Buying a vaction home - It's a whole new ballgame.

[ch435]

I remember a time not long ago when if your credit was ok, and you had a little cash, it got you into a home. And then we had the whole mortgage fiasco's, and now things are much different.

With the interest rates being at points they say may never be this low again in our lifetimes, and housing prices tumbling like they have, we thought maybe it was a good time to get our vacation home we wanted. We are looking for a modest condo on a canal in Ft Lauderdale. There are plenty available, that's for sure, and the prices have come way down over the past years. We've seen some go from 300K 5 years ago to 150K now.

The problem we have learned is that the banks don't think the market is done tumbling down there. So even with great credit, the banks are now requiring 30% - 40% down. Ugh, no wonder so many units have been on the market for close to a year. Not many people have that much cash laying around. We may have to re think our strategy. Oh well.

 

[Gimme Time]

Keep us posted with what you find. Another concern should be the Home/Condo association fees as some of the facilities which already have high yearly fees might/are gooing up to cover the decreases in revenue some of them are being able to collect. This gets spread accross the other owners one way or another.

 

[BritLady]

I remember a time not long ago when if your credit was ok, and you had a little cash, it got you into a home. And then we had the whole mortgage fiasco's, and now things are much different.

With the interest rates being at points they say may never be this low again in our lifetimes, and housing prices tumbling like they have, we thought maybe it was a good time to get our vacation home we wanted. We are looking for a modest condo on a canal in Ft Lauderdale. There are plenty available, that's for sure, and the prices have come way down over the past years. We've seen some go from 300K 5 years ago to 150K now.

The problem we have learned is that the banks don't think the market is done tumbling down there. So even with great credit, the banks are now requiring 30% - 40% down. Ugh, no wonder so many units have been on the market for close to a year. Not many people have that much cash laying around. We may have to re think our strategy. Oh well.

You might want to take a look at the West Coast of FL instead. Understand that there are some really good deals on new condos in the Manatee/Sarasota area on the water. Plus it's really great boating this side, pop down to Sanibel, Captiva, Cayo Costa, Useppa etc., our Intracoastal is superb and then there's the wonderful Gulf of Mexco ......Alright I know it's nice on the East Coast too but we're biased about this side. Good luck in your search

 

[mainstream]

As lOng as I can remember since I've owned summer or just second homes banks have required 30% or more for non primary residences due to the fact that when things get tough the non Primary residence is the first thing to go at least here in the north east that's how it's been I don't know about fla I know the whole banking debacle was on mostly primary residential forcloser and due to the no money down and 80-20 mortgages and people who never should of qualified to buy a home in the first place.I do agree things have changed I went to refi my primary which I have do e in the past with no employment verification or income verification just an apraisl this time it took an act of congress and I still have 60% equity in my home so it defiantly has changed

 

[ch435]

You might want to take a look at the West Coast of FL instead. Understand that there are some really good deals on new condos in the Manatee/Sarasota area on the water. Plus it's really great boating this side, pop down to Sanibel, Captiva, Cayo Costa, Useppa etc., our Intracoastal is superb and then there's the wonderful Gulf of Mexco ......Alright I know it's nice on the East Coast too but we're biased about this side. Good luck in your search

Maybe we need a better realtor. We did look some on the west coast - Ft Meyers and surrounding area. She told us our Sundancer 280 would be too big for the intercoastal water ways and that we wouldn't fit under the bridges to get to the ocean. Maybe you have a lead or two for us? Specific areas to look at?

In reference to the associations, yes we have heard to make sure they are solvent, etc. Some are really hurting we have found out.

BTW, We did find some fannie mae (foreclosure) ones that only require 20%. Citibank wanted 40%, which is nuts.

 

[fwebster]

I would urge some serious restraint in looking at condos in Florida until you study the market you end up interested in and know which complexes are good investments and which are liabilities. Pretty much all of Florida coastal areas have the same negatives going on now, some re rebounding while others are languishing on a down hill slide. I don't know specifics about South Florida markets, but I can site you some examples in our area that might give you an idea of why due diligence on the market and specific complexes is a higher priority than prices.

NW has beautiful beaches and some of the best boating in the country, so it is attractive to tourists and there are a lot of condo complexes here.

1. Ask is the complex is fully owned by individuals.-
Many newer condos were never completely sold out when the banking meltdown occurred. That means that some bank somewhere owns the 40-50-60% of the units that were foreclosed from the original developer. A bank is not going to let maintenance fees do any more than cover minimum maintenance costs so there will be no reserves for future major expenses. That means unit holders can count on major cash assessments for major things like painting the building, roof replacement, a/c replacement, etc. One of the condos here just assessed unit holders $20,000 ea for repainting their building. You have no choice or control if the association votes to handle big expenses via assessments. They can place a lien on your unit and then you are stuck...either pay the assessment or never sell your unit or in extreme cases have it forclosed to satisfy the lien.

2. Look carefully at the common elements of the complex and ask about liability insurance-
One very nice complex here has a beautiful pool 1/2 indoors and heated, 1/2 outdoors so you can enjoy the pool in even the coolest weeks. It is a show piece and is really attractive and well landscaped, but.....the developer put a bar in the glass wall separating the 2 halves. You can slide up to the bar, get your favorite mixed drink or beer and slide away to resume your fun. Well, it was a great idea, but no insurance company will write a general liability policy on the property that sells alcohol in a pool. That means that the 225 unit holders are un-insured for public liability at one of the most sought after tourist spots on the beach that depends upon rental income. A multi-million $ lawsuit is going to be split 225 ways when the dust settles.

3. Read the condo docs and look at the financial statement of the association before making offers -
Be sure there are no rules you cannot live with and that there are enough teeth in the bylaws to force minimum levels of unit maintenance by owners. You don't want to be next door to a foreclosed unit held by a bank in a distant state...and it happens because banks sell loans. If the bank has had the power turned off, the unit next door may be a mold factory that you will end up cleaning up when it over takes your unit. Or worse, bugs love and varmints love the south so the unit near by may be a roach infested dump if the association doesn't not have the right or authority to keep the A/C on and the pests at bay.

4. Consider the appraised value and taxes-
Florida has an aggressive approach to property appraisal. The appraiser has nothing to do with taxes other than setting the value of the property. Condos are peculiar animals because of the comps available. Every time one unit sells, all like units are re-appraised because there are something like 200 identical properties in one spot. That is good when prices are depressed and falling, but once the bottom of the market occurs, values will rise as will appraised values as will taxes. That $150k unit may cost you $2700 in taxes when you buy it, but if it goes to $300K in appraised value, the tax bill goes to $5400.

5. Consider the total carrying cost of a condo before signing a contract-
One of the appeals of condos are the ability to have access to a variety of common elements like pools, tennis courts, shuffleboard courts, exercise rooms, meeting or party rooms, etc. Well none of that stuff is free, nor is the flood and windstorm insurance or the liability insurance or the property taxes on the common elements and buildings. In a coastal complex with typical amenities, the maintenance fee will run $1600 - $2000 per quarter. Add that to the taxes and you get an overhead cost to add to your monthly cost of $800-$900, and that doesn't include the insurance on the interior of your unit.


But there are ways to reduce your risk.........

1. move your domicile to Florida and file your taxes there so you can claim a homestead exemption (assuming you don't have one on more expensive property elsewhere) Homesteads in Florida have a taxable value cap of 3%/year, and Florida has no income tax.

2. Find and work with an honest realtor who knows the condo market you are interest in. He probably won't say bad things about property that is for sale, but when asked the right way, he can guide you to the better complexes.

3. Find a realtor that is the listing agent for a major bank in the area and who handles their foreclosures. One of our CSR members gets all th e listings on a major bank's foreclosures in our area and they frequently offer nothing down, 1-3% financing just to get a property moved off their balance sheet.

4. Take a look at single family beach houses.....
If you don't need the tennis, pool, shuffleboard condo elements, you can own a single family home without many of the above risks and costs by using a property management company to help you when you are away.


Good luck with your search.

 

[Big Island Lifer]

Maybe we need a better realtor. We did look some on the west coast - Ft Meyers and surrounding area. She told us our Sundancer 280 would be too big for the intercoastal water ways and that we wouldn't fit under the bridges to get to the ocean. Maybe you have a lead or two for us? Specific areas to look at?

In reference to the associations, yes we have heard to make sure they are solvent, etc. Some are really hurting we have found out.

BTW, We did find some fannie mae (foreclosure) ones that only require 20%. Citibank wanted 40%, which is nuts.

This realtor doesn't know Ft. Myers. There are plenty of areas on Ft. Myers Beach and the sourrounding communities with easy access to the gulf.

 

[ch435]

Frank,

Wow! Thank you so much for that very valuable insight. I really appreciate all the information you provided. It gives us even more to think about. I have been a little unsure of the realtors we keep coming across. If anyone has a good lead for one down there, we would certainly appreciate it. Or a lead as Frank suggested about one who works with banks.

We wouldn't mind a small single family house - but do they have those on the canals?

 

[northern]

We are from Canada and I looked at getting a house on a cannal in Florida. Good prices, nice homes and low prices. My acountant told me to be very carfull as my estate could be probated through Florida and I would loose a lot (I would be dead but the estate would loose). He said if I lived there more than 4 months I could be concidered a perminate Florida resident and all my estate not just the Florida portion could be probated there. Where we live there are no probsate taxes or inharetent taxes.
We rent a 2BR condo in Mexico for the winter on the ocean that has a golf course and marina. Owning would be nice in a warm place but rent seems to be better as I feel values will go even lower as soon as the cost of living goes up for food and energy.

 

[cod]

Another BIG thing to consider that I didn't see mentioned is to find out if all the owners are current with paying there common charges. Many of these complexes have owners who are not paying and you would want to know exactly what that number is because if its a high percentage, you want to avoid that particular complex. Also, if there is a club that you want to join, what is the financial staus of the club. Many have gone bankrupt.....

 

[Crushin It]

this post deleted

 

[Bob & Sue]

As lOng as I can remember since I've owned summer or just second homes banks have required 30% or more for non primary residences due to the fact that when things get tough the non Primary residence is the first thing to go at least here in the north east that's how it's been I don't know about fla I know the whole banking debacle was on mostly primary residential forcloser and due to the no money down and 80-20 mortgages and people who never should of qualified to buy a home in the first place.I do agree things have changed I went to refi my primary which I have do e in the past with no employment verification or income verification just an apraisl this time it took an act of congress and I still have 60% equity in my home so it defiantly has changed

That scenario doesn't sound like much of anything has changed doing a refi or new mortgage without income or employment verification is one of the reasons this mess got started the banks or mortgage brokers are doing exactly what they did before this mess take a few points of the top, borrow the money from the fed window at 0% and create another bucnch of CDS's . Before long we'll have another crisis my home is paid for it's worth less than what I paid to have it built 14 years ago all because of Banking and Wall Street Brokers greed we don't need more regulation we need to withdraw all the Fed 0% window money from the banks and brokers and let them go bankrupt. They've stolen enough and ruined the wealth of enough people who have worked hard to get ahead you can't even make more than 1% on CD without buying a broker traded high load fee CD for a return of 2.25% or a high yield muni bond pick which city you want to gamble on going bankrupt next.
Sorry for the rant and high jack of the subject.

 

[BritLady]

OMG! You certainly do need a better Realtor! 280 too big, we have a 340 and we boat with no problems (just mind the shallows here) and we are not big on the West Coast by any means. In two weeks we are going to Useppa with our Yacht Club and I think the biggest boat coming along is a 61' Hatteras! Frank has some very valid points but in certain parts of FL the housing market is thankfully edging up a little and Sarasota/Manatee is one of them. We are now being solicited again to sell our single family home and it's value has edged up recently. Sarasota is probably not typical for FL it is one of the cultural centers and we always have a large very wealthy international community as well as people from the north who move here and many "snowbirds". And believe me the boating in this area is GREAT! It is a very special place which makes it a bit more desirable and expensive, but there are bargains still about. However, you still need to be careful in the condo market and location is important. I will ask around for the name of a Realtor who deals in boating communities (there are several boating communities here) and let you know if I find one. You might want to take a look at the following to give you some more ideas: http://www.luxurysarasotarealestate.com/bellagio-harbor-village.php which is quite a nice boating community near Sarasota. You can also buy an indoor rack for your size boat at Bellagio if you don't want to live on the water (in fact my husband and I have one for sale but it's in central Sarasota.) There's also: http://www.islandannamaria.com/top-10-boating-communities/ to take a look at too. Good luck!

 

[tdschafer]

I agree that your realtor is in the dark regarding the gulf coast. My buddy lived in Cape Coral for more than a decade and had a 37' Silverton in his backyard. What you need to look for in the Fort Meyers/Cape Coral waterfront area is "Sailboat" access. That means there are no bridge restrictions between the house and the Gulf.

 

[HUMPH]

We are signing docs this afternoon on a 2nd home and the process has been very different. We have a 30 year fixed at 3.75% with only 10% down but did have to call it our primary and our current home as a rental. A small waterfront home in Florida would have been a nice idea too! Hmmm????????

 

[chuck1]

Being a Realtor in a second/vaction home area I can say Frank has hit the nail on the head again! Great info and yes most second/vactions homes will require at the least 20+% down and need to have proof with history of the monthly income to cover the payment. One of my clients $$$$$ clients was going to have to setup deposit going into his general account from his investment accounts for like three months before the bank would even talk with him for a construction loan. He finally just said forget it and paid cash.

 

[chuck1]

We are signing docs this afternoon on a 2nd home and the process has been very different. We have a 30 year fixed at 3.75% with only 10% down but did have to call it our primary and our current home as a rental. A small waterfront home in Florida would have been a nice idea too! Hmmm????????

Not sure I would want to be putting this statement on a public forum, it could be called fraud?

 

[Bucit]

Ch435 - I have been in the mortgage business for many years now including the boom and the downfall we are in today. I agree that people that deserve homes are paying theprice for the government making sure "everyone" owned a home back in the day. It's crazy what we have to go through for top borrowers. Condos in Florida are touh and many lenders will not do them in Broward or Dade county due to all the fraud still going on. Florida was just given the title (again) of #1 mortgage fraud. Second place was far behing u that's how bad it's been.


Vacation homes are considered second homes and the rates and terms are much better than investment property. I can do condos (second home) with as little as 10% down. The problem is getting the condo project through underwriting. The condo budget must be stellar, no less that 51% owner occupied and less than 15% deliquency on HOA dues just to name a few. I have done a few but they're tough. I belive you will have better luck looking away from south Florida for condos. PM me if you have any questions.

 

[Bob & Sue]

We are signing docs this afternoon on a 2nd home and the process has been very different. We have a 30 year fixed at 3.75% with only 10% down but did have to call it our primary and our current home as a rental. A small waterfront home in Florida would have been a nice idea too! Hmmm????????

I would consult a financial adviser on this one after 2 years of being a rental you will owe capital gains on it there are some very tricky rules on this type of transaction with different disclosures to the IRS.

 

[ch435]

Great info everyone - keep it coming please.

It looks like we should expand our search to further north Florida, which we will start doing.