Many popular vacation condos on Siesta Key have on-site management that operates the
condo complex like a hotel. Management fees and services provided vary from condo to
As far as management of a more traditional condo or single family home, I can't quote a
"typical" management fee. However, I can tell you that property management is a competitive
business and you should be able to negotiate fees.
When you purchase a condo or a home in a deed-restricted community, the
condo/homeowners association charges you an application fee and runs a background
check. When you rent the property, the association will charge your prospective tenant an
application fee and run a background check on them as well. The fee is then paid by your
prospective tenant. Your property management company should be able to coordinate this
with the condo association on your behalf.
When interviewing property management companies, here are some helpful questions to ask:
- If you are unhappy with their service, can you cancel your agreement without penalty?
- Can you advertise your own property yourself?
- If you as the owner finds a tenant who passes a background check, do you get a discount?
- If a tenant breaks a lease, are you as the owner responsible for the additional marketing fees of
finding a replacement tenant?
If you are a cash buyer, a single family home is your best choice for pure cash flow. If
you've heard about increasing flood insurance costs, the legislation that caused the threat of
drastically higher premiums has been repealed by the US government. You are not required
to carry flood insurance unless you are getting a mortgage. Condo fees are likely to increase
because of insurance costs and governmental compliance burdens placed on condo
Single family homes in good condition are more likely to attract a tenant than a condo, and
are more likely to appreciate in price in the short term, based on historical trends in the
Sarasota area. Even after you factor in expenses such as homeowner's insurance and lawn
maintenance, the carrying costs for a condo versus a single family home slightly favor single
family homes if you are a cash buyer.
If you are interested in a condo on the mainland, you can easily secure an annual tenant.
Plan on an average monthly condo fee around $350, plus condo insurance and management
fees around 10% of your gross monthly rent, as your major expenses.
If you are interested in a condo to rent part time and use yourself, you are most likely going to
be looking for a vacation condo on one of the barrier islands, such as Siesta Key or Longboat
Key. As a rule, vacation condos pay for themselves if you are getting a mortgage, but are not
the best choice for those investors looking to maximize cash flow.
The Sarasota real estate market hit bottom in late 2011 and early 2012. The entire state of
Florida is entering the early stages of a seller's market.
The Sarasota real estate market benefits from the global economy and an affluent
international clientele. Your real estate investment is more likely to appreciate in value over
the long term, and attract a high quality tenant compared to other Florida destinations.
For Canadian buyers, in case you missed it elsewhere on my site, you do not need to
register at a seminar to buy Florida real estate! Please read my blog on how these real
estate seminars are highly misleading to the Canadian buying public.
Technically defined, the cap rate is Net Operating Income (NOI) divided by the current market
value. It is most frequently used as a method to determine the current value of a real estate
commercial real estate, where a comparable value analysis is more difficult, especially with
multi-family dwellings or apartment buildings.
Cap rates are rarely used to determine values for residential real estate investments. If you
are using a cap rate as an opportunity cost value comparison to other types of investment, you
can expect local cap rates between 6% and 7%.
price stats and trends
If you are new to real estate investing, you should plan on having 30% of the purchase price
as a down payment if you are getting a mortgage for either a condo or a single family home.
Rental condos and homes that don't need a lot of work priced under $100K are long gone in
the Sarasota area. Prices have risen as inventory has decreased.
We are in the early stages of a seller's market. Low offers are usually rejected, especially this
time of year, when our real estate market typically enters it's busiest season. As your
investment property specialist, my experience will help make sure you choose the best
property for your investment needs.