Posted by RichV(FL) on September 25, 2003 at 15:20:14:
John,
I agree. We are seeing alot of the same building of condos here on the west coast also.
We may run into the same oversupply down the road also if the market corrects itself in the years to come.
Regards,
RichV(FL)
Condo Association Fees - $300-400 is alot! - Posted by Jay
Posted by Jay on September 25, 2003 at 11:11:29:
I wanted to get the advice of investors out there -
Looking into getting a pre-construction condo in South Florida. Prices are given at a discount and then rise before completion.
My question is, if I go with the rental income route with the condo - the condo association fees range from $300-$400 a month. Should this get passed onto the renter? If I don’t pass this on, my cash flow will definitely be negative. How do rental investors deal with high condo association fees (or maybe they don’t!)
Thanks for all advice,
Jay
Re: Condo Association Fees - $300-400 is alot! - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on September 25, 2003 at 15:30:08:
Jay–(FL)----------------
Buying new buildings for rentals is usually a poor strategy. You are likely to get a negative cash flow, as you mention.
Rental properties are more efficient rent-generators the lower the prices. New properties are rarely in this category.
Good InvestingRon Starr**
Re: Condo Association Fees - $300-400 is alot! - Posted by Dave in NOLA
Posted by Dave in NOLA on September 25, 2003 at 13:08:22:
Jay,
Whether $300-400 is a lot depends on what it covers, especially in South Florida. If that amount covers utilities, its probably not much at all considering the average air conditioning bill in Miami.
I live in New Orleans where we have a similar climate. The fees on the condos I own average $300 but they include utilities which makes it a good deal.
Re: Condo Association Fees - $300-400 is alot! - Posted by John V, FL
Posted by John V, FL on September 25, 2003 at 12:58:18:
Jay if you pay much more than 8 times annual gross rental income for condos you most likely will be negative cash flow without significant down payment. Only in this euphoric environment can people be happy to put 30-40% down just to break even. Paying too much and betting on further appreciation to bail you out after an amazing five year run is asking for trouble. Those condos going up in downtown Ft Laud, Boca and West Palm are beautiful but I doubt it is a good investment. They are building them like crazy and most likely a correction down the road from oversupply and higher interest rates will occur to get in much cheaper.
Re: Condo Association Fees - $300-400 is alot! - Posted by Brent_IL
Posted by Brent_IL on September 25, 2003 at 11:49:19:
Fees are a cost of ownership. It’s like taxes, insurance, or any other expense. The only thing you have to tell the tenant about is the amount of the rent, which will be set high enough to pay the bills and make a profit.
Re: Condo Association Fees - $300-400 is alot! - Posted by Mark (SDCA)
Posted by Mark (SDCA) on September 25, 2003 at 11:28:11:
As a massive generalization, I dont think condos make great investment. They are mostly higher end apartments. So the appreication is not great. They don’t rent as easily as houses. And the cash flow is not as good as apartments.
So it sounds like you aren’t getting enough of a discount on the purchase if you would be negative.
Mark