think I could run into with the HOA?
Do you think I should wait the summer/fall of 2009 for a better deal or is
this the bottom in southwest florida? This unit sold for $400,000 three or
four years ago, now the price is at $190,000. Thanks for any and all responses! Judy

Right now is the best time to make an offer. That's because it's before mortgage rates are driven down to 4.5% and sellers who are motivated should be scared.

Since you will be paying cash, that's good. No worries about a mortgage. What I would do is prepare an annual income statement by estimating all of the revenue and expenses for the year. Then, figure out what units are renting for right now. It should be depressed, so it will be a good conservative number to use.

Estimate the occupancy rate you need to breakeven on your expenses even with your taking out the 3 prime months. If the occupany rate is less than 60% for breakeven, you've got a winner. That's because the cost of capital will basically pay for your 3 months usage.

That's how I would evaluate it as an investment.
 

DonM

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I've been to Florida several times over the past thirty years.

Florida is a big State- have you been in this locale often? If not I stand by my prior advice- the safest way to go would be to rent- or maybe a rent with option to buy- unless you're familiar with the area.

The rental agent for the real estate
company said... She also said...

Agents are like timeshare sales people- they have a vested interest in you buying from them. Real estate agents are typically much more ethical than t/s salespeople- yet they are still not disinterested third parties

There are only eight units, not eight buildings. I'll be paying for this in cash, so there won't be a problem getting a loan. What kind of problems do you think I could run into with the HOA?

Where I live it's bank policy not to loan to buyers of condos that have less than 10 units. They probably feel that such small condos will be less likely to have a professional mgmt. Also since the HOA is a democracy such small numbers increase the chances of poor mgmt. I understand that you will not be financing this , and therefore will not need a mortgage. However someday you might want to sell, and a buyer may want to finance and will not be able. Maybe buyers are even more scarce now since they are unable to finance not only due to the economy, but because of the bank policy. You should check it out and see if local banks would consider a loan secured by this property. Maybe check with a knowledgeable real estate attorney?

I'm not trying to rain on your parade. I think it's a great time to buy- just do it with your eyes wide open

good luck
don
 

lprstn

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I own 2 rentals and I just would say, ask yourself if you can keep the home as a vacation only property as renters are hard on a property.

Now of course is the time to purchase if you plan on keeping the investment for 7 to 10 yrs its conservative estimate of at least a 50% recovery in the real estate market in most places. So you may one day be able to turn a profit.

Now there is a difficulty with renting a property not close to home, because you are at the mercy of property management companies, and their rates go up, as well as if they rent to bad renters than they charge you for the damage repairs.

So, if you can afford to maintain the property without a profit, and it can be a vacation home. Then I would try to talk the seller further down in price for you offering up cash, check on the insurance for the property, the tax benefits between renting and keeping it as a vacation home, put together a working budget, and go for it.
 

Wonka

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I just read in today's Sarasota paper that 7.3% of all Florida loans are in foreclosure. That sounds like a buyers market to me...but they do say things are expected to get worse.
 

KCI

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Here's a couple things to think about from someone that lived just across the drawbridge on Perico Island. Most everything on Anna Maria was built in the 1960's, so it's probably old and it will most likely have a high maintenance cost. The main road (Manatee Ave) from Anna Maria to Bradenton is a nightmare during the season and a trip to the hospital could take forever. There are two problems, one is the really heavy traffic on the beach causeway (Manatee Ave) and the other is the drawbridge. If it is up, you wait. We waited on Manatee Ave (withing viewing distance of the bridge) and watched it open and close 3 times before before we could cross. As mentioned above, homeowner's insurance will cost a bundle, if you can even get it. And you'll need flood coverage because it is only be a couple feet above sea level. There's no question the beaches there are wonderful and it truly is a great place to live, but I would recommend you rent there before you buy.
KCI's Wingman
 
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