There are approximately 12,000 condominium units in the Gulf Shores, Orange Beach, Perdido Key and Fort Morgan areas. Prices range from as low as $60,000 to well over $1,000,000. These numbers are growing daily. This diversity provides you, the buyer, with many choices. Condominiums have traditionally been an outstanding investment experiencing appreciation in value. Rental units offer the added opportunity of accounting depreciation for income tax purposes.

Buying condos on the Gulf coast has been very popular for individuals and investors for several years. My recommendation to anyone purchasing a condo is to look at it in a similar manner as if you were purchasing a home. Buy in the best location you can afford. If you purchase desirable property, you will own property that others will want to own also. Property with lots of desire for ownership increases or appreciates in value more than property that isn't as desirable.

Buying a condo should not be considered a short-term investment. You should plan on keeping your condo a minimum of 3 to 5 years, unless you buy and sell preconstruction units for profit. Buying a condo can be compared to buying a mutual fund. You buy mutual funds for their appreciation, not necessarily their dividend. The biggest benefit condo ownership offers is the quality of life you and your family receive from owning one. In contrast, have you ever tired to stay at your mutual fund?

Investors purchase condos partly for tax benefits. Individuals purchase condos for personal use for their family, clients and friends to use. The tax benefits will include deductions for expenses incurred while owning a condo unit, interest deductions if there is a mortgage, property taxes plus depreciation of the unit. (Always consult with your accountant for your personal tax situation). I recommend a minimum of a 20% down payment if possible. When the purchaser puts down 20%, there is no private mortgage insurance expense. As a general rule, once a purchaser has put down 20%, the rental income received plus the tax benefits from interest deductions and depreciation, will often allow the 'numbers to work'. This way someone else is essentially buying your condo for you. Hold the unit as long as possible for the maximum appreciation benefits.

I can assist you in developing a rental pro-forma. A pro-forma will show you the average rental history for the unit you are considering less the expense for rental fees, taxes, insurance, condo fees, utilities, telephone, etc. Unfortunately, the pro-forma will not take into account the main reasons for condominium ownership which are include an improved quality of life, pride of ownership, and the appreciation in value.

Condo ownership can be a lot of fun. Coming to the beach to check on your investment is certainly not the worst thing that one has to do in life. I know of several individuals who currently own 5 or more condos. People buy condos because they want to and not because they have to!

Here are some considerations based on my observations after living and selling real estate here.

First: Start with a PLAN!

Have an objective/purpose

My advice is to start by thinking through your purpose and objectives before making any decisions. Are you buying for your personal use only, as a second home, as a rental property, as a vacation home or maybe you are not sure? Defining the purpose of your purchase is important. You do not want to make a mistake initially. How you choose to use your unit will greatly impact the way you finance the purchase. How you finance and how you use the property will greatly influence your IRS tax position as well as your property taxes. You may want to consult your tax advisor prior to looking at properties for a general overview of your tax situation. It