Community Banks Lending Despite Credit Crunch

As regional and national banks eagerly rush to accept government bailout loans in the face of frozen credit markets, local community banks are quickly becoming the go-to source for mortgage loans in Florida. Despite tighter underwriting guidelines from Freddie Mac and Fannie Mae and a secondary mortgage market with little appetite for Florida real estate, local community banks are still stepping in with loans designed to accommodate the local real estate market. These local banks have studied the specific needs of our local market and are offering loans tailored to the unique needs of Bay and surrounding counties.

One example is Panama City Beach. On the beach, the vast majority of properties listed for sale are condominiums which sprouted up all along the coast in the boom years of the first half of the decade. The flurry of condo development was due, in part, to the easy flow of credit and lax underwriting and property standards so prevalent at the time. Now, as investors paint all of Florida with the same broad brush, Beach condos are left with the same stigma as South Florida and labeled as “condo-tels” – a name coined by Fannie Mae and Freddie Mac to describe a hybrid between a condo and a hotel with resort-like facilities and daily rental desks. Though Fannie and Freddie didn’t seem to draw a distinction between condos and condo-tels in the past, they certainly do now. Financing for these properties has all but evaporated leaving many prospective second-home buyers with no options. Enter the community bank.

With deep roots all along the Florida Panhandle and in their respective markets, community banks understand our unique market and have a vested interest in its success. One such local community bank is Vision Bank. With a sincere belief in the viability of the Beach condo market, Vision Bank is lending its own money by developing portfolio products designed to provide affordable options for the local real estate market and the out of state second-home buyers so crucial to its resurgence. Vision Bank, while adhering to sound lending practices and diligent underwriting, is offering bank-held, fully amortizing mortgage products with no pre-payment penalties and no hidden fees designed specifically for the condo-tel market. Vision knows this market and knows that more condo sales will help stabilize prices and draw even more potential buyers back to the Beach and all of Bay County. That is the essence of a community bank – investing back in the community.

For this and more, visit my blog at www.activerain.com/blogs/hpalmer

Hunter Palmer

Auction at Towne of Seahaven

On December 13th, 2008 an auction will be held on site at Origin, at the Towne of Seahaven.

They will sell 29 condos with over 60 to choose from, including 2, 3, and 4 bedroom options. It is being advertised as no minimums and no reserves with the auction to begin at 11 am CST.

Registered bidders will be expected to bring a deposit (listed below) and pay a 10% buyers premium on top of the final auction price they purchased at.

Deposit amounts:

Studio: $7,500

1 Bedroom: $10,000

2 Bedroom: $12,500

3 Bedroom: $15,000

4 Bedroom: $20,000

More Information

Shores of Panama Selling at Near Auction Prices

In an effort to drop inventory levels, The Shores of Panama Condominiums in Panama City Beach are selling brand new condos at like-auction prices.

Just to save you some time scrolling (since that is inevitably what you will do first to find the price), I’ll just give you the price up front: $253 per square foot, on average. Now, let me tell you about why I think this is a great deal.

If you haven’t been to Shores of Panama, you really have to check it out to appreciate it. Short of going to Edgewater or Boardwalk, it really is one of the few ‘true’ resorts in Panama City Beach. Featuring resort amenities such as 2 full service spas with massages, facials, steam rooms, and saunas, two tiki bars serving lunch and dinner, conference areas, a 14,000 square foot pool, indoor heated pool, and tons more.

The sense of arrival is spectacular as you pull into the covered grand portacache. The scene includes elegant fountains and a quaint cafe with the entrance being accessed through oversized solid doors. The colors are warm and the mood relaxing.

As you walk into the large lobby, you have a view directly onto the lushly landscaped pool area and out into the emerald green Gulf of Mexico. The lobby is finished off with huge chandeliers and large-tile floors. The granite counter tops are large and majestic, and the furnishings look and feel expensive.

This expensive look and feel isn’t just skin deep, either. The entire709 condominium building was constructed using concrete tunnel form, firmly planting the entire structure on the beach. With an all concrete structure, residents can stay, and own with the peace of mind that their property is safe.

As you walk out into the pool area, you are greeted with palm trees and other native plants to this area. The 14,000 square foot pool weaves in and out of the various nooks and crannies that give this huge pool character. Flowing under two bridges, the pool gives the swimmer constant views of the Gulf of Mexico and is serviced by two tiki bars.

The 2 full service spas, separated for men and for women, provide massages, facials, steam rooms and saunas and are available to guests and residents. There is a spa located on each side of the U-shaped building. The fitness center features high-end Life Fitness brand cardio equipment, fitted with individual flat panel TV’s.

The large indoor heated pool and hot tub offers residents and guests an opportunity to enjoy a swim regardless of the weather.

With 3 elevator systems, you never have to walk too far to get up to your floor.

Centrally located in Panama City Beach, Pier Park, restaurants, Wal-Mart, and pretty much everything else you’d want while you were on vacation are just a few short minutes away.

Ok, so we’ve established that the Shores of Panama is a true resort, but lets talk numbers.

Recently, beachfront condos have sold for around $200/sq ft at auction.
The price here is $253 per square foot, but you get so much more. I walked around some of the other condos that have sold at auction, and they simply just don’t compare to the package you get at the Shores of Panama. Others that have recently sold, really are just a building with a pool.

As far as rentals, the pros at Oaseas Resorts have you covered. Last season, 65% of the guests who visited the property re-booked for next year. With an Oaseas Resorts office on site, getting in touch with them should be no problem.

For more information:

866-912-6375
info@resortvest.com
www.resortvest.com

Fed Lowers a Half Point – I Have a Better Idea

The Federal Reserve’s Open market Committee announced Wednesday it was lowering the federal funds rate to 1%, it’s lowest level since 2004. Yet mortgage rates rose on the news and continue to rise today. Though, on the surface, this may seem contradictory it exposes a symptom of the larger financial crisis we face. Since seizing Fannie Mae and Freddie Mac and passing the bailout plan, the Federal government has committed hundreds of billions of dollars in an attempt to thaw frozen credit markets and get the economy back on track. Unfortunately, all of that money is essentially borrowed.

Now the Feds are forced to sell billions in government bonds to fund their various bailouts and bank rescues flooding the market with an oversupply and thus driving down bond prices and driving up rates. This has a ripple effect throughout the capital and debt markets and increases the cost of borrowing for Fannie and Freddie. The higher borrowing costs are reflected in higher mortgage rates for consumers.

The bigger problem facing the Federal Reserve is that higher mortgage rates will have the effect of further weakening demand in the housing market. This will further amplify what is at the heart of this whole mess – declining home prices. As mortgage rates rise and home prices decline further, the rate of foreclosure is sure to rise putting even greater strain on banks and credit markets as well as Fannie Mae and Freddie Mac as the value of their assets depreciate and their ability to raise capital becomes more tenuous. To stop this vicious cycle the Fed and the Treasury must find a way to halt, and eventually reverse, the decline in home prices rather than continuing to merely react to each emergency caused by it. So how could they do it?

There have been a lot of proposals floated in recent weeks that aim to shore up the housing market, stop home price decline and prevent foreclosure. Some of these sound bizarre but viewed in the context of this historic financial crisis I’m willing to entertain anything.

One suggestion has been for Fannie and Freddie as well as banks taking part in the government bailout to offer mortgagors the option of a sixty year amortization. This would dramatically lower payments while not reducing the principal owed and provide an incentive to lenders in the form of greater interest income. Others say to allow everyone to refinance to some set fixed rate such as 5.25% that would provide payment stability and offer most borrowers some relief in the form of lower payments.

Still others have called for an outright principal reduction to lower mortgage balances to a point where borrower’s are no longer upside down in their homes. All of these ideas may have some merit but, in my opinion still do not address the root of the problem. We must create demand in the housing market so home prices will stabilize. How might that be done?

With thirty year mortgage rates creeping upward towards 7% for many borrowers, it is time the Feds start using some of the bailout money to back a program that would allow for a dramatically lower interest rate for all home-buyers coupled with a federally backed mortgage insurance plan to allow for lower down payments and longer amortizations. The lower rate, say 5.00% fixed for 40 years, along with a required down payment of 5% offset by a federal mortgage insurance premium of .75% annually but paid monthly would surely bring reluctant buyers back into the market. The increased demand for housing would drive up prices thus creating a win-win for the government in that the value of the bank stocks they now own would rise along with the portfolios of Fannie Mae and Freddie Mac’s mortgage backed securities. Banks, not wanting to miss out, would begin lending again and the resulting competition would increase liquidity in the credit markets and benefit the economy as a whole and reduce the number of foreclosures.

This plan would not be a reward for bad behavior, would not punish homeowners who have paid their mortgages on time and could be easily implemented through the FHA, Fannie Mae and Freddie Mac. Yes, it would be expensive in the short-run. But given the impotent attempts by the Feds to stop this snowballing housing crisis by hoping banks will lend again by throwing more at them are obviously not working. We need a better idea.

For this and more, visit my blog at www.activerain.com/blogs/hpalmer

Hunter Palmer

Bank Says Laketown Wharf will be 'taken care of'

One of the Corus Bank investors sent me an email with the Quarter 3 report of Corus Bank that has a paragraph that briefly speaks into their Laketown Wharf holding. The paragraph gives some indication as to their plans of the building in the near future.

The remaining component of nonperforming assets is OREO, which consists of three properties as of September 30, 2008. The largest is a condominium project located in Panama City, Florida, which Corus took possession of in September 2008. At the time Corus took possession, the outstanding loan balance of $96.5 million was transferred to OREO on the balance sheet. Prior to the transfer, Corus recorded a charge-off of $30.2 million. While certificates of occupancy have been received for the entire project and over 60 units have been sold, management estimates that an additional $10 million will be necessary to complete all work on the building. The Bank also intends to pay an additional $5 million to furnish approximately half of the unsold units and make them available for rent. The ultimate goal, however, is to sell all of the individual units.

I found this extremely interesting, and actually quite encouraging. Not that a huge bank would ever let a holding this large “go to the birds”, I’ve seen stranger. It is very important to the image of Panama City Beach that Laketown Wharf maintains a good image and that something does indeed happen with this property, whether the remaining condos are sold for whatever they can be sold for, or rented.

Talking to a friend today, I was told that Laketown Wharf has no formal agreement with anyone for beach access. I hope that Corus can negotiate a permanent solution for the guest, tenants and owners to have access to the beach.

The rest of the report provides interesting insight into how a large bank is handling the current economic condition of our great country.

The report seems to indicate the banks willingness to finish the job and do what it takes to move forward. A property they took possession of in California, they will be funding, finishing, marketing, and selling.

Condo Market after Ocean Reef Condo Auction

The Ocean Reef auction on October 18, 2008 concluded with a reported 35 sales. Sounds good but they still have over 140 unsold units in their inventory. The 2BR/2Ba units sold for $225,500, including the auction fee, which is about 20% less than recent sales of very similar Emerald Isle 2BR/2Ba units. This tells us that there are a few buyers out there willing to buy at a 20% discount. The Palazzo auction in August told us there were a few buyers out there willing to buy at a 10% discount. The question is whether buyers will demand more than a 20% discount at the next auction.

We reported in July that there were over 1,300 unsold, high-quality developer units in beach-side buildings in Panama City Beach. The Palazzo auction sold 50 units in August, the Ocean Reef auction sold 35 units in October, and Sterling Breeze closed 30 units in-house since July. That still leaves around 1,200 unsold developer units that need to be sold. 1,200 unsold developer units most likely means more auctions and lower prices.

The local condo market continues to trend downward. The chart later in this post indicates that sale prices as of October 2008 are down 15% compared to October 2007. New lows are set almost every month in high quality beach-side buildings. There are numerous examples of list prices that are below the lowest reported sale price of a particular model unit. Foreclosure proceedings in high quality beach-side buildings have accelerated in every quarter over the past year. The number of monthly, arms-length, market-rate sales from the 70 buildings within our database continues to decline. The market dynamics at play in our local market and just the market inertia will most likely drag prices lower.

Is there any good news here? If your basis for news is the year 2005, then market values have declined 50% and the world is coming to an end. However, if your basis is the year 2002 then story is more upbeat. Let’s look at the 744 square foot, 1BR/1Ba units in Long Beach Towers. These units were selling in 2002 for around $175,000. Currently, they are selling in the $215,000 range for a 23% increase since 2002. The rate of inflation in constant dollars over the same period was 21%. Not bad when you consider any other long lived item (vehicles, equipment, etc) you purchase almost always depreciates over time.

It is unreasonable to assume that residential property will always increase in value at a rate higher than the inflation rate. If you extend price increases at a 2% to 3% rate above the inflation rate over a 30 year period, people will be spending more than 75% of their income on a place to live. That is not a sustainable scenario.

Is this a good time to buy? If price is your main consideration, the operative question becomes “is it a good time to buy today relative to what point in time”. Certainly, today is a better time to buy than six months ago. But is it a better time to buy today than six months from now? The answer you will get depends on the agenda of whom you ask. Speculation in this kind of market is not for the faint of heart.

The following is an update of our usual, no spin data from http://www.condosaletrends.com which we hope will help you in your investment decisions. As always, if you lie to yourself about things concerning money, you lose.

We recently updated our Panama City Beach condo sales data through mid October 2008. The graph below illustrates the number of monthly re-sales from the 70 Panama City Beach condo buildings in our database. The 2008 monthly re-sales since July appear to be trending lower than past years.

The market trend line is illustrated below. It is structured to show a sale price trend measured in terms of the percentage sale price as of a particular date. The starting date used was May 1, 2007 so we could show the price trend for the preceding 19 months. We chose units from a variety of buildings of different ages and sizes that had a sufficient number of sales as to be statistically significant. The units used in the analysis were:

Boardwalk Beach; Opened in 2005; 1,380 SF; 2BR/2Ba
Calypso; Opened in 2006; 1,226 SF; 2BR/2Ba
Celadon; Opened in 2004; 846 SF; 1BR/2Ba
Grandview; Opened in 2005; 1,492 SF; 3BR/2Ba
Gulf Crest; Opened in 2003; 1,388 SF; 2BR/2Ba
Emerald Isle; Opened in 2005; 1,146 SF; 2BR/2Ba
Treasure Island; Opened in 2005; 1,370 SF; 2BR/2Ba
The Summit; Opened in 1983; 912 SF; 1BR/1.5Ba
Regency Towers; Opened in 1975; 1,114 SF; 2BR/2Ba
Sterling Reef; Opened in 2005; 1,076 SF; 2BR/2Ba
Splash: Opened in 2006; 1,074 SF; 2BR/2Ba
Seychelles; Opened in 2006; 883SF; 1BR/2Ba

The May 1, 2007 market value for each type of unit was determined by analyzing sales data from January 1, 2007 to June 19, 2007. The sale price of each type of unit is only compared to the typical sale price of that particular type of unit as of May 1, 2007. In other words, a unit type with a May 1, 2007 market value of $400,000 is represented as 1 or 100%. An October 2007, $380,000 sale of that type of unit is depicted as .95 or 95% of the May 1, 2007 sale price. The sale prices and sale dates were charted with a price trend line for each type of unit. The chart contained in the price trend analysis is a trend line of the trend lines of the sale prices of each type of unit from the 12 buildings. Foreclosure sale prices that were unrealistically low were not included. There were 177 sales used in the chart. The analysis does not try to skew the price trend in any direction. The data is just the data.

The data indicates that the rate of price decline has been mostly steady over the past 19 months. Compared to October 2007, it appears that typical prices have declined approximately 15% over the past 12 months. Price stabilization is not indicated.

Sam Portman
www.condosaletrends.com

Buy Now! – But Why?

The real estate market is in the toilet. Or is it? I mean, everything is relative. Everything is subject to interpretation. Right?

Sure, the real estate market is in the toilet. . . for sellers. But for buyers, the real estate market is hotter than a nanny goat in a pepper patch. (nice cliche, huh?)

In every type category, there is a surplus in supply. In Panama City Beach alone, there are 537 lots, 770 single family homes, and 1570 condos active for sale on the Bay County MLS. In many cases prices are half now what they were just 12 months ago.

Velocity is down. In any given category, we have several years of inventory given the current rate of sales. The growing trend of using auctions to dump inventory in indicative of developers realizing that their inventory needs to be liquidated – sometimes, at all costs.

Foreclosures are up. They are higher now than they have ever been, and that’s the same story we’ve been hearing, over and over. In fact, foreclosures this year have been higher year-over-year, each month of 2008.

Negative Nancy, you say? Well, hold the phone, bubba.

This is all to emphasize a point. Right now, it is a buyer’s market. Period.

Now is the time that all the savvy real estate investors have been dreaming of – a time when people are scared to turn down offers in fear of not seeing another one, a time when sellers will pay all closing costs and offer zaney incentives to attract buyers. Now is the time when the buyers get THEIR pick and have an opportunity to actually CASHFLOW a property.

Three years ago, all the smart investors had already left the market, they had taken their winnings and tucked it away. They were waiting for a time like right now to pull that wad back out and throw it at something else. I was talking to an agent buddy of mine the other day and was told that 6 out of the last 8 buyers they closed were cash buyers. Now is the time to buy. Cash is king, but mortgage money is easy to get to also, as long as you can fully qualify. Another buddy of mine financed a second home, 20% down on a 30 year fixed at 6%. Not too shabby.

If you can buy right now, you should be shopping. Real estate is always a long term hold, and there will be tremendous upside to those purchasing property now.

On to the fun part.

Panama City Beach’s 10 Best Deals.

Regency Towers Unit 525 – 3 bedroom, 2 bath 1,456 square feet, priced at $237,500. That’s $163 per square foot! Everything seems to be in order with this condo, and sounds like a real steal. The agent is Diane McKay, and her number is 850-596-1378. She works with Coldwell Banker/Carroll Realty. If you don’t know about Regency Towers, they’ve been working very hard to give the whole place a new face. The place is looking real good.
Long Beach Towers Unit 1-806 – 3 bedroom, 3 bath, 1,800 square feet priced at $365,900. That is $203 a square foot, wow! This is a bank sale, but could be a real deal. Long Beach is a great complex with a few great pools. Each condo is designed to have maximum beach frontage. This complex is relatively new, built 10 years ago. Also, I can’t forget to mention that this is a lock-off – two rentable units in one! Definite cashflow opportunity. The agent is Patrick Finn with Finn Realty. His digits are 850-368-6700.
302 Carolyn Ave, in Woodlawn. This is a steal at $136,900. With 1,692 square feet, this comes up to $80 a foot! 3 bedroom 2 bath built in 1958. Everything seems to be in ok shape. The agent is Diane McKay (she got two on the list!), her number is 850-596-1378.
Nautilus Cove Unit#?? Not sure of which unit exactly, maybe all of them? This is a four bedroom 3 bath going for $154,900. These are new, just built last year and never been lived in. At 1,492 square feet, that comes up to $103 a foot. They have a fitness center, pool, walking paths, and a closed security gate. They all come with granite counter tops, stainless steel appliances and ok carpet. You can’t go wrong with the price. The agent is Ronald Lucarz with Pelican. His number is 850-582-5159.
Sterling Reef Condominiums Unit 1505. This is a 2 bedroom 2 bath 1,076 square foot priced at $249,000. That comes up to $231 a square foot. Not too shabby considering how nice these are. The west view from this building is unsurpassed as it is contiguous with over 1,700 feet of dedicated beach that will remain undeveloped. This is a steal. The agent is Karen Ward with Realjoy Properties, and her number is 850-424-3094.
1101 Sawgrass Court #201 in Wild Heron priced at $295,000. 2 bedroom, 2 bath, 1,300 square feet. All I have to say is $226.75/square foot in Wild Heron on Lake Powell. You couldn’t touch one of these for more than twice this a few years ago. I have been in these condos, and they are super nice. The agent is Karen Smith with Beachy Beach Real Estate, her number is 850-527-5651.
121 Manistee Drive on the West End. 4 bedrooms, 2.5 bathrooms, 2,268 square feet priced at $159,900. That’s right, $70 bux a square foot. Built in 1984, this is a true country log cabin fit with a huge porch, beautiful exposed beams, a shed in the back and a good sized lot (wide at 75 feet). It needs a little work, but at $70 a foot, who cares? The agent is Gabriel Stephani with Beachy Beach Real Estate, and his number is 850-814-4640.
409 Liverpool Ave in Tapestry Park. This is a 43×125 foot lot in one of the coolest (I think THE coolest) neighborhoods in Panama City Beach. The architectural style and pedistrian-centered neighborhood layout makes this community a, well, real community. This lot is listed for $55,000. You heard me, $55K. That is half what they were going for a year ago. The agent is Craig Duran with Pelican, and his number is 850-527-0221.
Moondrifter Condo #805. Priced at $199,000, this is a 2 bedroom, 2 bath 1,050 square foot GULF FRONT condo. Dude, a Gulf Front Condo under $200k! Plus, this is priced nearly $80,000 less than the other two that are listed. The agent is Amanda Corbin with Prudential Shimmering Sands, and her number is 850-832-7447.
Last but not least, the least expensive home in the Glades is a 3 bedroom 2 bath 1,747 square foot home priced at $269,000. That comes up to $153/foot. This home was built in 1996 and features a two car garage. With a screened in pool and new paint inside and out, this home is advertised as “move-in ready.” The agent is Carrie Routt with Keller Williams, and her number is 850-867-5309.

Sorry guys, no pictures. This project was a little more exhausting than I wanted it to be, and I had to get it out.

Where we are in the current real estate cycle

MarketWatch.com published a great article speaking into why now may be a good time to buy real estate.

The bottom of the market is not a date, but a band of time or season,” Shore says, and therefore what constitutes the bottom for the entire country is meaningless for those looking to buy and sell homes in their own communities. “If you sit on the fence and wait for the absolute best deal, you could end up literally waiting for years. And most likely, your guess on market timing would be wrong. But if you choose to buy now, you will not only be in the driver’s seat during the buying process, you will also reap the gains of price appreciation once you become a home owner,” adds Shore.

Waiting for the right time to buy puts you at risk of missing it and getting caught in a market on the upswing. Plus, for some first-time buyers, owning simply makes better economic sense than renting. In such areas as Los Angeles, rents are getting close or surpassing a mortgage payment. And you don’t receive any tax benefits from paying rent, nor do you accumulate any price appreciation, as you would if you owned a home of your own.

Continue Reading >> >>

35 Condos Sold at Ocean Reef Auction

Expectations were high, and so was the attendance. After the wildly successful Palazzo auction, many came interested in seeing “where the market was”, and many more came to have an opportunity at getting a good deal. At the end, many agreed that the market was at the bottom and that prices wouldn’t come down much more, if any, from this number. On the other hand, many more still agreed that the market still has some room for correction.

There was an estimated 400 in attendance with 126 registered bidders from 17 states and 2 countries. When asked at the beginning who was from Panama City Beach, few raised their hands indicating this type of selling forum definitely attracts out-of-towners.

“I was wanting to move back to the states in 2006, but the prices were way too high, this may be my chance to come back, ” said Jerry from the Dominican Republic before the auction hoping to get a good deal.

“I’m hoping to get in at around $140,000 to $150,000 on a two bedroom,” said one local agent, who was also a registered bidder, “I won’t go much higher than $150,000.”

Before the auction began, the energy was great. There were people everywhere with not one empty seat and many people standing anywhere they could find an unoccupied piece of concrete. Bidder packets were being shuffled, pads were being prepared for note taking, and calculators were at the ready.

“You have to factor in the 10% buyers premium in all price per square foot calculations,” said one bidder, “the final auction price, is not the final sold price.”

The auction started with the 4 bedroom configuration on the block at an ambitious $500,000 that was quickly corrected to $300,000. The first bid came in at $310,000. The first 4 bedroom condo sold for $340,000, $374,000 after the buyer’s premium, or $233.75 per square foot.

“That number has got to come down, there’s no way all of them will sell at that price,” said the guy sitting next to me.

The very next condo was started at $310,000. After no bids, a member in the audience yelled “$305,000.” Two minutes later, the feeding frenzy started. $305,000 was the magic number, with 8 four-bedroom 1,600 square foot condos selling at that price. After the 10% buyer’s premium, the final price was $335,500, or $209.69 per square foot.

The two bedroom, 1,146 square foot condos were next. Talking around, this was the most desirable size. The majority of the buyers were price-point buyers, wanting to get in for as little as possible.

The two bedroom auction started at $300,000, was brought down to $225,000, then $210,000, then $205,000 – SOLD! The magic number for the two bedroom configuration was $205,000, $225,500 after the buyer’s premium or $196.77 per square foot. 16 two bedroom condos were sold for $205,000.

Including the pre-sold condos, all-in-all, 35 condos were sold generating an estimated $8.839 million. Initially, the developer offered 31 condos for sale.

After the price was set at $205,000 for the two bedroom, the auctioneers said the developer wouldn’t sell for less than that. At this announcement, approximately half the audience rose from their seat to exit. The line for those wanting their deposit checks back crossed the entire length of the pavement. Many were disappointed that not all of the condos were sold like a true auction, many didn’t want to pay more than their targeted $140k-$150k price range, and still others understood, but were still looking for a sweeter deal.

The real question here is whether we are at bottom. The sold price at Ocean Reef was less than Palazzo, but many agreed that Palazzo was nicer and justified the higher price.

One thing is for sure, if you are a developer and you want to dump some condos, auction seems to be a good choice. “Panama City has turned out to be an incredible market for condos. This clearly demonstrates the pent-up demand and shows that there’s no reason for condo developers to sit on unsold inventory when they can be sold efficiently and quickly by auction,” said William Bone, President of National Auction Group.

How to rent your vacation home…without losing your mind

As vacation rental property owners, we have gradually learned the importance of mixing exceptional hospitality with a good measure of common sense. It is generally the goal of any vacation rental owner to provide their guests with comfort, affordability and a place of respite. Isn’t that what we all need from time to time? My aim in this article is to provide new or struggling property owners with suggestions on what floats the boats of potential guests.

When my husband and I first entered into this business, we were what you’d call rental property virgins. Oh yeah, we’d rented vacation homes or condos from the Bahamas to Maui, but we had nothing to prepare us for this new journey. Our curriculum was hours of Internet research and “Googling”.

Our quest began with a visit to Panama City Beach, where we stayed at some relatives’ home, about three blocks from the beach. For months before our trip to Florida, I began to contact several real estate agents. Not an easy task when you’re doing it from your home in the Midwest. But we muddled through. This California native was beach-starved and I wasn’t going to let 800+ miles stand in my way of the beach dream. Then we narrowed our real estate agent list down to one we enjoyed working with. We also printed out listings and photos, and trimmed down our shopping list of homes.

Location, location, location! Although we desired an actual single family dwelling on the beach, our budget limited our search to beachfront condos. So letting our agents know our price range, this helped narrow our search considerably. To make a long story short, hours of condo shopping resulted in finding our dream condo. We now owned a ground floor, beachfront condo on the quiet west end of Panama City Beach. I prefer a view closer to the ground as I’m agoraphobic (fear of heights) and I hate using an elevator. I have no aversion to using stairs, but I already use them at home. So I figured why not provide my older guests and those with young children with nosebleed-free accommodations. Nothing beats stepping right onto the sand from your patio. I thought I’d died and gone to heaven. We returned a month later to close on our property, refurnished, and enjoy our first week as condo owners. That was the easy part!

We always knew we’d eventually run the business without the help of an agency, but we needed some guidance to get our feet wet (no pun intended). For the first couple of months, we used a rental agency while we figured out what we were doing. We knew we’d need to secure reliable housekeepers, obtain vacation rental web sites to list our property, and work our property into a successful business. Well, at least try to get it to pay its own bills. When we were ready, we learned that it was actually easier, for us. I won’t claim it’s easier for everyone. But since we only own one condo, it was a no-brainer.

I cannot stress enough how important record keeping is in this business. You must record every transaction relating to your business. Every loss, gain and receipt must be meticulously recorded…right down to the housekeeper fees, bed tax collected, and heaven forbid, stolen towels! By the way, we’ve only had spices removed! So find yourself a good spreadsheet template. Also, keep good records of your correspondence and emails with your guests, inquiries, housekeeping and maintenance staff. You are more likely to enjoy repeat guests if clear and friendly conversations exist between you.

I have made it a habit to contact my inquirers immediately (within that day). They are usually impressed that I took the time to get back to them. Some never get back to me even after I take the time to call or email them. But I figure, hey, it’s their loss! By the way, every email I receive from potential guests, whether they rent or not, get filed. I try to reconnect with them for the following season, or when I run specials. Never underestimate what an invitation to bookmark your listing site for future rentals can do for your business. Repeat guests can eventually become your bread and butter. This year we’ve enjoyed about 90 percent occupancy. There are other factors to contribute to this phenomenon.

Provide your guests with all the creature comforts. Upgrade your cable programming to HD and furnish the nicest high def television you can afford. Prices have really dropped as resolution and contrast ratio have risen. For the living room, a 40” to 52” LCD does nicely. However, be sure to put locks on pay-per-view. Also, it would behoove you to have a smaller HD LCD in the bedroom, instead of a bulky tube TV. The LCDs run cooler and do not attract as much dust. Also, provide DVD players in the living room as well as the master bedroom. If you have extra DVDs lying around, stock a few for your guests. Provide movies for younger guests. Mark them clearly and keep an inventory.

For the basic price of combining local phone service with DSL, the rewards are obvious. I’ve rarely had guests that didn’t need it or use it. Many ask for it and prospects just may choose your rental over another that doesn’t provide Internet service.

I cannot stress enough how important a good housekeeper is. Find one that has a spotless reputation, great references, flexible, has great attention to detail. Your housekeeper deserves to have good communication with you, for schedules, expectations, prompt payment and a good working relationship. She/he can make or break your business. Keep them happy and everyone wins.

Keep your rental like you would your home. Not only will it feel more like home for your guests, they will tend to respect it more. Provide plenty of linens and first-day amenities such as little soaps, TP, tea, spices, etc., will remind them they are not in a mere hotel. Little touches like bedtime mints, champagne for newlyweds, even a couple of loads of dishwasher soap will make them yearn to return.

A comfortable bed that they don’t want to get out of is sure to bring your guests back. Don’t scrimp on comfort here. A sturdy mattress will last years longer than one from a discount store. Do provide moisture-proof anti-microbial pillow and mattress covers. Let your guests know this, as it will ensure them that you have their health and comfort at the top of your list.

Keep your appliances updated and good working order. If you buy new, get extended warranties. I guarantee it will be worth it, and it’s tax deductible. Provide your guests with tips and information on how to use them. High efficiency front loading washers use only HE (low sudsing) detergent. Remind them to keep the lint traps clean on your dryer. Provide coffee filters! They are cheap, and even if you don’t provide coffee (which can go stale anyway), your guests will appreciate not having to buy filters.

It’s nice to keep a broom and dustpans, bagless vacuum and some cleaning supplies available for your guests to use. Some may never use them; after all, they are on vacation! But then you may have guests like myself, A-types that can stand to see dust or sand on the floor. My housekeepers are always delighted to walk into a recently vacated unit that was sparkling clean. It can happen!

When the deal is closed and your guests have only weeks until they arrive, be sure to send them receipts for payment, email to print out of what you expect of them, how to check in and out, how to get keys, times, phone numbers and anything else that will make their arrival and departure as smooth as silk. Encourage your guests to sign a guestbook. Others will enjoy reading pages of kudos and you can write their entries into the much-forgotten online guestbook!

Every January, I create a letter to email all my contacts, whether they actually stayed or just inquired. Then I write them and invite them to check our web sites to start planning their next vacation. I remind them to book early, especially for peak times like March through the end of September. Guests that you expect to return will appreciate the reminder. If you prefer not to rent to college age guests, and we strictly avoid this, do be cordial and diplomatic when emailing them back. Firmly remind them of your policy but don’t burn the bridge. Let them know to share your link with their parents, should they be shopping around for great accommodations. A little diplomacy may lead to a booking you didn’t expect.

Lastly, I’d encourage rental owners to remember what it is like to be on the other side of the door. Treat your guests as you would like to be treated. Do for them what you can afford, try to break even, and try to enjoy your vacation home yourself when you can. We’ve developed some great relationships with our renters. The dividends will be great new friendships and happy memories for all. Have fun with it and many happy returns!