"Condo-tel" or single family STR in Florida??

Question

Looking to buy a vacation property in Florida but stuck on property type. We're looking at condo-tel type properties in the St. Petersburg area, or single family in the Cape Coral down to Naples area. Both come with pros and cons. We are in Oregon, so not having to worry about managing a property from 3000 miles away is very appealing. And inly.being able.to use our property for a few weeksnout of the year is not a problem for us. But at the cost of over 50% gross income, I'm not sure it's worth it. While single family won't have the large management costs, but will be much more time consuming to manage. I've heard good and bad things about companies like Evolve. That 10% may be what they charge, but its for the bare minimum and as management services increase, obviously so does their cost.

I'm just looking for advice from others who have run into this scenario and what would any of you do??

Collin Hays · Answer

One of the most common misconceptions in this business.  We took on a client in April of 2020 who had "self managed" his cabin for three years.  His best year was $22,000.  He was really concerned about "giving away" 25 percent of his profit to us to manage his cabin.  We've booked just over $41,000 so far this year, and all he's done is receive monthly checks.

It's not what you pay, but what you earn.

Collin Hays · Answer

As a Property Manager, I wish I didn't have any risk.  Two years ago, we had guest slip-and-fall at one of our clients' properties with a $250K settlement.  Who's insurance company would you guess ended up paying the claim?

Joshua Strickland · Answer

Condo-tels are much harder to qualify for if using financing FYI. Many lenders won’t even touch them.

Chris Mury · Answer

Like others have said, be wary of financing. Find out which bank has successfully executed a mortgage in that specific condotel recently and give them a call. Many condotel units often trade with seller financing so look into that option as well.

You might also find that you are not obligated to use the "on-site" management company. I sold a condotel unit recently and the on-site company wanted to charge my customer 50%. We found out that she had no contractual obligation to use them and she hired a local company for 15% year 1 and 20% for year 2 and beyond. Big savings.

Good luck!

Rachel Payton · Answer

@Collin H.

I totally get that. We've run some numbers and we'd be ok regardless of which we chose in a "normal" year. But we looked at a condo last week who only netted $5000 to the owner in 2020 because of travel restrictions. Then a mortgage would need to be paid from that.  So there's risks to consider in this uncertain rental climate.

Zambricki Li · Answer

Single family whenever possible. A house usually has a greater appreciation potential. For STR why be in a condo when you could be in a house? Why deal with a condo neighbor if you don't have to? Sure, there is less to deal with in a condo though that's because you own less "house". You just own the air between the walls in many cases. With condo you don't really own your porch for example it's often technically "community".  Once you renovate a house there are rarely monthly costs that would rival a monthly Condo HOA bill.

Hire great housekeepers and you may not need a management company. The clean is the turn. Just hire housekeepers you have a good relationship with so you can text to check on the details and status. Install driveway/garage cam. Amazon your supplies when needed. Airbnb app on your phone. You can do it all in an hour or two a week playing on your phone. Sincere good luck and have fun.

Tyler Yarbrough · Answer

@Rachel Payton look in the Florida pan handle 30a area. Great rental returns and named one of the prettiest beaches in the country! Dm me for more information!

Don Konipol · Answer

@Rachel Payton

I never saw a condo tel setup that enabled the property owner to make money

The resort management companies that set up condotels, time shares, fractionalized ownership, etc, not only charge top dollar for the property, but add top dollar for management, add numerous garbage fees when you rent yourself or thru the pool, etc.  they are very adept at extracting every dollar possible, and leaving nothing on the table.

They can work when you want to own the property to use, are willing to pay the expenses, and regard any income from renting out your unit as “found money”.  As an investment, well, they suck.

Austin Drew · Answer

@Rachel Payton I'm located in Naples and have done a lot of research on STR in this early for the past 6 months. Feel free to shoot me a message and will be more then happy to share some information.

Jezelle John · Answer

@Rachel Payton I was literally thinking something similar. I would love a condo-tel that I can utilize also for vacations but with the state of the nation, I would be hesitant because the mortgage is always due. There is risk in everything but a condo-tel would be great for me after my portfolio is much more vast.

"Condo-tel" or single family STR in Florida??

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