[Iowa+Florida]

with condo prices dropping rapidly, should we consider buying a condo?

we are looking around Estero, Florida as we spend about 2 weeks/year there in the winter/spring there now.

the math says much cheaper to rent as you can rent nice homes/condos for $2-3000/month, so why buy?

I am 50 now and will retire at 58 so maybe should be thinking about buying now so when I retire I can spend winter there.

thanks for guidance

[Iowa+Florida]

oh yes, on a $215000 condo, I calculate $10,000 annual expenses including taxes, HOA fee, utilities, insurance, cable, phone.

If I can rent a condo for $2500/month and use it for 2 months, seems like cheaper to rent?

This doesnt count the cost of the capital to buy it. If appreciation is 5% year, I can same yield in tax free muni's as that and my stock portofolio yields 10% minimum.

I could rent it out for a few months to get some money back, but that is no piece of cake either.

any comments appreciated

[Prichard]

Believe me, it's NEVER cheaper to buy a vacation condo, or even home, over renting. I have a vacation cabin in the mountains on some acerage that I bought for an investment. I bought it right, so when I sell it, I'm fairly confident that I will get my money out of it. Or, I might decide to move there full time someday. Basically, my investment in a mountain cabin is for fun, and insurance.

It insures that I can afford to live there full time, some day if I choose to do so.

It insures that I have a place to go and live, and even work (via internet) for an extended period of time if we get hit with another Charlie. Living out of a motel with a family for almost a month just doesn't cut it.

I have a place to visit whenever I want, and a place for friends and relatives to use. If I ever decide to rent it out, I can get a decent little second income out of it.

For all of the positives that I get for having that little cabin in the mountains, I could have taken that same money and invested it in one or two of my favorite mutual funds, and almost for sure come out better in the short run and the long run. But, that's just plain boring, isn't it.

[Iowa+Florida]

thanks Pritchard.

your reply is not boring, but watching your mutual funds grow is boring if you end up at the end of your life and don't do anything with the money to enjoy life.

I get your point. Your reasoning is along my lines of thought exactly. I see no way this thing cash flows. My only thought is the capital I put in it should get 5% appreciation per year over 10 years and I will pay for the condo out of my incoming bearing savings which are yielding about the same.

then the only cost is the variable expenses which is a wash for what I would pay in vacation rentals anyway + what I could make on 3 months rentals.

now I just need to decide.

[Muggy]

Iowa, you are missing the single 2 biggest issues IMHO:

1. Renting lets you try different places out
2. Renting allows you to avoid storm damage/stress

[Iowa+Florida]

thanks muggy

good points.

Estero is perfect for us as my wife lived there and she has work there when I retire. we have spent enough time in most places in warm climates to really like Estero over over places.

the weather stress is good point but that is what insurance is for I hope.

my wife's point is that if we dont buy now when prices are low, we wont be able to buy in 10 years when I retire. I see her point, but if I get good ROI on my investments I should still be able to have more money then than I do now to buy more than what I can in today's dollars. I do wonder if there will be a runup on prices after the bubble bust here over the next 10 years when all the boomers retire before I do and downsize their homes in the north and buy property in Florida.

the condo we are looking at is 35% lower price than it was at the peak.

thanks for the discussion. making this decision makes me sick as I hate to spend money but I hate to miss an opportunity. I really love the humid warmth of Florida after the late afternoon rain, sitting on the beach at Naples, Bonita or Sanibel watching the sun go down. Plus we could invite all my family and friends down to party with us.

[logybogy]

I would say no unless you like throwing your money down a rat hole.

Property Taxes on vacation properties in Florida are not allowed to be homesteaded. The legislature is addressing the issue now in a special session but most tax cuts will be directed towards primary residents.

Vacation and rental properties will always pay more in taxes in Florida and over the long-term this difference can be substantial. In pretty much any well-off neighborhood in South Florida, you will find long-time residents paying $3,000 in taxes while new residents or vacation homes are paying $10,000 or more in taxes and it'll keep going up as long as the property appreciates to the tune of about 2.5% of the property value each year.

Insurance companies also charge higher rates if you don't live in the unit full time.

[john1963]

in my opinion, i would rent

[NanciOhio]

I just realized that this thread is from 2007. I'm curious if "Iowa+Florida" decided to buy a vacation home.? I'm also interested in opinions on buying vs. renting a Florida vacation condo in this current market of 2014. Thanks!

[macrodome2]

NanciOhio- since you just posted today (even though the thread is from 2007), I'll give you my 2 cents since we just purchased a house in Venice. Hubby was satisfied with renting, but I insisted on buying. Renting is always more cost effective than buying if you're not a full time resident. However, my reasoning for buying were the intangibles:

1. Hubby gets restless in someone elses place, so getting him to stay for more than 1 month without his "things" would be impossible.
2. Most places in Venice require a 3 month min stay. There are some 1 month min places, but virtually no homes that you can come to for 1 or 2 weeks.
3. Renting requires months of advanced planning in season. You can't just decide you're going to go down next week. We came to our own house with one week planning in Nov 2013. We were planning on going for the month of Dec. I was waiting for a contract that got held up, so we decided we'd go for Nov and Dec. If the contract came in I could come back. Well it's March 2014 and we're still here and missed one of the worst winters of all time. We're planning on leaving in early April, but even that can be fluid.
4. You can share it with family members when you're not using it.
5. You can rent it if you want to (we decided we won't)
6. We could afford it, so we did it.
Did I have some second and third thoughts when we first came down- you bet. But after spending 4 months (so far) down here while my sister was sending me photos of the snow and ice, I'm really glad we did.
One other thought- although you won't recover your investment on the furnishings, the house is still an asset should you decide to sell. It's not like you're blowing the money on a trip around the world.