REAL ESTATE TIPS: What to consider before investing in condo
I am writing this at 6:45 in the morning overlooking the Gulf of Mexico from my condo balcony. Everyone is in bed and I am enjoying some “me” time — a perk of living in a family full of night owls.
We all love the view from the condo and listening to the waves. We could do without the parties on the beach until 2 in the morning. Very loud and obnoxious parties. But these peaceful mornings listening to the beach make the party noise last night worth it!
Last night, while we were watching the beach party get broken up for the second time within an hour, we had a conversation about the owner. While providing plenty of entertainment, staying up until 2 in the morning listening to very loud music and very loud people doing stupid stuff (like back flips off of storage boxes) was not what we were expecting when we booked this trip.
The owner probably wasn’t expecting it either. For him, this investment hinges upon people renting his condo. If things go well, he makes money. If things don’t go well, this property could be his biggest nightmare.
Having a condo in a vacation town as an investment has been a goal of ours for several years. If you have the same goal, here are three things to look for before buying.
* Get a good deal. We have more money into our personal home than we would get out of it should we decide to sell. I am completely OK with that as it is our forever house. But in an investment property, especially one potentially hundreds of miles away, I want to know that I bought it right so that if we do decide to sell quickly, we are able to and not lose money.
While not a guarantee, if you buy a home that is a good deal, you are less likely to lose money on the sale than if you paid too much on the initial investment. Remember markets fluctuate and vacation markets are no different so this is a general thought not a firm rule.
* You don’t worry. If you are a worrier or even need to feel in control all of the time, you might really struggle with owning property so far away. If a tree falls on the home you live in, you are there to address the situation. If it happens on a property far away, it may be more difficult to address or even know about right away. Can you handle that? If you can’t, don’t feel bad. This would be a struggle area for me. Just keep that in mind when you consider this purchase.
* There is an overabundance of rainy day funds for the property. In February, all of the individuals who own vacation rentals were expecting this to be just another tourist season. Obviously that was not the case. Having an extra pile of cash set aside to cover unexpected expenses (like a refrigerator breaking) or regular expenses (mortgage, taxes, insurance, HOA fees) is important. You don’t want to count so heavily on the potential rental income coming in that should you lose rent money, you have to choose between paying the HOA and feeding your family.
Whether you choose to go on vacation this year or not, I hope that your summer is full of good memories! Have a blessed week!
Esta Ryder, Broker/Owner
Ryder Realty, LLC