Purchasing a Vacation Rental on the Emerald Coast Cost

So, you're considering moving here to the Destin Fort Walton Beach area, and you're considering getting a little piece of paradise here at one of the wonderful condos that we have here. You're probably asking yourself, what's involved in actually purchasing one? Well, in this video we're going to go over the top five different things that you're going to need to know prior to making that decision.

So, let's talk about it. Let's talk at this beautiful view that we've got here behind me and what it is like to purchase a condo here. I'm sure that you've probably visited or come down here and just wondering, hey, what's it going to take in order to actually purchase a condo?

1. KNOW YOUR BUDGET

Okay. So, number one on our list is knowing your budget. You got to know how much that you're willing to spend to get into one of these units. Now, it's one thing to think about, hey, how much am I willing to invest? But, it's another to know exactly how much. So, talk to your mortgage loan originator or somebody here locally for an actual access to what you'll need to know for fees and different things like that. If you need some suggestion, just give us a call. We've got lots of great lending partners that we'd happy to give you that.

2. OUT-OF-POCKET EXPENSES

This is prior to even purchasing the condo. So, you've got things like a Down Payment, Closing Cost, EMD or Earnest Money Deposit, Appraisals, Inspections, Prepaids as we call that for taxes insurance and even, as well as Interest and of course, HOA fees. So, your down payment could be anywhere between 0 to 25 plus percent. Why do I say zero if I'm investing? Well, there are condos in the Destin Fort Walton Beach area that actually are VA approved. You have to talk to your real estate professional to figure out which ones those are. But if you're looking to move into one for your primary residence and you want to wake up to this every single day, it is definitely an option. But if you are looking to invest here, know that most of the type of loans that you're going to get are going to be a 25% down. You also have closing costs. Now, closing costs are a variety of different costs, especially with your condo. That could be as low as $3,000 and upwards of $15,000. That really is going to depend on your area, the different condo units or anything like that. You also have your EMD or earnest money deposit. All that is good faith money to say, hey, I'm serious with this contract. If something does fall through within the midst of you purchasing one, you will probably get that money back if it's not your fault. Next is the appraisal. Now, the bank's going to ensure that whatever that you decided to purchase this home for, you actually it is worth that, right? They're not going to give you the money if it's that worth it, right? So, that's going to be a $500 fee that you'll incur or somewhere around there. You also have your own personal inspections to make sure that it's exactly what you anticipate that you're getting. Inspection fees could be anywhere between 300 to 500 dollars. And what they're going to do is they're going to inspect your unit and what you're going to own. Not the big complex, but just the unit where you're at like the HVAC and all the different things inside the bathrooms and stuff like that. Now, you also have your prepaid items. What we call prepaid items, prepaid insurance, which is that full year upfront. You're also going to pay for your taxes, at least two to four months in advance. And you're also going to pay for any prepaid insurance for that. Now, one other thing I want to throw in here, is HOA fees. Now, those fees are collected usually at the time of closing or shortly thereafter. It's not part of your mortgage payment, so you're going to have to keep that in mind. Those can be as low as $300 a month upwards to $1,000 a month, but it really just depends on what sort of complex that you're in.

3. OTHER EXPENSES

Now, number three is the other expenses that you're going to have to think about. So, some of these are your Management Fees, Repairs, Utilities, Maintenance as well as Cancellations and Vacancies, and even Marketing Expenses. Now, your management fees for some place like this is close to 25%. Now, that's going to be all-inclusive taking care of a lot of things that you'll be looking for. Now, you also have repairs or a different repairs that might happen throughout. You have your utility costs and how much that could cost throughout this time, which is usually just heating and electric. You also have cleaning for maintenance repairing. Anything else has gone through anything like that as well as you will have to go with cancellations and vacancies, where you're not getting paid for anything during that time. Also, if you want to do your own marketing, you could do through something like Facebook marketing or something like that for real nominal fee. So, you can Market yourself and save yourself some money.

4. FEATURES

Now, this can go any which array that you want to. Features could include the actual water view, like we're looking out here. It could be looking out over the bay. It could be a whole variety of different things, access to amenities, things of that nature. So, really you'll have to see what the rental history is, in order for that to work for you. You also have what I mentioned before was different amenities as well, to include pools, like we have the waterscape on Okaloosa Island, which is a big, big pool area as well as Destin West. You've also got other facilities where they have different rec rooms and volleyball courts and tennis courts and just a whole lot more. Your HOA fees will typically go up with the more amount that you get for your amenities.

5. HOW MUCH

So, the last but not least the things that you want to know is how much you can actually make while doing this. Now, there's so many factors to mention here that you want to talk to your real estate professional about running those numbers prior to actually making this investment. However, the things that you can anticipate is, if you are investing here, that you'll probably have a 25 percent down payment for that. Will say a unit of $400,000 and two bath on the seventh floor. You'll also say that your gross rent around that a couple of years ago, was around $45,000. And, don't forget that you also have that 25% management fee which is on site, as well as a six hundred fifty dollar HOA fee. Now, if you do the math, you'll understand that it's going to cost you probably close to two to four thousand dollars, depending each year just to own the condo. So, you're still coming out of pocket, but you're also gaining equity over time and you have access to your own personal vacation rental. Now, there are other ways just depending on say things like interest rate, insurance and things like that, that can make this a cash flowing property. But, once again, there's a lot of factors that go into this, so talk to your real estate professional.

So, that's all that we do have for you for buying a vacation rental here on the Emerald Coast in the Destin Fort Walton Beach area. If you have any questions about anything we mentioned here, please call/text us at 850.320.7757 or email us at Admin@WhittemoreGroupRE.com