Ladies and Gentlemen, I have some exciting and expensive news. I have a beach condo under contract!!! For all practical purposes, this is my dream condo! There are several pros and cons to this unit over others I considered. I won’t share any pictures until I actually close on the deal. Quite frankly, I don’t really have any pictures right now. Part of the reason for no pictures is how I was able to get this deal. The property is so expensive, that I may declare bankruptcy in two years! All kidding aside, there are some downsides to this particular property that will be discussed below. We will discuss what this means for my dividend portfolio as well. So, sit back and relax. This is going to be a long post. Let’s dive in.
Buying Criteria
Currently, I own a 1 bedroom (with bunk beds) and 2 bathroom beach condo. Although this condo is directly on the beach, there are some features that I don’t like. For starters, the master bedroom does not have a gulf view. Some guests look for a master bedroom with a gulf view. They want to wake up and see the beach directly from their bedroom.
Additionally, although the condo feels spacious, it is relatively small in size in terms of square footage. It is a little less than 1000 sqft. The balcony is nice and has a great view but it is also relatively small in size.
The location is superb but busy. Overall, I love this condo.
My criteria for my second beach condo was simple. I wanted something larger and I really wanted a corner unit! It’s important to differentiate from your competitors, and I think a corner unit does that. Basically, I didn’t want another run-of-the-mill condo unit which are prevalent on the beach.
With the criteria set, it was on to looking at condos.
Condo Shopping
During my first weekend looking, I toured several different complexes and looked at several units. There were some potential options, but nothing really stood out to me.
My realtor, whom I’ve know for a few years now, suggested that I pick a particular building I liked the most and she would try and see if she could find an off-market deal. She assigned one of her Junior realtors to me. He is relatively new to the area, but was a realtor in another state. I am used to her working like this, because she did the same thing when I bought my first condo. It worked out nicely the first time.
In any case, they attempted to make some calls (only to corner units).
During the second weekend, I looked at more condos with the Junior realtor. There were distinct options. I did fall in love with one particular unit (more on this later). So, there were two, possibly three realistic options.
However, my Junior realtor made calls to corner unit owners who might be interested in selling. One owner was interested in selling but she wanted to show us the unit herself. She lived in another state. The plan was that I would hold off until the next weekend before making an offer until I saw this corner unit. All but one of the other choices I had selected was a corner unit.
So, after a long day, I decided to drive back home.
Lucky Break
After about an hour and-a-half drive into my way back home, my Junior realtor texted me that another owner had gotten back to him and the unit was available for me to see that day.
So, after telling my Junior realtor in a joking manner that I hated him (because I had to drive back to see the unit), I decided to drive back to see the unit.
We had a good conversation with the guest that was staying in the unit and decided that I was going to try and get that particular unit.
Before I describe the unit, let’s discuss the three other potential options.
Other Alternatives
Here are the other alternatives I considered.
A. 1 Bedroom 1 Bathroom Corner Unit
I know you’re not supposed to fall in love with any particular real estate property, but I was in-love with this 1 bedroom 1 bathroom corner unit. It also had bunk beds.
The unit I saw was on a high floor. I like high floors, although I recognize that some guest specifically look for low floors.
To me, this unit was a true corner unit! By that I mean that you can views from both inside the unit as well as on the balcony. Some corner units on the beach only have views from the balcony but not from the inside.
In addition to the unit itself, I also liked the complex. It is in a great location and is super close (within walking distance) from my current location. The complex has a lot more amenities than my current complex. So that’s a plus.
However, the unit is smaller than my current unit, and one of my criteria was to get something larger. That being said, if I were to ever get a third condo (which I wasn’t planning on doing), it would be this complex and a unit with this floorplan. I have decided!
There were other reasons not to get this unit now, despite the fact that it was well within my budget and would cash flow. Sufficed to say, this was last on my list. So, I would only get this unit as a last resort.
B. 2 Bedroom 3 Bathroom Condo (With Bunks)
This unit is in the same complex as the 1 bedroom 1 bathroom corner unit above. However, it sleeps more people than my current condo. Other than this fact however, there was nothing special about the unit itself.
The balcony was relatively small (maybe a little bit larger than my current unit). The complex has nice amenities, and that was a plus. But I just wanted something more special.
So, this was an option but a lower priority.
C. 3 Bedroom 3 Bathroom Condo
This unit was VERY TEMPTING! The unit was spacious and sleeps 12 people. The balcony was spacious and had GREAT views. This was a penthouse unit, but it wasn’t a corner unit.
Although I wanted a corner unit, I would be willing to forgo that criteria for a 3 bedroom 3 bathroom spacious beachfront penthouse unit! Generally, 3 bedroom 3 bathroom beachfront condos are WAY out of my price range. So, this would be my only opportunity (unless I win the lotto) to get a 3 bedroom 3 bathroom unit.
Although the size of the unit and location of the unit was a huge plus, there were significant downsides.
For starters, this was an older building, built in the 1980s. I’m concerned about older buildings. The state requires that condo buildings be inspected by the end of 2024 and that the HOA fully fund their reserves. If there were to be structural or other problems, there could be future special assessments. I imagine this is more likely to occur in an older building than a newer one.
A significant downside to this complex is that it looks really run down. There was rust on outside AC units, outside the elevators, etc. Guest reviews from several of the units reported seeing rats. This included one guest review for the particular unit I was considering who reported seeing a mouse in the unit last summer. People are paying a lot of money to stay there, and it is not necessarily a pretty site.
That being said, there is no question that the unit would cash flow and the complex does have a lot of amenities. This was a serious option!
The Condo Under Contract
The condo I chose is in pristine condition! It was recently renovated two years ago. It is in the complex I selected as my number one complex! Additionally, It comes with a designated parking space, which not all the units in that complex have.
The condo is a 2 bedroom 2 bathroom unit. It sleeps 6 people, which is the same number of people who can fit in my current 1 bedroom 2 bathroom unit (with bunk beds). The difference is that this new condo (which is larger in square footage, about 12-1300 sqft) can sleep 6 adults, as opposed to 4 adults and 2 children (who would sleep in the bunk beds).
Furthermore, one of the bedrooms has 2 full size beds, so it is spacious.
The balcony is one of the best balconies on the beach and it is much larger than my current balcony.
But, I haven’t told you this best part. Not only is this a corner unit, but it is a penthouse corner unit! I am beyond excited. About 3 years ago, the first condo I was under contract for was a 3 bedroom 2 bathroom penthouse unit but that deal fell through (new construction, took too long, covid-19, etc) and I got my 1 bedroom 2 bathroom unit instead.
Now, I get a full 270-degree view from the balcony (because it’s a corner unit), instead of the typical 180-degree view from non-corner units. And, of course, the master bedroom has a gulf view and separate access to the balcony.
What About The Downsides?
There are some downsides, however. The complex has some but not a lot of amenities. And it is the most expensive of all my other options. Yes, the 3 bedroom 3 bathroom beach condo was less expensive by about $25k. Finally, and not insignificantly, my back-of-the-napkin math calculation suggests that I might be in a negative cash flow situation with this unit! Please don’t ask me why I only do back-of-the-napkin math calculations when purchasing real estate, instead of the more substantial cash flow analysis that real estate professionals suggest! As a reminder, I am not a real estate professional, or financial advisor, so ensure that you get professional advice when making your own investment decisions. Despite the potential for negative cash flow, I didn’t care! It’s my dream condo (for my budget) and I plan to enjoy it for as long as I can! More on this later.
Ultimately though, this complex is in quiet location on the beach but still relatively close to the action. It is rated as the #2 of 71 condos in all of PCB on Tripadvisor. I could go on and on, but I think you get the point!
Why Buy A Beach Condo That May Provide Negative Cash Floor
To put it simply, I’ve changed my perspective on life and money!
Before, I was singularly focused on pursuing wealth. My goal, like many Americans, is to get to the point of financial freedom. I was on that path. Although I took some risk by investing in cryptocurrencies, the majority of my overall portfolio were safely and responsibly invested in stocks, index funds, and real estate. But now, things have changed.
I am no longer focused on building wealth. I truly realize life is short. My health may take a turn for the worse at any moment, and I want to live and enjoy my life as much as I can. I am now trying to figure out what makes me happy. So now, I am in the pursuit of life and of happiness.
For all practical purposes, the condo is my dream condo. I wasn’t planning on getting my dream home until later in life, but as I just said, I am living for today and not for 10 years from now because that might not happen for me.
I joke with my friends telling them I will be declaring bankruptcy in two years because of this condo. But truth be told, a lot will have to go wrong for me to declare bankruptcy. Even if the market crashes 30%, it doesn’t matter to me because I will be holding onto this beach condo for the long-term – probably for as long as I am alive. If it gets too financially difficult to keep the unit, then worst case scenario, I will just sell the condo and take a relatively small loss.
Finally, I’m not an idiot. There is a fair chance that the condo will cash flow positive. Plus, when you consider the tax benefits and appreciation (over the long-term), I think I’ve made a great decision. I had a chance to own a penthouse corner unit in a highly rated complex on the beach, and I took it. Of the two hundred units in that complex, only 2 units can claim the status as a penthouse corner unit – and I will own one of them! I would make that decision over and over again if I had to!
How Does This Affect Dividend Portfolio
I have some bad news to report. I had to sell $10,000 worth of stock in order to cover the earnest deposit I would need for the condo. Plus, there are some other expenses such as paying for an inspection, an appraisal, as well as getting a new smart lock for the unit. The next couple of months are going to be very expensive.
This is my second-time liquidating most of my portfolio. The updated numbers will be reflected in next month’s monthly dividend income report.
Here’s the good news. Once the dust has settled, I plan on re-doubling my efforts to rebuild the portfolio. There is even the small chance that I could just replenish the account in a couple of months (after closing) because I will be cashing out of my retirement accounts to do the deal and may have some cash left over.
If I don’t quickly replenish my dividend portfolio, I anticipate that over the next two years, the portfolio may grow at a very slow pace. But, starting in year three, the pace at which I contribute to the portfolio will be exponential. By the way, this is worst case scenario. My overall living expenses will be very low because I will likely be living with my mom. So, I may be able to replenish my dividend portfolio at a much faster rate.
Moreover, future income sources are not guaranteed at this point, but I should be good for the next 18 months to 3 years. After that, I will re-evaluate.
Finally, let me re-state and recommit to the fact that I am not giving up on the dividend growth investing strategy. In fact, I anticipate I will be doing this for the rest of my life. I love this blog. Even though it’s focused on investing and making money, I do document my thoughts throughout – almost like a diary (almost).
Final Thoughts
I am either making the biggest financial mistake of my life or the best. In fact, I am convinced that I am purchasing this beach condo at the very top of the market. I am not getting a discount on the price, but that’s ok. Making money was not the sole reason I purchased this particular condo. I did it because I plan on using it myself. When it’s not booked, I will go and enjoy it, either by myself or with family and friends.
Now that I will be living with my mom, one of the first things I will do is bring her to see both units. It’s going to be epic. She doesn’t like high floors, but she’ll be fine. I am very happy with this purchase, and that’s the point!
I will show pictures in future updates, so stay tuned.
What did you think of this post? Let me know your thoughts by commenting below.