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Buying investment property in Florida... looking for feedback

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Buying investment property in Florida... looking for feedback

Old 02-26-2012, 07:11 PM
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Question Buying investment property in Florida... looking for feedback

Hello all knowing THT,

I'm looking at investing in a 2BR/2BA condo somewhere on the east coast of Florida. Now, I'd love some feedback from people who have done the investment property thing, or who know about investment property.


What I want:
  • A condo, or town home with water views, possibly a dock, and parking

Why I want it:
  • To establish a residency in FL for tax purposes
  • Provide a small start to a vacation rental LLC that will grow over time
  • To hedge against inflation
  • Act as a long term investment (laughable with FL condos, I know)
  • Give my wife and I a place to visit a few times per year

Things to consider:
  • All the typical home buyer junk...
  • HOA guidelines restricting renters
  • Property maintenance and HOA dues
  • HOA management, and financials
  • Dock/ common area usage terms


OK, with that said... I'd love your feedback. Pros, Cons, things I'm missing, good places to look, etc.
Old 02-26-2012, 07:48 PM
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Better think twice before you establish residency in FL using an address that's also a rental property.

Can't eat your cake and have it too.

Tipsy
Old 02-26-2012, 10:11 PM
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Using the words "Florida" and "Condo" in the same sentence usually doesn't end well.

Even if you find a smokin' deal chances are your HOA neighbors defaulted long ago and you get stuck with big fat reassessment bills.

"Dear Mr. Condo Owner: We need a new pool deck. Please remit a check for $3600 within the next 60 days. If you do not remit check for said monies we will be forced to place a lien on your property.

Warm regards,

HOA NAZI"

Be careful.

That being said, Florida is a FUN state to live in. If you're bored here, it's your own fault. No state income tax is great too plus property taxes are a little more sane than most other places.

Stay away from Cocoa Beach. It's a ****hole, stuck in a time warp. Satellite Beach and Melbourne are nicer, although the condo blocks can be ugly-as-sin. I've seen Soviet Union era high rises with more curb appeal.
Old 02-26-2012, 10:21 PM
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I bought one in the UCF area of Orlando for $36k the person before me payed $180k ;? with that said there are great deals everywhere for condos. the truth with them is there are more condos than there are residents of The State of Florida.

look at homepath.com
Old 02-27-2012, 05:22 AM
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1st do the math.... Then when you realize you are not going to make any money - think again and see if you really want to move forward...

How much and where ?
Old 02-27-2012, 05:38 AM
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IMHO, your idea is about 10 years behind the times.
Old 02-27-2012, 05:43 AM
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Condo in Florida as investment ? Like feeding an alligator ......
Old 02-27-2012, 05:56 AM
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Originally Posted by TipsyMcStagger View Post
Better think twice before you establish residency in FL using an address that's also a rental property.

Can't eat your cake and have it too.

Tipsy
I'll check, but I believe we can get away with a moderate amount of weekly rentals and still have residency. Similar to the airbnb.com method. Fair point though, and I'll surley look into it.

Originally Posted by triplenet View Post
1st do the math.... Then when you realize you are not going to make any money - think again and see if you really want to move forward...

How much and where ?
I'm not so concerned about making money as I am about keeping what I'm making now.

We're looking at the New Smyrna area, but are open to Melbourne, or Hermosa.

Originally Posted by Afishinado View Post
IMHO, your idea is about 10 years behind the times.
Hmmm. 10 years ago prices in FL were inflated and 4x what they are now. Can you give me some more context to your statement?

Again, please keep in mind this is as much of a tax/inflation move as it is an "investment."
Old 02-27-2012, 06:18 AM
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10 years ago (2002) prices were not 4 times what they are now....

Bottom line, if you are looking for a vacation home and plan to rent it out I would locate a RE Broker with some experience in the area and pick their brain a bit...

Its always been my understanding that vacation rentals dont cover all the expenses.. So be prepared..

I think its a great time to buy - just due your due diligence and make sure you steal it .....
Old 02-27-2012, 06:42 AM
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the issue is you will buy a place you want to be in....then you will rent it out.....and then when you visit it will be like staying in an old worn out hotel room that has been thrashed on....with the bonus that you are the one that gets to pay to fix it back up

you will spend your "vacation" looking at all the crap that needs to be fixed up and working on it

and you will get a place with a bunch of "cool features"......that will be the kinds of things that will get torn up easy and cost money to fix up

in counter blenders, grilling cook tops, carpet, shower and bath features

but if you don't have those things....your vacation is like staying in a cheap rental property ....when really you should just be looking to rent out a cheap rental that is easy to maintain
Old 02-27-2012, 06:52 AM
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Originally Posted by triplenet View Post
10 years ago (2002) prices were not 4 times what they are now....

Bottom line, if you are looking for a vacation home and plan to rent it out I would locate a RE Broker with some experience in the area and pick their brain a bit...

Its always been my understanding that vacation rentals dont cover all the expenses.. So be prepared..

I think its a great time to buy - just due your due diligence and make sure you steal it .....
Fair point. We're not looking to recoup the investment expense in rentals. I just need to show some (3-5 weeks of income) each year to make this a realistic business on paper.

Think of it this way. If you pay 12k in state taxes each year, and you could afford a 100k dollar condo that will run you about 1k per month in mortgage, taxes, HOA dues would you pay the government, or would you buy a condo in a state with no state taxes? It's the same money... you just get to keep some of it.




Originally Posted by TexasVines View Post
the issue is you will buy a place you want to be in....then you will rent it out.....and then when you visit it will be like staying in an old worn out hotel room that has been thrashed on....with the bonus that you are the one that gets to pay to fix it back up

you will spend your "vacation" looking at all the crap that needs to be fixed up and working on it

and you will get a place with a bunch of "cool features"......that will be the kinds of things that will get torn up easy and cost money to fix up

in counter blenders, grilling cook tops, carpet, shower and bath features

but if you don't have those things....your vacation is like staying in a cheap rental property ....when really you should just be looking to rent out a cheap rental that is easy to maintain
Yeah, that's the issue with rentals. We're not looking at anything super nice. Literally a 100k dollar place, with a community dock in a complex. We'd rarely rent it, but of course you have to fix stuff. Any idea what a 2/2 would run in average maintenance per year as a full-time or part-time rental? That's what I'm hoping someone would tell me.
Old 02-27-2012, 06:57 AM
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I would put a call into your accountant about the income tax issues..... Gonna be difficult to convince the man that you are a Florida resident when you rent the place out and make money in another state... Not to mention all your assets (cars, insurance, bank accounts, etc) are registered in another state...
Old 02-27-2012, 07:02 AM
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D-it's an idea worth looking into, interest rates are low as well as prices.

I would get good realtors in the areas you're interested in and let them start looking for you. One thing to consider when looking at a rental, this summer could be a wash if gas prices continue to rise.

Good areas and one you mentioned, NSB, has about 1/2 the inventory of last year and prices are creeping up. Short sales and foreclosures are slowing too.
Good luck with your search!
Old 02-27-2012, 07:15 AM
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D-reread what you're trying to accomplish. Watch out you don't run into fl. Homestead tax problems. If you claiming homestead in Fl. Florida may make you prove it.
Old 02-27-2012, 07:25 AM
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Originally Posted by triplenet View Post
I would put a call into your accountant about the income tax issues..... Gonna be difficult to convince the man that you are a Florida resident when you rent the place out and make money in another state... Not to mention all your assets (cars, insurance, bank accounts, etc) are registered in another state...
I'm planning on bringing my lawyer and accountant for sure. We'd rent in GA, and own in FL, and register the vehicles in FL. The boat is registered in Delaware, so I may look interesting on paper.

Like I said... I'm not positive this would work, but it's got enough legs to look into it, and I'm paired of paying the man so he can buy $15k dollar toilets with my money.


Originally Posted by casualc View Post
D-it's an idea worth looking into, interest rates are low as well as prices.

I would get good realtors in the areas you're interested in and let them start looking for you. One thing to consider when looking at a rental, this summer could be a wash if gas prices continue to rise.

Good areas and one you mentioned, NSB, has about 1/2 the inventory of last year and prices are creeping up. Short sales and foreclosures are slowing too.
Good luck with your search!

Good to know. Thanks for the info, and the bit about the homestead exemption laws.
Old 02-27-2012, 07:30 AM
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Originally Posted by triplenet View Post
I would put a call into your accountant about the income tax issues..... Gonna be difficult to convince the man that you are a Florida resident when you rent the place out and make money in another state... Not to mention all your assets (cars, insurance, bank accounts, etc) are registered in another state...
Good advice, not 100% sure on this but I believe to be considered a Florida resident you must have to physically live there more than 183 days of the year. And they can and do check.
Old 02-27-2012, 07:56 AM
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Originally Posted by triplenet View Post
I would put a call into your accountant about the income tax issues..... Gonna be difficult to convince the man that you are a Florida resident when you rent the place out and make money in another state... Not to mention all your assets (cars, insurance, bank accounts, etc) are registered in another state...
This is excellent advice, and dont forget about cell phone records. The investigators will subpoena phone records and know exactly where you have been all year. Many states including mine are investigating residents claiming exactly what you are trying to do. It can be a dangerous, and very costly idea. I know people who do exactly what you are considering, but they put the required days in Florida out of fear of the Division of Taxation.


Also dont put in the same paragraph looking to establish residency, and a place my wife and I can visit a few times a year.
Old 02-27-2012, 08:13 AM
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Originally Posted by TipsyMcStagger View Post

Better think twice before you establish residency in FL using an address that's also a rental property.

I had this explained to me by the tax office on the West coast. Your place of residency is where you say it is, not where someone else says it is, and it has nothing to do with who else has their residency there or how often you are there.

Remember, Rahm Emanual was living in Washington DC all those years, then ran for mayor of Chicago from an address that was rented to some folks in Chicago for the years. Other candidates got into a pissing fight over it but the courts backed Emanuel.
Old 02-27-2012, 08:23 AM
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Be ready for an IRS audit. This has flags all over it.
Old 02-27-2012, 08:24 AM
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Originally Posted by Eyeball View Post
I had this explained to me by the tax office on the West coast. Your place of residency is where you say it is, not where someone else says it is, and it has nothing to do with who else has their residency there or how often you are there.
Good luck with that.

Tipsy

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