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My wife and I are exploring the idea of buying a condo on Ocean Blvd, probably either at Caravelle or Jonathan Harbour, and was wondering if anyone knew anything about their HOA, and also maybe some ideas about which hotel would be better to buy in? Of course we want the one that will generate the most rental income, but we're also interested in generally just which is better overall, friendlier, more professional, kept up, etc. I'd like to have a strong HOA that does a good job of keeping the grounds up, etc.
Any thoughts on these two hotels would really be appreciated.
Quick note: I've seen other threads on here saying vacation rentals are not profitable. I have never done it, so I admit I don't have the experience to say otherwise, but it seems with the numbers I am running, it should be profitable, barring extraordinary circumstances.
For example:
My wife's sister's friend (yes, I know, quite a distant relationship) says she rents two condos, and they not only pay for themselves, but also for her home mortgage. He says both condos stay rented about 70% of the off-season and 95% of the peak season. These are $60k-$70k condos (not too expensive). She says she makes $4000/month for two summer months. A mortgage that even includes borrowing the down payment, along with HOAs, shouldn't be more than around $15k/year max (possibly more like $12k). $8k during the summer would go a long way. Of course, this includes basic expenses that I estimated, such as a 15% property management fee, a $450/month condo fee, $1000/year taxes, etc.
Maybe I am just overanalyzing without the necessary experience. Someone let me know if I sound crazy, please. Or... if I'm possibly on the right track.
Only buy something if YOU want to use it...you cannot make a profit doing rentals......prices are just too low, and expenses are high! It might be different directly on the ocean....but our condo does NOT "pay for itself" at all..and it's rented almost all summer long....even in those months, figuring in the HIGH taxes, business lic fees, utilities, repairs and upkeep...you just don't come out ahead.
Quick note: I've seen other threads on here saying vacation rentals are not profitable. I have never done it, so I admit I don't have the experience to say otherwise, but it seems with the numbers I am running, it should be profitable, barring extraordinary circumstances.
For example:My wife's sister's friend (yes, I know, quite a distant relationship) says she rents two condos, and they not only pay for themselves, but also for her home mortgage. He says both condos stay rented about 70% of the off-season and 95% of the peak season. These are $60k-$70k condos (not too expensive). She says she makes $4000/month for two summer months. A mortgage that
even includes borrowing the down payment, along with HOAs, shouldn't be more than around $15k/year max (possibly more like $12k). $8k during the summer would go a long way. Of course, this includes basic expenses that I estimated, such as a 15% property management fee, a $450/month condo fee, $1000/year taxes, etc.
Maybe I am just overanalyzing without the necessary experience. Someone let me know if I sound crazy, please. Or... if I'm possibly on the right track.
Thanks.
I've been looking into buying a myrtle beach rental, which I've been trying to research and have a few threads (Appreciate everyones posts). Your numbers are greatly off from what I've gathered, as you have the hoa fee accurate, but a property management percent greatly differs for vacation homes (Because a lot more work and new people every week or so) so that number is going to be around 35% instead of the typical 10%. You also need to add in insurance and I believe flood insurance, but I am still trying to better understand all the details of flood insurance. Also, chances are slim with getting a mortgage on a beach house...which means you will need cash, heloc, etc
You are also forgetting about hoa assessments too, which my rental on a regular condo had a special assessment around 1k for this year and knocked out a good amount of the profit I expected. It sounds special assessments are fairly common in the area too, as vacation associations recovering from the crash still.
Even without a mortgage you will be required to pay a management fee of 35%, 450 hoa, taxes, insurance, etc... that involves a lot to break even
Last edited by sixburgh90; 10-30-2015 at 09:14 PM..
Good thoughts--thank you guys for putting them out there.
My numbers are pretty accurate. I understand a lot of management companies do charge in the 33%-40% range, but those seem overpriced to me. The company I am working a deal with right now charges 15% if you are oceanfront, because those rent so much better. Normally they are 20% (still not bad).
I did not include HOA assessments because I wouldn't expect those commonly. However, I do understand people at the Yachtsman Resort are pretty upset over getting hit with multiple ones over a few number of years.
One thing about the HOA... I don't sense a strong HOA in a lot of these hotel-condos. Some of the low-rent places like Wave Rider and Palmetto have vocal HOA members who are trying to improve the place, but there is practically no HOA presence for most hotels, at least online. Maybe those HOAs are stronger in person there at the resort?
The wife and I are going to try it. My pension probably won't even exist by the time I retire. Might lose our respective asses, but we have to take the shot, I think.
Anything I am missing or miscalculated?
With the HOA being so high does that typically include any of the tax or insurance?
I saw someone mention wind insurance? is that need to be included too?
Anything I am missing or miscalculated?
With the HOA being so high does that typically include any of the tax or insurance?
I saw someone mention wind insurance? is that need to be included too?
We have a two bedroom newer condo with a great ocean view but not directly oceanfront that is on the ninth floor of the resort. It is in MB in a quieter, residential section of Ocean Blvd. as far from the strip and S. Ocean Blvd. as we could get and still be in MB. Here are our monthly costs:
HOA: $905
Tax: $237
Insurance: included in HOA
Flood Insuance: included in HOA
Total: $1,142
However...there are incidentals almost every month: random things like a new shower head or a new coffee maker, yearly HVAC maintenance, yearly new bedding fee, etc. The highest incidental expense we have had to date is when someone cracked the tabletop on the table on our balcony and we had to replace it to the tune of $300. You would think that this kind of stuff could be charged to the tenant's credit card on file, but it rarely is because it is almost impossible to prove that they stole, broke, etc. whatever.
There are months in the summer where our monthly income is 3-4 x the monthly cost and there are months in the winter where the income doesn't even cover the HOA, even though we rent it to snowbirds steadily all winter long. If we had a mortgage payment to boot, I don't know if we would even break even, but then, we would never have bought a condo at the beach if we had to borrow money, that much we knew ahead of time.
ETA: If you think our HOA is high, we also looked at a two bedroom at Marina Inn at Grande Dunes before we bought our condo and their monthly HOA four years ago was over $1,100. That resort isn't even near the ocean, they have a shuttle that takes people to the beach.
Last edited by canudigit; 11-03-2015 at 09:40 PM..
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