Ready to buy here now? You’ll need to know how
By Natalie Gutwein
So, many of you reading this are here on Siesta Key for spring break and have just absolutely fallen in love with our beautiful island.
What’s not to love? The lowest average daytime temperature is 71 degrees in January, and the average rainfall from mid-November through mid-May is less than 2.5 inches. It’s warm and barely rains for about half the year.
There’s no state income tax, we have some of the highest-rated schools in the state, you can walk to the beach from almost anywhere on the island, we have two business villages, two grocery stores, so many restaurant choices, live entertainment, my favorite coffee shop on the planet (you can find me at Mojo Risin’ every single day — try it once, you’ll see why), and let’s not forget … Siesta Key is frequently named as one of the most beautiful beaches in the world by various publications.
It’s decided — you’re staying! Well, at the very least, you’re buying an investment property that you can visit at your leisure and rent out when you can’t be here. So now what? What do you need to consider? How do you do this? You’ve saved your entire life, you’re buying your dream vacation home, but you have absolutely no idea where to start.
Let’s just put it out there right off the bat: Everybody knows a Realtor in Florida. According to the Realtor Association of Sarasota and Manatee County, as of Jan. 31 there are 8,767 licensed Realtors in the two-county region. Your brother-in-law’s uncle’s cousin’s first wife twice removed sold two condos in the last three years, but she swears she knows everything she needs to know to help you spend your life savings. Would you go to a surgeon that had only performed two surgeries? I hope not.
In my business, just like the the medical field, who you work with matters. You need to start this process by picking a knowledgeable Realtor. Ask how many properties they’ve sold ON Siesta Key. Not in Sarasota, and certainly not any farther away than that, but on this island specifically. There are so many nuances to selling on this island, so many little things an agent can only learn through experience, and so many good agents that specialize on this island, that there are really only downsides to picking one that doesn’t.
Next question, ask them if they know what the 50% rule is. If you’re purchasing a single-family home, you’ll want someone that is well-versed. There is so much to know about this subject that I dedicated to it my entire March 2023 column. The Cliff Notes version: If a home is built in a flood zone (of which all of Siesta Key is) you can only perform renovations up to 50% of the appraised value of the improvements (NOT the land value), if the home is below base-flood elevation. Base-flood elevation is determined by FEMA flood maps and varies across the island. For example, if the value of the improvements is $200,000, you may spend $100,000 on renovating the home. There’s a lot more to it, which is why knowledge of this subject is so important.
Secondly, make sure your agent understands the financing options for condominiums in a resort area. Most traditional financing is NOT available for the majority of the units on Siesta Key. The properties are considered “condo-tels” (condo-hotel) and/or non-warrantable condos, and you’ll need a lending institution that loans on a private portfolio that doesn’t get sold to Fannie Mae or Freddie Mac. Those institutions will not buy loans in condo-tels or those that are considered non-warrantable.
You’ll also need to consider how you plan on using the unit and examine the rental restrictions at each complex or subdivision. Will you primarily be staying in the unit yourself or is this something you’ll get to a few weeks a year and rent it out the rest? The restrictions are governed by both county zoning and homeowners associations. The variations range from nightly rentals, three-day minimums, weekly, two weeks, monthly, all the way to some that only allow annuals.
On top of those restrictions, there could be additional restrictions on the number of rentals you can have per year — especially in single-family homes. For example, one of the neighborhoods on the island allows rentals with a 30-day minimum, but you are restricted to two rentals a year. Investors tend to stray away from those neighborhoods, but if you’re looking for a home for your primary residence, that’s the neighborhood you should look at as you won’t have an Airbnb next to you.
Additionally, if you’re looking for investment potential, the homes on the north end of the island (technically Bay Island up to Garden Lane) are in the city of Sarasota. That area is zoned with an eight-day rental minimum. Owners are able to rent those homes out more frequently than the homes with a 30-day minimum, and are therefore more attractive to investors. The value on those homes is slightly higher due to the income potential.
These are just a few of the considerations you should have in mind when you’re purchasing a property here on Siesta Key. I could go on and on, but these tips should help you get started. As I said before, find an experienced agent that specializes on Siesta Key. The upside far outweighs any possible downside. Besides, there are many of us from which to choose.
You stay sunny, Siesta!
(Natalie Gutwein, a Siesta Key resident, is a licensed Realtor with Sotheby’s International Realty’s Judie Berger Team and is also a member of the board of directors of the Siesta Key Association civic group.)