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Im a canadian resident who enjoys Florida a few times a year, and given the current real estate prices (which are hard to believe when we compare to Toronto for example) me and my wife decided to buy a small condo and keep it rented out, waiting for an eventual appreciation of value in the next 10-15 years.
My purpose is NOT to occupy the property, not even occasionally, but rather have it rented out on a long term contract and slowly use some of the cash flow it will generate to cover the loan arranged in Canada.
I have access to a line of credit at low interest, which can be paid in full anytime, and will use this line of credit to fund the purchase.
Recently I had a chance to visit Sarasota and had a quick look at the Palmers Ranch area (specifically the Vintage Grand development) as a canadian real estate brokerage is advertising those condos here in Canada, saw some numbers and liked the area.After TONS of reading in these forums over the past few weeks, I feel I made my mind about buying it, just want some feedback from other investors in the area.
To give you guys some ideas about numbers, the units are selling for around $65k, hoa is 128.00, current tenant (already in place and with a lease until mid next year) is paying 600.00 per month.
Any (recent) thoughts on Vintage Grand and the whole Palmers Ranch area? Any aspects in particular that I should pay special attention to?
Your input is much appreciated.
Looks like you have additional information about that specific location. Mind sharing?
Like I mentioned before the complex has lots of rentals. Sometimes the tenants take care of the unit and sometimes not. If you don't ever intend to live in the property I think that there are better investment opportunities out there.
Here are some stats on Vintage Grand:
Nov-Dec, 2010 there were two sales-$90k and $118K
Dec-Jan, 10-11'-No Sales
Jan-Feb, 2011-$60K, $47,500 & $80,500
Feb-Mar, 2011-$82,900 & $90,900
Apr-May, 2011-$65K & $63K
May-June, 2011-$22K & $95K
June-July, 2011-$74K, $90K & $100,500
July-Aug, 2011-$79,900, $90,900 & $94,900
Aug-Sept, 2011-No sales
Sept-Oct, 2011-No sales
High levels of foreclosures are causing all sorts of problems for condo associations, which are having to slash costs and amenities and often impose assessments on solvent owners to maintain deteriorating infrastructure.
Condo buyers need to find out as much as they can about complexes before they plunk down cash.
I suggested asking the following questions:
• How much money has the complex put into reserves to deal with future infrastructure needs?
• Are there any major repairs that need to be made?
• Have assessments and dues been increasing, and does the complex have plans to do so in the future?
• How many of the units are owned by investors?
• Do any investors control large blocks of units and are there any restrictions on renting?
These are the same questions that a bank will ask to determine whether to lend in a complex.
I'm sure you are aware that Vintage Grand is a condo conversion. There were also many units that had mold issues. I had a bank owned unit listed in Vintage Grand.
Location: Sarasota/ Bradenton - University Pkwy area
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Vintage Grand was original an apartment complex built in 1989 called Camden Apartments. When the real estate boom hit our area, investors bought several apartment complexes in Palmer Ranch and converted them to condos. Vintage Grand's investor still had, as of September, a large inventory of condos that remain unsold. They have them all rented out except for a few "models." If you buy from the investor, you buy the unit subject to the lease. Because of the large number of investor owned units and the fact these are condo conversions, most lenders won't touch them for loans. Therefore, buyers must pay cash to purchase.
At first glance, Vintage Grand appears well maintained, especially the "sales center" which was formerly the clubhouse. However, when you drive back through the various buildings and look around, you start to notice things here and there regarding maintenance. The landscaping is not as nice, or as maintained. It appeared that not all tenants were following the condo association rules, there were towels hanging off of a few balconies, some toys laying about at some of the buildings. If you're looking at $128/mo HOA in Vintage Grand, you're looking at a 1 bedroom unit. But are you also factoring in the fees for a rental management company, taxes and insurance? One bedroom condos do not as a group appreciate as much as 2 bedroom units. That's important since you want to buy something for appreciation.
Serenade on Palmer Ranch is more expensive, but the community is gated, has a very nice clubhouse (which is actually used as a clubhouse) with fitness center and the overall condition of the buildings appear much better as they were built in 1999. A one bedroom unit in Serenade will run more, but it's also larger (843 sq ft vs 588) and will rent for more $$. Serenade was also a condo conversion, it was originally Savoy on Palmer Ranch Apartments. I did not see any beach towels hanging over balconies, the entire community was neat, well manicured. Covered parking is available but costs extra, there are some garages that have their own deeds and can be sold separate from the condo.
The other condo conversion community in Palmer Ranch is Bella Villino, formerly LaVenezia Apartments. Bella Villino units are selling at or slightly above Serenade prices. This community was originally built in 1998 and converted in 2005. It is also a gated community with a large, well appointed clubhouse with a fitness center, a large covered veranda area and a beautiful clubhouse pool. Most of the units have carports or garages, the garages have their own deeds and can be sold separately from the condo. There are several BBQ grilling areas with picnic tables for the unit owners. This community also appears well maintained throughout.
Before buying any condo as an investment, find out how many unit owners are currently delinquent on their HOA fees. You should also get a copy of the most current financial statement to review. See if the community has sufficient reserves to meet future maintenance and expenses such as roads and roofs. Some communities have "borrowed" from reserves to meet operating expenses over the past few years while dealing with the high number of foreclosures. That money has to be replaced thru higher HOA fees or special assessments at some point. I'd also suggest obtaining a copy of the last 3 months (6 if you can get them) minutes of the HOA board meetings to see what is being discussed.
Palmer Ranch is popular with both buyers and renters, so I can understand why you'd want to buy a condo there. However, sometimes the cheapest condo is not necessarily the best purchase....
Vintage Grand was original an apartment complex built in 1989 called Camden Apartments. When the real estate boom hit our area, investors bought several apartment complexes in Palmer Ranch and converted them to condos. Vintage Grand's investor still had, as of September, a large inventory of condos that remain unsold. They have them all rented out except for a few "models." If you buy from the investor, you buy the unit subject to the lease. Because of the large number of investor owned units and the fact these are condo conversions, most lenders won't touch them for loans. Therefore, buyers must pay cash to purchase.
At first glance, Vintage Grand appears well maintained, especially the "sales center" which was formerly the clubhouse. However, when you drive back through the various buildings and look around, you start to notice things here and there regarding maintenance. The landscaping is not as nice, or as maintained. It appeared that not all tenants were following the condo association rules, there were towels hanging off of a few balconies, some toys laying about at some of the buildings. If you're looking at $128/mo HOA in Vintage Grand, you're looking at a 1 bedroom unit. But are you also factoring in the fees for a rental management company, taxes and insurance? One bedroom condos do not as a group appreciate as much as 2 bedroom units. That's important since you want to buy something for appreciation.
Serenade on Palmer Ranch is more expensive, but the community is gated, has a very nice clubhouse (which is actually used as a clubhouse) with fitness center and the overall condition of the buildings appear much better as they were built in 1999. A one bedroom unit in Serenade will run more, but it's also larger (843 sq ft vs 588) and will rent for more $$. Serenade was also a condo conversion, it was originally Savoy on Palmer Ranch Apartments. I did not see any beach towels hanging over balconies, the entire community was neat, well manicured. Covered parking is available but costs extra, there are some garages that have their own deeds and can be sold separate from the condo.
The other condo conversion community in Palmer Ranch is Bella Villino, formerly LaVenezia Apartments. Bella Villino units are selling at or slightly above Serenade prices. This community was originally built in 1998 and converted in 2005. It is also a gated community with a large, well appointed clubhouse with a fitness center, a large covered veranda area and a beautiful clubhouse pool. Most of the units have carports or garages, the garages have their own deeds and can be sold separately from the condo. There are several BBQ grilling areas with picnic tables for the unit owners. This community also appears well maintained throughout.
Before buying any condo as an investment, find out how many unit owners are currently delinquent on their HOA fees. You should also get a copy of the most current financial statement to review. See if the community has sufficient reserves to meet future maintenance and expenses such as roads and roofs. Some communities have "borrowed" from reserves to meet operating expenses over the past few years while dealing with the high number of foreclosures. That money has to be replaced thru higher HOA fees or special assessments at some point. I'd also suggest obtaining a copy of the last 3 months (6 if you can get them) minutes of the HOA board meetings to see what is being discussed.
Palmer Ranch is popular with both buyers and renters, so I can understand why you'd want to buy a condo there. However, sometimes the cheapest condo is not necessarily the best purchase....
We looked at all three before we purchased two years ago. Vintage Grand was at first appearance very nice. When we started spending a little time in the complex, we were not so thrilled. Too many short term renters for us. When I did a bit of research, I found that over half the units were still owned by the developer. That would mean they controlled the HOA and could raise fees anytime they wished. I do not know if it is the same now. The best out of the three was Serenade, although it is the farthest from the beach. I talked with the manager several times and he was very helpful about answering my questions.
We also looked into Vintage Grand but we wanted to use the unit for ourselves so we felt that wouldn't work. we thought of renting it out to snowbirds for Jan-March but found out the pool was not heated. Yes, we did look at some units and both were not maintained very well by the renters - holes in walls, missing things and on most lanais you found all the stuff they couldn't fit into the condo...not a look we liked. Location was good and bad...near the mall...near the mall we saw it as a negative rather than a positive. Everyone has their own thoughts and needs so it is hard to say what is good for one person might not work for another. We ended up buying in Bird Bay Village - our unit is rented out Jan - April and more than pays for the hoa fees/taxes etc. and we venture down at least 3 other times. If you are looking to just rent it out i would agree that North Port has some very good deals on single family homes for a very good price. Good luck!
p.s. did you attend the Toronto Florida Home Finders Meeting to find out about Vintage Grand? That's how we ended up down in Sarasota.
Thanks everyone for their input. I had a chance to visit the property a couple of months ago and my first impression was better than some of the other communities I also visited. The price is not the only criteria, of course I want value and price affects it but all things are being considered. For example on the same trip we saw another development in Orlando and within 5 minutes there I wanted to run.. scary, scary stuff. Some areas of it reminded me of Detroit at night....
Anyways, the main goal is to get the best ROI. The idea of a condo attracts me more than a single house just because of the community aspect. I will not have time to inspect and manage the property nor find tenants and yes - I know I will pay to have someone doing that for me. There is no mortgage on the property so if banks dont want to touch it, no problems. My concern with single family homes is the extra maintenance it requires (and I own a house now - I know it costs more and requires you to be more involved). I will sure take a look at North Post (almost typed North Pole - Im still in Canada...brrrrrrrr) and see what the number look there.
My analysis of the VG condo were based on the numbers:
Purchase price : 60k
Condo(HOA) fee : 128 monthly
Taxes : 80 monthly (might increase since Im not a resident)
Current lease in place : 600.00
Taking in consideration 10 months leased out of the year (to account for vacant time and property management fees) my gross income would be 6000.00 per year.
HOA plus taxes amount to 208.00, rounded to 250.00, leaves me some 3000.00 net income (before taxes of course) or 250.00 per month. Im not doing this for the extra income, Im planning to buy a few units in different locations (8 or 10 condos over the next 5 years) using my Canadian income and savings, not the rental income, and hopefully have a portfolio of rental income properties, paid off, with a decent appreciation in some 15 years from now. The extra income from the units, will used to cover a part of the canadian line of credit used to fund these purchases. If I were financing 100% of the property value at current rates, I could amortize them over 25y and pay them off entirely using the net income alone. Of course there are TONS of variables, market changes, vacancies, delinquencies, maintenance expenses, etc to also affect those numbers.
Quote:
Originally Posted by cdnsungrl
p.s. did you attend the Toronto Florida Home Finders Meeting to find out about Vintage Grand? That's how we ended up down in Sarasota.
Yes - I did and that how I came across the VG. FHF has other locations in Florida too that fit my "needs" and Im investigating them too.
If anyone has an example of a similar type of property and numbers to compare, Id REALLY appreciate.
I was speaking to the property manager who manages all of the rentals for my Canadians. You might want to talk to him directly before you purchase in Vintage Grand. If you DM me I can send you over his info. This was his response:
He is about to make a big mistake! I need to speak with him to help him understand the rental market & the issues when renting condos. Renting condos can be very difficult when dealing with associations. The associations make & can change the rules which are normally in favor of home owners. This will limit the tenants that he will be able to rent to. The biggest issue he faces is the quality of tenant. Lower rents & more properties equal more problems & less profitability.
Example:
10 properties costing 50k each renting for 500 per month compared to 5 properties costing 100k each and renting for 1000 per month.
Double the amount of maintenance when doubling the number of properties. Double the amount of potential vacancies, double the amount of tenants to deal with, double the problems & head aches...
Also, you have a better chance of getting a better quality tenant if they can afford to pay $1000 per month instead of only affording $500 per month.
I agree, We rent out of condo Jan 8 - April 14 and received over $6,000 that being said it is very difficult to find someone to pay $2,000/month during the off season or even $800...not very many want to venture down in the hot & humid months and if they do venture down it is usually to Orlando area. I understand not wanting to have a house..it is exactly why we purchased a condo. We leave and close the door. No maintenance. Our wonderful year round neighbour checks on our place every couple of weeks and will notify if something is wrong. We have a name of a handyman who will come in and fix our issue. All depends on what you want to do with property. I'm tempted to buy another property but i hesitate to have too many since i am limited time to get back and forth to check on things. Good luck!
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