Calling The Bottom

[Bobby J]

Maybe a more relevant question might be, "Are you a weasel?"

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I have been an open book on these boards. Makes me wonder who the weasel is...

 

[SHELLY]

I have been an open book on these boards. Makes me wonder who the weasel is...

I prefer the term "enigmatic."

I would derive neither personal satisfaction nor financial benefit by posting my pedigree for all the virtual world to see.


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[flyguy]

FG,
Can you post a few examples?

Sterling Reef: A new gulf front building. 2/2 with 1076 sq ft just sold for $245,000.

I have a spread sheet that runs the cash flow that I used when analyzing condos. Using a 30 yr 6% with 20% down, my tax bracket, depreciation, condo dues, taxes, estimate on utilities, and insurance.

It should be break even on actual cash flow with about $20,000 per year in rental income.

With break even cash flow you actually have a positive investment return from the principle you build. But of course there is opportunity cost from the down payment.

This does not take into account unforeseen assessments. And with descent insurance you will be well protected from loss of income due to a hurricane.

Anyway, not to get too deep. The numbers are not exact and will be different depending on one's situation. I don't want to debate the details other than I think it could come very close to cash flowing.

As I stated in another post, as a pure investment you can probably do better than this. But if you are an end user you would have a gulf front condo to enjoy for part of the year, and that has to be worth something.


JMHO,
Flyguy

 

[SHELLY]

Sterling Reef: A new gulf front building. 2/2 with 1076 sq ft just sold for $245,000.

I have a spread sheet that runs the cash flow that I used when analyzing condos. Using a 30 yr 6% with 20% down, my tax bracket, depreciation, condo dues, taxes, estimate on utilities, and insurance.

It should be break even on actual cash flow with about $20,000 per year in rental income.

With break even cash flow you actually have a positive investment return from the principle you build. But of course there is opportunity cost from the down payment.

This does not take into account unforeseen assessments. And with descent insurance you will be well protected from loss of income due to a hurricane.

Anyway, not to get to deep. The numbers are not exact and will be different depending on one's situation. I don't want to debate the details other than I think it could come very close to cash flowing.

As I stated in another post, as a pure investment you can probably do better than this. But if you are an end user you would have a gulf front condo to enjoy for part of the year, and that has to be worth something.


JMHO,
Flyguy

Thanks for taking the time to post the info.

I'll not debate the details, but I'll just go on record by saying IMO (and based on many of the details you yourself pointed out) I wouldn't consider this as a decent RE 'investment.'

<I just checked out this condo @ Property Appraiser's site>

Place opened in 2005.

It currently shows only 2 units 'sold' in 2008.

(1) Unit 604B bought for 275K from the bank. Originally purchased for 615K in 2005

(2) Unit 1506B 'bought' by JP Morgan Chase (foreclosure). Last purchased for 615K in 2006

Most of the condo-owers are holding these units at 2005 prices averaging $500k+ (most all are non-homesteaders paying mucho taxes).

This place is a trainwreck in progress.


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[flyguy]

Oh boy, I always hesitate making detailed posts becasue you then have to defend the numbers.

Anyway, the tax records are not up to date with the latest sales. 104 and 402 sold in the last month for $244,900 and $250,000 respectively. There is also at least one 3 bedroom that sold for much higher.

It is without a doubt a trainwreck. They are selling at less than 40 cents on the dollar from the peak. (WWWBD)

Flyguy

Thanks for taking the time to post the info.

I'll not debate the details, but I'll just go on record by saying IMO (and based on many of the details you yourself pointed out) I wouldn't consider this as a decent RE 'investment.'

<I just checked out this condo @ Property Appraiser's site>

Place opened in 2005.

It currently shows only 2 units 'sold' in 2008.

(1) Unit 604B bought for 275K from the bank. Originally purchased for 615K in 2005

(2) Unit 1506B 'bought' by JP Morgan Chase (foreclosure). Last purchased for 615K in 2006

Most of the condo-owers are holding these units at 2005 prices averaging $500k+ (most all are non-homesteaders paying mucho taxes).

This place is a trainwreck in progress.

 

[30ashopper]

Sterling Reef: A new gulf front building. 2/2 with 1076 sq ft just sold for $245,000.

I have a spread sheet that runs the cash flow that I used when analyzing condos. Using a 30 yr 6% with 20% down, my tax bracket, depreciation, condo dues, taxes, estimate on utilities, and insurance.

It should be break even on actual cash flow with about $20,000 per year in rental income.

With break even cash flow you actually have a positive investment return from the principle you build. But of course there is opportunity cost from the down payment.

This does not take into account unforeseen assessments. And with descent insurance you will be well protected from loss of income due to a hurricane.

Anyway, not to get too deep. The numbers are not exact and will be different depending on one's situation. I don't want to debate the details other than I think it could come very close to cash flowing.

As I stated in another post, as a pure investment you can probably do better than this. But if you are an end user you would have a gulf front condo to enjoy for part of the year, and that has to be worth something.


JMHO,
Flyguy

Hey Flyguy,

Curious, what appreciation rate did you account for or did you leave that out, and do you have any idea what your IRR would be over say 10 years? I'm curious how it compares to other investments. Also, taking into account down time from storms and the like, is 20K a year reasonable? Is that managed, rent by owner?

 

[flyguy]

Hey Flyguy,
Curious, what appreciation rate did you account for or did you leave that out, and do you have any idea what your IRR would be over say 10 years? I'm curious how it compares to other investments. Also, taking into account down time from storms and the like, is 20K a year reasonable? Is that managed, rent by owner?

Again don't take all this as hard numbers. It is the return on the first years ownership with zero appreciation. I did not take it to out years. I insured my own condo for loss of use and extra assessments due to hurricanes. Based on my insurance, you would probably make more money from the insurance for loss of use than you would from rentals. The $20,000 is net rental income so you better add 30% more if you want to use rental management. I think $20,000 is doable by owner for a 2/2 but you would have to decide for yourself.

To compare it to other investments I think you have to put a dollar amount on the value of you having your own condo and that is hard to quantify.

As far as appreciation I assumed zero. I have my opinion but what do others think a 2 bedroom gulf front condo will be going for in 10 years? (WWWBD)

JMHO
Flyguy

 

[SHELLY]

As far as appreciation I assumed zero. I have my opinion but what do others think a 2 bedroom gulf front condo will be going for in 10 years? (WWWBD)

JMHO
Flyguy

I think if one buys at these current prices and subtracts carrying costs (and considering the "ownership aggravation" will cancel out "ownership joy"), in 10 years I think the condo will return somewhere between "in-the-hole" to "lucky to be breaking-even."

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[Miss Critter]

I would be curious to see what actual rental income is post-season. How many units have come online over the past 2-3 years? There are so many more units available from Destin to PCB, won't it be difficult to gauge rental potential pre-season?

 

[flyguy]

I think if one buys at these current prices and subtracts carrying costs (and considering the "ownership aggravation" will cancel out "ownership joy"), in 10 years I think the condo will return somewhere between "in-the-hole" to "lucky to be breaking-even."
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Your opinion is as valid as any one else's. I would put the number conservatively at $350,000-400,000 (gotta love those babyboomers). I hope others will give their estimate on what they think it will be worth.

I assume you don't own anything beachfront (please correct me if I am wrong). So from someone who has always wanted a place on the beach, I really don't think you have a very good handle on the value of ownership joy.

JMHO,
Flyguy