In November 2012 I reported on the sale of several Key West guesthouses which included the Coconut Grove Guesthouse, Oasis Resort, Coral Tree Inn, and Seascape Inn. The Oasis and Coconut Grove guest houses sold for $7,200,000 or $200,000 per room for the 36 room guest house complex.
The Sea Shell Motel and International Youth Hostel (below) located at 716-718 South Street has 17 transient licensed rooms and sold in October 2013 for $2,900,000.
The primary reason I decided to move to Key West to buy and operate a guesthouse. One of the places I looked at but did not buy was called Big Ruby's that was located on Appleroth Lane not quite one block west of Duval Street. I saw the building when it was empty and nearly abandoned. It was offered at $500,000. The building had a definite sway to one side. I feared the cost of renovation and repair which ended any further consideration of the property. I was short sighted and learned that what you see is not what you get. (It works the other way as well: things that seem to be in god repair may not be.) Somebody else purchased Big Ruby's. It was renovated, a new building was added, and two buildings on Whitehead Street acquired to expand the property into a complex with 38 licensed guest rooms. Big Ruby's sold in July 2013 for $7,200,000.
Last week the world famous La Te Da was sold for $6,300,000. The listing realtor aptly described the property as an "Iconic Guest House That Started It All. La Te Da Has A 193-seat Restaurant With A 5-cop Liquor License, A Hotel & An Entertainment License, Two Bars, Cabaret, 16 Licensed Transient Units, Pool. Own A Legendary Property And Business. I stayed at La Te Da during my first visit to Key West nearly 30 years ago. I knew within a few minutes of sitting at a poolside table to eat lunch while our rooms were being prepared that La Te Da was not like any other hotel I had ever been to. A lady seated next to me at a two-top got out of her chair, took off her sarong, walked nude into the pool, swam one lap, and then emerged to put her sarong back on and finish her lunch. Larry Formica built this little gem and made it something so special to all of us who stayed there, ate there, drank there, or who attended tea dances in years gone by. I wish the new owners good luck.
I think active buyers of guest houses and single family homes need to reflect on the extraordinary prices buyers have recently paid for guest houses and hotels. Key West has weathered its way out of the recession and the BP Oil Spill fiasco that scarred tourists and buyers away in droves. Our economy really got a double whammy for a couple of years. Some buyers feared the recession was not over and refrained from buying thinking prices would continue to decline. Then overly aggressive TV and newspaper reports spread fear that the Florida Keys would be polluted from oil from the BP oil spill. Tourism declined first from the fear of oil contamination and later from tourists demanding demanding discounted rates for lodging, food, and other tourist related businesses.
After everybody realized the recession was really over and that the reports of oil pollution were untrue, tourists and buyers came back. The buyers had stashed cash and were ready to buy. The short sales, bank owned bargains, and backlog of real estate inventory began to sell. And they sold and sold until the inventory of low to moderate housing was nearly depleted. Buyers looking for quality homes in Old Town and Casa Marina returned and started buying up the bigger properties. If you spend hours on Zillow, Trulia, or the Key West mls you may already know that many new listings are being now going under contract within a few days after being listed. I am not making this stuff up. It is really going on - not all houses and not all price ranges. But there are many properties in all price ranges that are being purchased within a few days of being listed for sale.
Please note, I was neither the listing agent nor selling agent on any of the sales shown above. I think the prices being paid for hotels and guest houses reflect a realization by investors that Key West is a good long term investment. If you are looking to buy a guest house, a cottage or home, please consider calling me, Gary Thomas, 305-766-2642. I am a buyers agent and a full time Realtor at Preferred Properties Key West. I love living my life here. You will too.
