Anna Maria Island Condominium Market (Bradenton, Sanibel: foreclosure, rentals, insurance)

[RhysNJ]

I'm researching the possibility of purchasing an investment condominium unit in one of the three towns on Anna Maria Island. My purpose would be to use it ourselves a few weeks a year for now, and rent it out as much as the market and economy will allow for the remainder, using a turnkey service from a local management company. Perhaps as we get closer to retirement, we may want to spend more time there during the winter months.

With all of the available inventory, rapidly declining market values, increasing insurance premiums and maintenance fees, general economic upheaval, demographics, etc., there is a LOT to consider. I'm learning as much as I can about every aspect of this before talking to any realtors or sellers. Sometimes I think I must be crazy for considering this on a barrier island out in the Gulf.

As a property-casualty insurance agency owner, I'm also well aware of the pressures faced by condominium associations in this kind of economy. I'm sure that it is anything but easy to serve on a condo board these days with all of the rising costs, declining values. etc.

There are probably 100 questions I ask of any knowledgeable locals who might be kind enough to take time to respond. What I'm really trying to determine now is just how much condominium unit I would need to generate enough rental revenue to make it worthwhile (i.e, not lose money, perhaps make some rate of return.) Forget the mortgage-availability issue at this point.

For example, can you get enough for $250,000 that would be an attractive enough rental? Or am I kidding myself, and do you really need to spend more like twice that amount to generate enough to rent it reliably? Obviously at $250,000 it won't be on the beach or that close to it, but it could be close to the bay, or otherwise in a nice complex that has a good rental history.

Would a second-story unit be a safer bet in the event of major storms with flooding, or does that significantly affect the rental possibility?

Of the three towns, should I be focusing on a specific town, and any particular associations which allow 7 day rental periods? I know Holmes Beach is trying to move to a 30 day minimum in their R-1 zone, which I believe are single family houses. I also know that associations differ in their restrictions. What is the best combination overall?

I know these are very general questions, but if anyone from the area has any thoughts, opinions, or experiences with this, I would be very appreciative. Thanks!

Rhys

[Ladywithafan]

Originally Posted by RhysNJ

I'm researching the possibility of purchasing an investment condominium unit in one of the three towns on Anna Maria Island. My purpose would be to use it ourselves a few weeks a year for now, and rent it out as much as the market and economy will allow for the remainder, using a turnkey service from a local management company. Perhaps as we get closer to retirement, we may want to spend more time there during the winter months.
Unfortunately, the winter months are when you make your real $$$ renting out your unit.

With all of the available inventory, rapidly declining market values, increasing insurance premiums and maintenance fees, general economic upheaval, demographics, etc., there is a LOT to consider. I'm learning as much as I can about every aspect of this before talking to any realtors or sellers. Sometimes I think I must be crazy for considering this on a barrier island out in the Gulf.
You would do better to advertise the rental out-of-state & out of the country.

As a property-casualty insurance agency owner, I'm also well aware of the pressures faced by condominium associations in this kind of economy. I'm sure that it is anything but easy to serve on a condo board these days with all of the rising costs, declining values. etc.


There are probably 100 questions I ask of any knowledgeable locals who might be kind enough to take time to respond. What I'm really trying to determine now is just how much condominium unit I would need to generate enough rental revenue to make it worthwhile (i.e, not lose money, perhaps make some rate of return.) Forget the mortgage-availability issue at this point.
Depends on the amount of money you want to make but this is really NO TIME TO MAKE A KILLING renting out a condo on AMI.

For example, can you get enough for $250,000 that would be an attractive enough rental? Or am I kidding myself, and do you really need to spend more like twice that amount to generate enough to rent it reliably? Obviously at $250,000 it won't be on the beach or that close to it, but it could be close to the bay, or otherwise in a nice complex that has a good rental history.
On a $250 condo, depending on size, location, facilties, in this market, you're looking at around $1K to 1,200/mo.

Would a second-story unit be a safer bet in the event of major storms with flooding, or does that significantly affect the rental possibility?
You're either going to lose your roof during a 'cane & become a fishbowl or get flooded at a min. of 10 foot storm surge if you buy an older, ground floor unit...pick your poison.

Of the three towns, should I be focusing on a specific town, and any particular associations which allow 7 day rental periods? I know Holmes Beach is trying to move to a 30 day minimum in their R-1 zone, which I believe are single family houses. I also know that associations differ in their restrictions. What is the best combination overall?
AMI used to be most expensive followed by Holmes Beach & Bradenton Beach bringing up the rear...island is now way OVERDEVELOPED land wise with the same small two lane historical roadway of ages ago...

I know these are very general questions, but if anyone from the area has any thoughts, opinions, or experiences with this, I would be very appreciative. Thanks!


Rhys

Hope this helps.

[SoFLGal]

The closer you are to the beach the better the rental possibilities are going to be. Like LWAF said, winter is going to be the busiest for rentals.

I just did a quick search of the islands and found a 2/1 condo for rent for $2150 on the bay. Then there's a 1/1 on Holmes Beach-on the beach for $2900. No condos right now on Bradenton Beach.

Did another quick search and right now the least expensive property on AMI is a 2/1 condo in Bayou Condos, built in 1973, with a deed boat dock for $298K. Lease expensive on Bradenton Beach is a 1/1 Condo, foreclosure, built in 1973, steps from the beach, $136,500. And on Holmes Beach is a ground floor condo built in 1969, deeded beach access and dock, for $185K.

My parents used to own to Islander Newspaper out on Anna Maria Island when I was a kid and we lived on Longboat. Then I moved back to the area when I was in my early 20's and lived on 7th St in Bradenton Beach. I have fond memories of all the islands

[RhysNJ]

Thanks...again. No, I don't see us or anyone else making a killing any time soon, just enjoying the unit and hopefully not losing money, perhaps eeking out a modest return. We wouldn't be likely to use any of the prime months ourselves for many years. Those rental figures are lower than what I would have guessed, but probably more realistic than what I would hope for, especially now. That's a pretty scary choice between the the fishbowl and the flood! But part of barrier island ownership, for sure.

We would be looking for a furnished 2/2. There are quite a few listed below 300K on realtor.com (and zillow, some with "zestimates" well below asking price.) What I don't know is whether or not these have good rental potential, stable associations, huge assessments pending, and what kind of other restrictions apply. As I said, lots to research.

It also seems like as much as buying a unit, you are really buying an ongoing relationship with a managing rental agent that can help you find a positive experience. I've been reading a lot of their sites and blogs lately, along with anything else I can find from those who have done this.

Rhys

[Ladywithafan]

Originally Posted by RhysNJ

Thanks...again. No, I don't see us or anyone else making a killing any time soon, just enjoying the unit and hopefully not losing money, perhaps eeking out a modest return. We wouldn't be likely to use any of the prime months ourselves for many years. Those rental figures are lower than what I would have guessed, but probably more realistic than what I would hope for, especially now. That's a pretty scary choice between the the fishbowl and the flood! But part of barrier island ownership, for sure.
The thing is annual rentals always go for less. And, if you're looking to make more than $1,500 per month on a rental, your target market gets limited.

We would be looking for a furnished 2/2. There are quite a few listed below 300K on realtor.com (and zillow, some with "zestimates" well below asking price.) What I don't know is whether or not these have good rental potential, stable associations, huge assessments pending, and what kind of other restrictions apply. As I said, lots to research.
Obviously, best rental potential is gulfront/bayfront. I used to work for Smith Realtors back in the 90's and sold waterfront, it's still run by the same four ladies; great place to go for information.

It also seems like as much as buying a unit, you are really buying an ongoing relationship with a managing rental agent that can help you find a positive experience.
I've been reading a lot of their sites and blogs lately, along with anything else I can find from those who have done this.

Rhys

When you narrow your search, you need to find out if the condo association is handled by a property mgmt. firm or self directed. Either way, you will be having an ongoing relationship with the association regardless of who rents the property, get condo docs & study them...

[RhysNJ]

I might have been less than clear. I'm thinking we would only use it ourselves a week or two in the hotter months, perhaps a week in October, another in May, or something like that. I would want to rent it out either on a weekly or monthly basis during the peak winter months, PLUS any other time of the year if possible when we are not there.

I'm assuming that I'd be better off finding a place that allows weekly rentals? I know some require 30 day minimums, which would seem very limiting (retirees/snowbirds mostly?)

I'm pretty sure I would leave this to a property manager and not list it myself on VRBO or Craigslist or anything, at least initially. What percent do they get these days?

Thanks again,

Rhys

[Ladywithafan]

Originally Posted by RhysNJ

I might have been less than clear. I'm thinking we would only use it ourselves a week or two in the hotter months, perhaps a week in October, another in May, or something like that. I would want to rent it out either on a weekly or monthly basis during the peak winter months, PLUS any other time of the year if possible when we are not there.
November 1st through May1st, so you'd be considered renting seasonably.

I'm assuming that I'd be better off finding a place that allows weekly rentals? I know some require 30 day minimums, which would seem very limiting (retirees/snowbirds mostly?)
Weekly rentals are not what condo associations want because it makes your unit like a revolving hotel room. Most condo associations will require a 30 day minimum rental. Just imagine yourself living next door to different people every week for six months.

I'm pretty sure I would leave this to a property manager and not list it myself on VRBO or Craigslist or anything, at least initially. What percent do they get these days?
Don't forget, in a weekly rental situation, you've got to have that unit cleaned after every rental...wow...I'd like to be the one who cleans!

Thanks again,

Rhys

If you've never been to AMI, you have to first come & take a look at the whole island. Islanders, for the most part, don't like change & don't want to be disturbed. Good luck!

[gypsychic]

I don't think you want to be in the weekly rental business even if you could find a place to do it, that puts you in the "hotel" category, and subject to more taxes and laws.

I was thinking that maybe a realtor in the area could suggest some places that would be considered good for seasonal rentals? One good thing is that some vacationers are loyal and if they like a place will come back year after year. My in-laws from the midwest come to Anna Maria every year and almost always go to the same beachfront condo (they pay big bux!)

You definitely want to buy something that has easy access to the beach, otherwise it won't be that easy to rent or you won't get much money.

Good luck!

[RhysNJ]

Thanks, you're probably right. We have rented condos in different places by the week, most recently in Sanibel. Very nice, higher end stuff but off season, where it seems to work okay.

One last question...it's so basic I feel stupid asking. What are the average condo fees these days for a unit in this price range (mid 200-'s to 300)? The only site I've seen that shows a fee is the ReMax site. For example, this unit I started out with in Westbay and Moorings shows "fees" as $1,250. My wife immediately assumed that was monthly, which sounds WAY too high. However, it sounds low for annual. (Taxes are indicated separately, and yes I know those would go through the roof for a non-resident buyer.)

Thanks again for all the great responses,

Rhys

[angelfish]

Originally Posted by RhysNJ

Thanks, you're probably right. We have rented condos in different places by the week, most recently in Sanibel. Very nice, higher end stuff but off season, where it seems to work okay.

One last question...it's so basic I feel stupid asking. What are the average condo fees these days for a unit in this price range (mid 200-'s to 300)? The only site I've seen that shows a fee is the ReMax site. For example, this unit I started out with in Westbay and Moorings shows "fees" as $1,250. My wife immediately assumed that was monthly, which sounds WAY too high. However, it sounds low for annual. (Taxes are indicated separately, and yes I know those would go through the roof for a non-resident buyer.)

Thanks again for all the great responses,

Rhys

That sounds more like a quarterly fee.