It has become the dream of millions of people to own a second home when they retire. Sometimes these dreams are grandiose. After all, we won’t all be able to own a sprawling mansion with manicured acreage, several swimming pools and servants to tend to our every whim. It is, however, within many people’s means to buy a luxury beachfront condominium. And it is entirely possible that your dream can come true sooner, rather than later. There are many careful considerations to make, but once the homework has been done, that gorgeous beachfront view may in fact be yours.
In the United States, many condo owners have chosen to purchase their properties in warmer climates. Florida is among the more popular choices for the purchase of second homes. The market is very accommodating in Florida. This means that compared to most parts of the country, the cost of living in Florida is considerably lower. That translates into paying less money for real estate, while living within the economy of a higher cost of living. In other words, you can make good money in one state, and purchase your condo in a place where the cost is significantly lower.
If buying your dream condo prior to retirement is a consideration, take into account the income that can be generated from your purchase. Yes, that means that once you’ve spent some money—like the down payment and closing costs on your condo—you can make money, too. Many people choose this method and subsequently find themselves very close to outright ownership of their property by the time they retire. The key word here is “rental.” Think about the logistics: If you buy your condo prior to retirement, you certainly cannot occupy the unit full time for a while. During the time it sits idle, rent it out. Beachfront condominiums bring in big bucks throughout the year. No, the numbers won’t miraculously multiply in the first few years of ownership—and there are several options to consider. But the end result will be sooner ownership of a second home with minimal stress on your current budget.
Let’s assume that after the down payment and other typical fees, a couple mortgaging a beachfront condo is left with a $1500 monthly payment. Suppose that couple is in their forties—approximately ten years away from retirement. They are able to arrange work and school schedules (assuming there may still be school aged children at home) to allow a one-month vacation during the winter. We’ll pick February. During April and one other random month, the couple and/or their family are able to occupy the condo for up to two weeks time. That leaves a total of ten months per year that the property sits vacant. This is like throwing money away.
Some folks choose to arrange their own rentals. This has its advantages, but a few drawbacks as well. Independent rentals incur no fee to real estate or rental agencies. However, if you live a long distance from the condo, it may mean the expense of a plane ticket and travel costs to prepare the unit for rental. The odds need to be weighed carefully. Many people have perfectly good luck renting via “word of mouth.” That way they are at least familiar with whomever will be renting their unit—typically cutting down significantly on the risk of damage.
All this leads to looking very carefully at the notion of renting a condo during the purchasing process. It should, in fact, be one of the first questions asked. “What is the policy at this condominium with regard to rental?” And, “What kind of rates can owners charge to rent their units?” These facts weigh considerably in the figuring of affordability of purchasing the condo.
It is at this point that many buyers learn that their real estate agents—or someone else within their agency—will assume the responsibility for acting as rental agent. They will very likely charge a fee for this service—usually a percentage of the rental income. This is another reason to build a comfortable rapport with your agent.
Prior to making an offer on a condo, it is vital to determine what the costs of insurance will be, as well as the monthly condo fees. Beachfront property will undoubtedly require flood and possibly hurricane insurance. Check with the agent to find out if you must purchase these separately, or are they included in your condo fees.
When purchasing a beachfront condo, it’s important to check with the condo rules and regulations pertaining to use of the facility. Many places sell and rent to retired persons only. This won’t mean that Junior and the grandkids can’t come visit you for winter vacation, but it may in fact put a time limit on their stay. Once you have definite interest in a unit, it is imperative to check and re-check all of the rules of the condominium association.
Purchasing a beachfront condo has multiple benefits over purchasing a beachfront single dwelling home—especially if you aren’t ready to occupy the unit year round. When those invariable beach storms arise, you don’t need to rush to the scene to prepare your property for potential damage. In most cases the condo association is responsible for taking care of any problems on the outside of the building. This includes roofing, porches or balconies, landscaping and carports.
Condo size is, of course, a consideration. Eventually you may want to make that your permanent, year-round home. Many condos are significantly smaller than single dwelling homes. Take into consideration your future needs when determining which condo is the right one for you.
It is possible to own that proverbial second home. You needn’t be a millionaire or financial genius. You simply need to save a down payment, consider renting as a means of generating income, and weigh the options carefully when making the actual purchase. Can you picture yourself sipping a cool drink under palm trees while listening to the gentle lapping of ocean waves? It can become a reality!
