With the historic decline in real estate values, many are wondering, “Which is the best investment, a home or condo?” To be sure, in some parts of Florida, the real estate market for condos is not good. But should one still shy away from a condo investment? The answer, believe it or not is, “Absolutely not!”
The Real Advantages of Condo Ownership in Florida
There are several key advantages that one need consider. There is a key qualifier: the following pertains to properties that are located within coastal/vacation areas.
- Cost/Return on Investment – Vacation condos in coastal areas that are both South of Tampa and Daytona Beach have an almost year round vacation market. Further north and the weather during the winter months is really too cool to attract tourists. Therefore, given the relatively low upfront cost in purchasing a vacation condo versus a single family home, weekly rental rates for condos are often a net positive cash flow, almost from the outset with a real positive return on investment.
- Market Size – The market for short term condo rentals in the Florida vacation market is much greater than the market for single family vacation home rentals. The rental rates are much lower and the probability of keeping a condo rented on a continuing basis is much greater, because in the current market, fewer can afford the relatively high cost of renting a three or four bedroom home near the beach or waterfront areas.
- Views – One of the other advantages of a vacation condo is that condominium complexes near the ocean, gulf or in the Florida Keys usually have better views than would a moderately priced single family home in the same area. In other words, it is significantly less expensive to purchase a condo with a “decent” view than a single family home with the same view.
- Condo House Keeping Cost – Typically, in mid sized to large condominium complexes that are rented to vacationers, it’s relatively simple to find reputable and dependable individuals to perform cleanup services after a one or two week vacation stay. Also, the clean up cost of a typical condo is a fraction of what it might cost to perform the same services on a single family rental home.
- Facilities – A key advantage of a condominium over a single family home is that because there are so many units sharing the cost of all the facilities (a pool, recreation room, and work out room, etc.) the number and quality of facilities usually far exceeds that which might be found in a typical single family home.
- Ease of Management – If one buys a condo situated in one of the Florida vacation destinations and the owner is located in Texas or New York, maintenance problems are an absolute annoyance. Even if the owner is only 15 minutes away, it still is an annoyance. With a condo, often there is an on site manager who normally handles a vacationer’s problems, like a jammed toilet or sink. Also, local maintenance companies can be contracted to respond to a problem when summoned by a tenant resolving the problem without ever bothering the owner.
- Ultimate Sale of a Condominium – As mentioned above the market for vacation condos to purchase is significantly larger than the market for single family vacation homes. When an owner of a condo elects to sell his property after having owned it, it is certainly easier to find buyers with the necessary down payment and financial resources to purchase a condominium as opposed to a much more pricey single family vacation home.
Like anything else, doing the background work in purchasing a condominium is of key importance. A potential investor must research the area, the rental history, the condition and the suitability of purchasing whatever condominium in which he might have an interest. Even in today’s market and perhaps, especially in today’s market, a Florida vacation condominium has so many obvious advantages as an investment.