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ClintClint

Beach Fanatic
Jul 2, 2008
599
78
I'll leave everyone with the best financial advice anyone ever gave me:

Be careful of advice about finances/real estate that you take from friends, family, and random strangers. Nobody likes to look stupid and people will lie to keep from looking foolish. Unless you have access to someone's financial records take that cash flowing rental, incredible interest rate, or great deal with a grain of salt.

You got some good advice SWGB, but please allow me to expand on it a little---don't trust anyone's financial records, they may well be pure fiction
 

Paula

Beach Fanatic
Jan 25, 2005
3,747
442
Michigan but someday in SoWal as well
I bought a cottage in SoWal and LOVE it. We made some of our best memories there, so much so that my daughter wanted to have her senior high school photos taken at the beach across the street. Here are a few things I've learned:

1. I have no regrets, only great memories with family and friends (and some SoWal friends that sadly, I haven't seen much but will see again in the future when I'm there more often. If you're going to make great memories there and you have the money to pay for it and won't depend on rental income to pay the mortage and you have other investments and savings/retirement, you'll be able to enjoy the memories you're making with great peace of mind.

2. I like renting it out and using a management company to take care of everything because I work full time and can't get there often right now (but will in about 3 years... countdown has started....). I actually have two cottages and I go "in the hole" about $10,000 on one cottage and $20,000 on the other cottage each year. That's a lot of money since 2003 that could have been invested somewhere else, but I probably would have put it into the stock market and lost some of it anyway, so I'm feeling pretty good (the cottages are just part of my investment portfolio and they make me very happy). So far, I can cover the $30,000/year; if I can't in the future (e.g., kids in college), I'll sell one cottage (and I'm glad I bought right before the prices all went up and crashed, so I'd be OK, but that didn't work out for everyone which is why you heard so many warnings - everyone here knows people who got burned and are just trying to make sure that doesn't happen again).

3. I don't worry too much about what happens to the stuff when it's rented. The gain from the renters (in good will, having people in the place when I'm not there, stuff they've kindly left behind for others to use) has far outweighed any losses (very little has been taken or broken). I don't put my best stuff in there, but I do have some sentimental things in there (old furniture) and I'm not worried about it. If it's meant to break, it will break.

4. Personally, I like having small places (two side-by-side 3 bedrooms but in 1100 square feet each - brilliant use of small space) because it's less likely that I'll get large groups of people -- e.g., unsupervised students. I advertise my places as family-friendly, which they are and with nothing to do in the area except sit on the porch, pool, beach. Doesn't sound too appealing to partiers and people looking for action (which is good). Also, with the two side-by-side smaller places, when I travel (or guests travel) with larger groups, they can get together when they want and also go to their own cottage for privacy. And I can go down there and stay in one and have renters in the other. And if I decide to sell one, I still have the other.

5. Don't expect the management company to get all your renters (or even most of them). Use VRBO. And the rental company will never clean/maintain your place as you would, so expect to go there and have to follow-up on cleaning/maintenance. Sometimes I go there and the places are in great shape. Other times less so. But I have a very good relationship with our management company and I'm glad they're there.

6. If you're concerned about hurricanes, find a place that's up on one of the high dune areas of the SoWal area. Won't help with wind and rain, but sure can help with storm surge. Also helps to get a place that has passed the most recent storm codes (e.g, roof, windows). Get on SoWal.com during a storm/hurricane and you'll get up-to-the-minute news on what's happening. Don't worry about the beaches looking pretty torn apart after a hurricane. It's interesting to watch the beaches change over time. They were absolutely stunning this past August with fluffy white sand and I must say they were stunning after Hurricane Ivan. It really was something to see what hurricanes can do and how Mother Nature Works. I'm a wiser person about the beach/nature now than I was when I first came here in 2003. If you're on a dune, the stairs to the beach will get washed away every now and then, but then you can go to the beach in some of the flatter areas and the association (if you have one) will charge you to build new stairs.

7. If you buy a place with an association, remember that association fees go up. Our community has VERY low association fees because it is small and the landscaping is natural (no grass or fountains to pay for).

8. Remember maintenance costs go up over time (though furniture/set up costs go down). Now that the cottages are 6 years old, I've had to do power washing, some painting, and other things like that. I could have let it go, but I like to take care of them (and the neighbors/association like us to take care of our places).

9. If you can rent your place in May - August, that's the peak season and you'll make your $ then. You then have the rest of the year to visit unless you get snow birds (we have snow birds in both cottages for some of the winter, at least until I become a snow bird myself). Snowbirds rent for a song in the winter, so you don't make much at all but it's nice to have someone in there and it's nice to know the places are appreciated by happy snowbirds who got a great deal. and having snowbirds in the winter brings the area some business during the low season.

10. Beach front is certainly nice if you can afford it. You also have to consider the costs/hurricane risks. Having a view is great, but many people bought thinking they'd have a good view and someone built something in front of them. So be careful if you go for the view and check out the risk of losing it. Consider what kind of constructions/changes could be happening near you as well. We don't have a view of the ocean right out our windows - we look at the native plants and trees which is also very nice (and some native creatures as well). A view would be great, but can't say once we made the decision not to have one that I've yearned for one. I just walk to the beach and enjoy all the view I want.

11. It's nice to be a very short walk to the beach, short enough that you can carry a lightweight Publix Beach Chair back and forth in the heat and not get cranky.

12. Talk to people about the advantages/disadvantages of the different communities along 30A so you can find the right fit for you.

I LOVE our cottages and everything SoWal has to offer, especially the people (friends I've made), the beach, and the FOOD (lots of amazing food). It has been fun getting to know SoWal more intimately - 6 years and I still have so much more to see and learn. No regrets, only great memories and great expectations for all our future visits there.

Enjoy the dreaming and buying of a place of your own and just pm me if you want to know any of the other things I considered when buy the cottages or if you have specific questions. It's good to hear the warnings as well as the good things so that you can make the best decision possible for the long-term. I'm a bit of a worrier so I thought through many of the details before buying (e.g., be on a dune in case a hurricane hits, go for low association fees if possible, spread the risk between two cottages in case I had to sell one, buy a smaller place in case my income changes, etc.). And now all I do is think of the good stuff with the cottages and worry about nothing when I'm there. It's truly a haven and great for the soul.:love:
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
First, let me say that I am a very positive Realtor. Being "positive" does not prevent me from being honest and realistic. I have a good understanding of "investment" and business, and would never pretend that one should buy a vacation home if he or she is looking for a great "investment." It can be a good decision, with time, but again, a vacation home in our area is a place to park money and enjoy a luxury in life. Call me a Debbie Downer if you want, but you specifically mentioned wanting it for an "investment." I don't care if you are paying cash or getting a gov't loan of 100%. It won't change my opinion of what qualifies as an investment and what qualifies as a luxury item. If you like a property and can afford it, then buy it. That means it works for you.

we would love to put some of that money that we are throwing away on rentals into an Investment.
You asked for input from property owners and after hearing from several, you decide you don't like what you are hearing and complain. This statement in quotes above is a HUGE misconception. As I said, I'm a Realtor, and while I love to sell property, I like people to know that renting is not throwing away money. It is an expense which comes with all property, renting or owning. If you are paying cash for a property, it may make financial sense for you to buy, but it doesn't mean that it is a good "investment," because of the opportunity costs of your money being tied up in equity in a home. Also, just because you like to think of rental income as "all profit," it doesn't make it so. You have to divide your gross rental income by the amount you have invested in the property to determine whether or not it is really profit. If it is less than the rate of inflation, or less than the interest paying on a CD, you are not seeing the full picture and looking through rose-colored lenses. Buying a vacation property isn't a bad thing, it is just a thing -- a place to park money, as I mentioned earlier. You can fair well or poorly.

Good luck in pursuing your purchase.
 

Rather B Paddlin

Beach Lover
Feb 15, 2005
178
14
Hey Rather B,

I'm not being snarky, but what is your occupancy rate for October through March?

I guess the point got lost since I was pointing out that someone who might desire a huge house now, might not need 6-7 bedrooms when they retire. Having worked in rentals I also understand that generally owners who have larger houses do have to hold back income from the spring and summer months to cover the lack of income during the fall and winter.

It would just be much simpler if this place was booked year round, but it's not and I'd hate to see a first time rental owner get excited that their rental bank account was busting at the seams by the end of the first summer. ;-)

Ok Snarky,

All of our homes are considered large. Three of our homes are 75% booked in October, mostly family, friends and clients per gratus. Two of our homes are 100% booked absolutely solid, from Thanksgiving thru April. Quite frankly the large homes do so well in the summer( rental rate and occupancy wise )that the off season rentals are icing on the cake. Having that prime season cash in hand is a good thing not a bad thing. Interesting enough, the last two rental seasons have been our two best. With less people buying, more people are renting.

What works for one person may or may not work for another. Paula does a great job with her homes and it works for her. I believe her post summarizes it the best. Buying into South Walton almost 10 years ago has the been the best decision we have ever made. Not only because of the property but because of the friends and neighbors we have met. I see market conditions as an opportunity not a problem.

Side note : Paul, please give Gretchen and Bob a big hug next time you see them. We missed an opportunity to see them a couple weeks ago.

Well Snarky, your turn what are your occupancies on your seasonal rentals that are the basis of your advice?
 
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Paula

Beach Fanatic
Jan 25, 2005
3,747
442
Michigan but someday in SoWal as well
Hi RBP:

I will indeed say hello to Gretchen and Bob. Let's get them to SoWal sometime soon if we can. Everyone looks great - Bob's been walking the dog by my house regularly and they were over for dinner in August and is on a 40+ soccer team. So far, so good. It was great to meet you in person last year. Come by the house next time you're in town.

Your places really do well. Mine do well also with rentals especially summer and then spring. They were booked straight through from late May to the first week in September. for the upcoming fall, so far I have just a few weeks booked here and there. They're not as fully booked through the winter as your's are - I have partial winter rented with snowbirds so far and have for the past few years. But regardless of rentals, I'm happy as can be (as happy as you are) being connected to SoWal. In a few years, off-season rentals will matter less to me because I'll be in at least one of the cottages much of the time.

Big or small, location, etc., is all a matter of preference and what someone can afford at any given time (and what's available). We're lucky to have what we have, that's for sure. And I agree that SoWal is so much more than the properties - the people (and the beach and the food and the music and all the other things) make the place.
Ok Snarky,

All of our homes are considered large. Three of our homes are 75% booked in October, mostly family, friends and clients per gratus. Two of our homes are 100% booked absolutely solid, from Thanksgiving thru April. Quite frankly the large homes do so well in the summer( rental rate and occupancy wise )that the off season rentals are icing on the cake. Having that prime season cash in hand is a good thing not a bad thing. Interesting enough, the last two rental seasons have been our two best. With less people buying, more people are renting.

What works for one person may or may not work for another. Paula does a great job with her homes and it works for her. I believe her post summarizes it the best. Buying into South Walton almost 10 years ago has the been the best decision we have ever made. Not only because of the property but because of the friends and neighbors we have met. I see market conditions as an opportunity not a problem.

Side note : Paul, please give Gretchen and Bob a big hug next time you see them. We missed an opportunity to see them a couple weeks ago.

Well Snarky, your turn what are your occupancies on your seasonal rentals that are the basis of your advice?
 

Rather B Paddlin

Beach Lover
Feb 15, 2005
178
14
Rather B Paddlin,

I'm not in the rental business, and I don't have any stats on rentals to know the answer to that question about bigger not renting better or faster or whatever. However, I have seen the larger homes in Grayton Beach sit empty for most of the summer, while the smaller homes seem to stay rented much more frequently.

Joe,

As I posted , all I could base my opinion on is our past experience. Our largest homes could be booked 2 or 3 times over in June and July. There are other factors like relying on an agency to book your home, rental rate being too high, no gulf view, or not having a private pool.

Not sure what the deal is with the homes you speak of.
 

DreamnOfFL

Beach Comber
Jul 10, 2005
16
0
East TN
I'd like to take the time to reply to this now that the dust has settled :lol:
I never meant to cause a huge debate or disruption in the forum. Let me explain in better words my intentions with purchasing a property there.
First and foremost it will be a Vacation Home for my family.
Memories are my top priority from the adventure of owning a place to come to as much as we can.
In the meantime with it being empty I was hoping to use it to rent out. That is the part that I've never done and wanted advice about.
I really do appreciate ALL the advice.. Good and bad. I did lash out because of couple of posters were not so polite about it as others. And I appologize for seeming to take it out on all of you. That is why I've taken a few days just discussing things in Private with some really wonderful people!
Sooo .. As long as you don't tell me to go away or keep dreaming (in a sarcastic way). I'm totally open minded to all advice.
Thanks!
 
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fisher

Beach Fanatic
Sep 19, 2005
822
76
Thanks so much for the response.. You have nailed a lot of issues that I was curious about. We would be using VRBO for sure. We have been finding our Vacations Rentals from there for years.
Also when I choose the word "Investment".. I'm not looking to become rich off this place lol Just mean in terms of for us to stop throwing away money and actually putting it into something we own and love. Last summer alone we spent over 8,000 dollars on just two visits there. And to think that could have been into a place of our own is just sickening. And I don't even want to add up everything over the past ten years lol

The tip about putting family photos into the place is very smart! I always wondered about that. Only one that we have rented in the past had personal photos.. and I actually thought it was a nice touch.

As for the Wireless Internet that is a MUST .. We are addicted really bad ourselves and I know others would appreciate the access to feed their addiction as well.

Our long term goal is to eventually move there. The two times we get to come and visit are like coming home. I've always thought the stork dropped me in the wrong part of the U.S. :lol:


Keep in mind that you will not be cash flow positive on a beach home purchase. You will end up spending a lot more than $8,000 to own and rent a home if you finance the purchase. Even if you pay cash, you will still be in the hole considering the lost earning potential on the money you put into the property.

You will have high taxes, high insurance, utilities, interest, HOA dues (if you are in a planned community) and maintenance costs that can be quite high. For instance, it can cost $8k to $10k to have a small cottage painted in SOWal and they need painting typically every 4 or 5 years.

So, if you are planning to buy because you really want a place of your own. That is wonderful. If you are doing because you think you will be better off financially, don't do it.

It is cheaper to rent than to own.
 

Miss Kitty

Meow
Jun 10, 2005
47,015
1,123
67
Keep in mind that you will not be cash flow positive on a beach home purchase. You will end up spending a lot more than $8,000 to own and rent a home if you finance the purchase. Even if you pay cash, you will still be in the hole considering the lost earning potential on the money you put into the property.

You will have high taxes, high insurance, utilities, interest, HOA dues (if you are in a planned community) and maintenance costs that can be quite high. For instance, it can cost $8k to $10k to have a small cottage painted in SOWal and they need painting typically every 4 or 5 years.

So, if you are planning to buy because you really want a place of your own. That is wonderful. If you are doing because you think you will be better off financially, don't do it.

It is cheaper to rent than to own.
:popcorn:
 

SHELLY

SoWal Insider
Jun 13, 2005
5,775
802
Keep in mind that you will not be cash flow positive on a beach home purchase. You will end up spending a lot more than $8,000 to own and rent a home if you finance the purchase. Even if you pay cash, you will still be in the hole considering the lost earning potential on the money you put into the property.

You will have high taxes, high insurance, utilities, interest, HOA dues (if you are in a planned community) and maintenance costs that can be quite high. For instance, it can cost $8k to $10k to have a small cottage painted in SOWal and they need painting typically every 4 or 5 years.

So, if you are planning to buy because you really want a place of your own. That is wonderful. If you are doing because you think you will be better off financially, don't do it.

It is cheaper to rent than to own.

....but, on the plus side, the sunsets are so much more beautiful when viewed through rose-colored glasses. :love:

.
 
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