How can I buy a condo for cheap in florida?
 

Sounds crazy but I can't seem to get this article out of my mind.

http://www.nytimes.com/2013/03/10/us...anted=all&_r=0

My neighbor bought one in the same location and enjoyed it so much he couldn't stop talking about it. It was a 2 bedroom condo in a retirement community (for people over 55) for about $ 200,000 about nine years ago. He passed suddenly in 2009.

We do like where we are except for the endless winter. We don't have definite plans except we will be keeping our present apartment and spending the summer here.

How do I go about finding bargains like that?

Find a good realtor in whatever area of Florida you prefer. There are great prices on condos in Florida.

Frankly, the best deals come about when an owner dies. The kids are "stuck" with the place and often are looking to get rid of it for a little bit of cash.

I can tell you how to make a mistake, IMHO: Buy based on price rather than being familiar with an area and knowing it's where you want to stay. Is it a bargain to get a cheap condo in an area you're going to hate?

And prices are now beginning to rise down here in southeast Florida. There are lots of investors, particularly from South America, who are trying to "protect" their money.

A lot depends on your price range. Some properties in the $200,000 range are receiving many bids their first days on the market. There are plenty of stories about people routinely being outbid by others.

You need to find yourself a reputable real estate agent as was recommended above.

Dukey brings up a good point. The market certainly has started to turn in Florida, so I would act relatively soon for the best deals. There are thousands of homes in foreclosure and thousands more holding on by a string. But smart buyers are starting to snap them up at good prices.

Incidentally, at least in Naples there is suddenly a huge demand for rental apartments (usually condos that people rent out -- perfect for an owner who hasn't yet retired)) and rental houses. It seems so many homwowners have lost their own homes and their credit who now need to rent, but many rentals have gone into foreclosure and just arent' available.

Thanks everyone.

Neo, I agree I need to act soon.

I also agree it's crazy to buy a place based on price if that is your permanent residence, in our case, we just want a place to escape old man winter.

Anywhere warm (as long as it is relatively close to NYC with an international airport) and safe with some nature would do it. If I can get a deal like the woman in the NY Times article, I see almost no downside to it(unless you tell me there is).

If it turns out Florida not my cup of tea, I don't worry recovering my investment. If we love it so much we can upgrade to a better property and a better neighborhood.

Like downtownbrown said ' the best deals come about when an owner dies'. For that reason, I probably have to be in Florida to get those kind of deals, right?

I still don't have a clue where to look. We can fly to Florida next week but where do we go? I am thinking of renting an apartment and use that as a base to look around, is there a website for rental apt?

Thank you in advance.

I've used vrbo, homeaway, flipkey, and airbnb for vacation apartment rentals.

<I see almost no downside to it(unless you tell me there is).>
One huge downside, potentially, is unforeseen assessments. A lot of condo communities have seen so many foreclosures that their association finances are in complete disarray. Because you can't squeeze blood from a stone, many have postponed necessary maintenance. It's conceivable that such a community would see an influx of new owners as the opportunity to levy large assessments to get maintenance and repairs back on track. Make sure you understand Florida condo laws a bit, and check out the association's budget very carefully before you buy.

NewbE, and on the same note, it's not just letting maintenance go, but some associations have had to resort to actually doubling the amount required from each existing owner to make up for those units in foreclosure. If you are used to paying maybe $450 a month for maintenance and suddenly it is $900 -- well that can certainly be a downside.
Another is that the association is using up all their reserves for necessary maintenance. Then perhaps the first year you own it, it is time for painting the building or a new roof, and you will be hit with a huge assessment that normally would have been covered by the reserves.

If you are buying a Florida condo, just as important as looking at the unit itself is getting a good view of the current finances and the recent minutes of the condo association. They can tell you a lot!

The article was primarily about Century Village properties. I had looked at properties in two of the villages for a relative several years ago. Two bedroom unities were selling for a lot less than $200,000. But you must like the Century Village concept and location. They are not on the ocean. Must have a car to get to the ocean. The villages are so well established and so many people have lived there so long that the foreclosure problem may not be as much there.
There are lots of apartment ads for sales if you google Centure Village Delray, West Palm, etc.

When buying any jointly owned property (condo or co-op) it is vital to understand the underlying financing and overall status:

1) What repairs are up coming/scheduled?
2) Have necessary repaiss and upkeep been done on schedule?
3) How much of a reserve fund is there at the moment and what is a safe amount?

(I live in a co=op with 48 apartments and out reserve fund is never allowed to go under $500K - since if we suddenly need a new elevator or heating system - this can be a major expense.

when we put a new roof on recently we did it via a 12-month assessment. Our was about $500 per month (smaller apartments paid less) - and we preferred to do this - so we could leave the base maintenance as is - to make sure apartments are as salable as possible.

I have heard stories of co-ops that have totally depleted their reserve fund - so they could not only not afford necessary repairs - but the units become unsalable (banks look very carefully at reserve funds and don;t want to give mortgages on properties when the underlying funding is unsound.)

I'm a little confused by your post, nytraveler. So you're saying your 48 unit co-op has a half million dollars in reserves, presumably for regularly scheduled repairs and maintenance above the normal things, yet when you needed a new roof you didn't use those funds, you all had to pay for it separately? Tell me again what the half million dollars is for? How long ago was it the last time the roof was redone -- shouldn't the reserves have been planned to allow for normal replacement? Or did it blow off in Sandy or something and your insurance didn't pay for it? Normally roof replacement is one of the basic things that the reserves are specifically earmarked for.

By the way, my main point was that you were referring to leaving the reserves intact because it would "look better" or make units "more salable" if the reserves were left intact, but honestly -- wouldn't buyers be even more turned off by the idea that they just did a $6000 assessment per unit for a roof replacement that should have been adequately planned for in the reserves? It would sure make ME hesitant if I were considering buying -- I'd be asking "why weren't there reserves for normal roof replacement?"

Mohan: I am currently renting for the winter in Palm Beach County. I agree that there are very good deals, really all over the place in this area.

If you are interested in flying here, or even if not, I can recommend two real estate agents that I have worked with.

My rental unit, 2-bed room, 2 bathroom with den and outdoor porch on a fake lake but with surprisingly good bird watching, has just sold for about $170,000; monthly costs are $500 or so. That includes all sorts of facilities, classes, gym, pools, theatre, etc etc.


It is a big step up from places like Century Village. But again, there are good deals all over the place here including at the places talked about in the Times article. We actually have friends who live in Century Village in Deerfield....really, really cheap to buy there but not all that appealing, perhaps, to everyone.

Do you want an over-55 community with all sorts of activities, or do you want to be on the ocean with the great views???..

For me that was the big divide and both have their pros and cons.


http://www.fodors.com/community/unit...ral-advice.cfm

(Related recommendation: See the film now on HBO on Demand: KingsPoint, about a budget condo community in Delray Beach
https://www.hbo.com/documentaries/ki...int/index.html

ps. There are at least 3 nature reserves within a 10 minute drive of my rental condo.....surprisingly excellent. This is one, to give you an idea:


http://www.pbcgov.com/parks/nature/g.../#.UVBoao58vww

Neo -

If we had paid for the roof out of the reserve we would then have had to increase our maintenance to bring the reserve fund back up to the $500K.

And increasing maintenance not only decreases the value of the apartment it makes it more difficult to sell.

By making this a separate short-term asesment we have held the maintenance at the same rate, making the apartments more valuable and salable. And because this was a specific asessment we were able to arrange low cost loans for those owners who didn't want to or couldn't pay the assessment as a lump sum or from their monthly income. If we had raised the maintenance - they would have just had to come up with the money - or found a higher interest rate on their own.

We do take regular repairs out of the reserve fund if the cost is such that we can replenish it via the regular maintenance - less than $50 K or so.

Doing it this way makes our building more attractive to lenders and so easier to buy and sell apartments - and get the best prices.

And our philosophy is to keep the bulk of the reserve fund for things that can't be predicted - or smaller items like painting common areas or repointing the brick facade.

OK, I guess New York buyers aren't as "clever" or as "demanding" as Florida buyers. There, most buyers would figure out that having to pay $6000 in one year for a special assessment is just as bad as raising the maintenance -- in fact most would consider it worse and would be wondering why on earth there isn't a good reserve plan in force that has estimated major repair costs(that can clearly be planned for) and has reserves allotted for that specific purpose. But if the buyers think paying $6000 extra in one year rather than raising the maintenance is better, well, that's really good for people wanting to sell!

The condos I own and have owned in Florida all have specific reserve plans, in fact they are required by Florida Condominium law (not sure they'd apply to co-ops, however, which have pretty much become extinct in Florida). Major expenditures like building painting, paving, roofing, and similar items are carefully estimated with a life expectancy and appropriate amounts going into the reserves specifically so there will normally be enough when those things are due. It doesn't take rocket science to do a pretty close estimate of when roof replacement or major painting should be necessary. Any savvy Florida buyer will demand to see that reserve expenditure plan. Clearly New York does things differently. Kind of interesting that NY buyers must be aware that standard major repairs and replacements (the kinds that can be predicted) will be handled by special assessments. I'm curious if prospective buyers are given any indication of how much those might be -- which should be easy since they are "predicted" expenses. Or if they just buy and then the next year they are told "surprise! It's time for our roof to be replaced so everybody needs to chip in $6000 extra this year".

I'm not arguing that your association may do things that way, but for the life of me, I can't imagine why it's "MORE ATTRACTIVE" to lenders and buyers NOT to have reserves specifically set aside and being funded to handle such major expected things as roof replacements, but to just expect non-specific huge assessment amounts at random times.

It could be more attractive to potential buyers who come along after that special assessment and note that they would only have to pay it for several months and then their cost drops back to the regular assessment. And payment of the special assessment (or a portion of it) could be negotiated between seller and buyer. If the association had a history of "non-specific huge assessment amounts at random times" I'd look elsewhere, but having one in place would not sent me running if the property was otherwise suitable.

Well, quoting from Florida laws:

"The Condominium and Cooperative Acts require reserves for roof replacement, building painting, and pavement resurfacing, regardless of the amount of deferred maintenance expense or replacement cost, and for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000. The statutes state that the amount to be reserved shall be computed via a formula which is based upon the estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item. A condominium or cooperative association may adjust replacement reserve assessments annually to take into account any changes in estimates or extension of the useful life of a reserve item caused by deferred maintenance."

So if I were buying a condo in FLORIDA (which this post was originally about) and I found the condo did NOT comply with this law, then yes, that WOULD send ME running even if the property was otherwise suitable. I personally would not be interested in buying a condo that did not follow Florida Condo laws. But others are welcome to. I think this is how many people end up with bad investments in Florida -- not even insisting that the condo they buy follows the law!

You really need to request at least 6-months of association meeting minutes at a minimum. You should also look at the association statements regarding current reserves, etc.

One PROBLEM with those association minutes can be how the meetings are structured. Sometimes there are so-called "open sessions" which happen after the official meeting is closed. These open sessions are supposedly when owners can bring up problems, etc., for discussion. If these problems are not being recorded in association meeting minutes then you will nto know about them.

Minutes should be read so recurring patterns can be discerned; amounts of time to resolve issues, etc.

Also you should request a copy of the association/building rules which can be very revealing.

There was a recent segment on CNBC:


http://seniorhousingnews.com/2013/03...nger-retirees/

Do most associations provide the minutes and docs and financial information to prospective buyers? I;m president of our (tiny) association, and I don't think we've ever had such a request until after the contract is ratified. Which would be a bit late if the news is bad.

In my area, law requires the seller to provide a full set of condo docs (bylaws, financial reports, reserve analysis, a year's minutes) upon accepting an offer. The buyer then has three days to review them and can walk away, with full refund of the deposit, for any reason (including just a change of heart). It is a large pile of paper and an updated set must be prepared on short notice, so the there is a cost to the seller of $100+. Of course buyers inquire about pet policies, etc., and can get a copy of house rules, before making an offer. But official condo doc package only goes to someone who really intends to buy the property.

Neo -

The assessemnt is temporary - the first we've had in more than 10 years. Once you raise the maintenance it's up - and it never goes down.

And by keeping it as an assessment (to be paid at one time) the tenant was able to borrow it at very low rates if they chose - paying over time versus putting their entire budget out of control long-term.

We work very hard to keep our maintenance low - for the type of building and size of apartment - in order to keep apartment values higher. As for the $6000 - we have a large apartment - for someone with a one bedroom the amount was quite modest.

And we do have good financial advisors - they are the ones who keep us up to date with what lenders expect for a building of our type/size to renegotiate our underlying mortgage and make sure potenital owners can get the best rates possible.

The maintenance fee on our condo actually DID go down over the past year so obviously every building/association is different.

I suspect that like it or not if a management company which obviously rrepresents the association refuses to provide certain information based on whether or not they are certain somebody is going to buy that could be a problem for the seller.

There are reasons why a sale might not go through which have absolutely nothing to do with a buyer's intent or sincerity.

And if all else fails, the seller can sometimes provide a certain amount of written information and no association is going to hold that information back from a seller.

"And by keeping it as an assessment (to be paid at one time) the tenant was able to borrow it at very low rates if they chose - paying over time versus putting their entire budget out of control long-term."

OK, I guess I get it now. It would not be logical to amortize the "known" cost of the roof over say 20 years within maintenance fees (obviously a pretty small amount that way) putting into a reserve account as it would put people's budgets "out or control". Instead it makes more sense to hit them with the total amount all within one year in an amount they must borrow as that is easier for people. OK, if you say so.

My main point was that in Florida, the state we were talking about, an owner could sue an association for not having reserves for a known major expense like roof replacement. There it is a law designed to protect condo and coop owners from having major assessments for standard but major expenses which could have and should have been planned for.

As far as I know, roof replacement is the only thing for which Florida condo law requires a separate reserve fund. An owner could sue the association for failing to have enough money on hand for things like driveway repair or maintenance of common areas, but the law doesn't require that those kinds of things be specifically provided for. I think.

NewbE, see my post yesterday at 3:22 PM. I quoted the law which specifically DOES mention both painting and paving, plus the general "and for any other item for which the deferred maintenance expense or replacement cost exceeds $10,000."

NewbE and NeoPatrick, this is a serious question. Let's say the association has violated the law and the reserves are insufficient for roof replacement or other deferred maintenance/replacement costs. Are the individual board members responsible for making up the deficiency? Are they liable in damages to the homeowners for breaching their legal obligations? If not, what does it get you, other than more costs (litigation) for the homeowners to absorb?

Well first of all most boards have insurance for their officers and boards relieving them of such responsibilities.
But yes, lawsuits would likely mainly raise costs for the members. When a condo owner sues his association he is essentially suing himself.
And unless it was shown that the reserves were deliberately ignored without vote by the members, a lawsuit may not go very far.

You might contact my friend Heather Zurlo at SoNaples.com

Hawaii also requires condos to have sufficient reserves to cover expected expenses, repairs and improvenments. A 20 year budget is required. The law was passed when new owners got tired of being hit with huge assessments that the owner association should have been saving for all along. Even if you can get sweet loans for the owners, a $500 a month increase is unfair to both owners on a fixed budget and to people who recently bought in.

As a Realtor, I look at assessments as a sign of poor fiscal management. On the rare cases where such an assessment is required (one building here recently had to do one because of a major plumbing failure) it puts a real damper on sales. I also think most people would find a permanent $50 or $75 a month increase much more more palatable than a $500/month increase for 12 months.

Neo, I did read the excerpt, but my point about roof funds is a bit more arcane: I think that's the only thing that requires a separate reserve fund, fenced off from the other monies. But it doesn't matter, as we agree that it is certainly the board's responsibility to handle the finances such that maintenance and repair are covered.

I also agree with your reply to sf. Residents need to get involved in their board's activities if they want a say, because suing after you're displeased is unpleasant and expensive. And you are likely only to win the privilege of unseating the board and holding a new election. We have good participation on ours in the sense of percentage of units represented at meetings, but it's the same owners month after month, and the same ones always absent. I wonder if the absentees realize how much power the board has over their financial well being!

OK, NewbE, I guess I'm not fully following you. In all the condos I've owned or been on the board of, there was no "fenced off" roof fund -- it was just a general percentage of the total reserves and like other reserves could be adjusted up and down as life expectancy or cost expectations varied. All the reserves including for the roof were in one special account. When we did a 10 year assessment of our roofs for one condo (half of the life expectancy) and it was determined it would not last another 10 years, then a slightly higher percentage of the reserves from quarterly maintenance. payments went into the roof fund, but it was still all just part of one account.

One bedroom, one bathroom, $26.000 in west Boca Raton:. Leaving personal decor choices aside, cheaper than buying a car.



http://resionline.com/megatemplate/m...ional&custId=0

mohan, I didn't read the linked article but just wanted to say, if what you want is a place to go when it gets cold in NYC, you don't need to BUY anything. Get on a plane and go to a hotel! It's a lot cheaper. Figure out how many days you can realistically spend in Florida, multiply by what you think a hotel (or condo rental) will cost and compare that to what you're going to pay for mortgage and carrying charges.

The Florida real estate market is not for the faint of heart. Buying/selling is all a matter of timing. One bad hurricane and your apt. value can plummet. It may be temporary, but if it's when you need to sell, it doesn't matter. I've known too many people who have either been stuck with property they can't sell or have had to sell at a loss. There are loads of studio and 1 bedroom condos for sale because people don't want them! The carrying costs/maintenance charges etc. will drive you crazy. Just my two penneth.

McLAurie: Maybe take a look at the linked articles (why comment here without reading them in the first place??) and then return.

For the price that I have paid for a rental condo, for just one winter here, I could have purchased an apartment in one of the communities mentioned in the article and in the HBO doc. (Or a used car)


Carrying costs are very very low. Not sure how much a hurricane would affect the prices of the communities mentioned.

Hotels rates in those hotels I have seen are not reflective of the low real estate prices.


Having been here several months, and having had tours of various areas with agents, I think that this area might certainly be a good value for those interested in having an inexpensive bolthole in a warm weather zone.

Agree with McLaurie that renting for a season might be prudent before a purchase.

What people are missing is that the $500 per month was for a large aprtment. The people in a one-bedroom ( more than half of our building) only had to pay a litle more than $100 per month - about $1300 overall. IMHO better to do this than permanently raise the maintenance.

In any case, that is our philosophy - and what the elected board voted to do.

Naturally we could have paid cash out of the reserve fund - but then the permanent maintenance goes up and apartment value goes down.

As for people on limited, fixed incomes who can;t come up with an extra $100 per month - they probably could not afford to live in the building. Our latest sale was the smallst one bedroom - about 750 sq ft - and the price was more than $800K. (Please no cracks about Trumps. This is a 6 story red brick middle class - no doorman - prewar building. And part of the reason the price is so high is that our maintenance is about $300 less than average for these apartments.)

Nytraveler, I don't think any of us were missing that at all. Some of us and the Florida laws just totally disagree with you, that's all.

Thanks everyone. All of you have given me much to think about.

In the NY times article, the condo was sold for $26,900, annual property tax was $632. Can I assume there is no monthly maintenance? What other expenses should I anticipate?

Do condo board have something against people who don't reside in the condo full time? Is spending 2 months in a year a problem to neighbors?

I think my late neighbor said his friend looked out for his condo when he was in NYC. I don't know anyone there, is it an issue?

I enjoy gardening, can i expect to find a condo with a small garden or is that strictly with a house?

Our shortcoming is we don't know how to fix things. I don't drive, dh will be doing all the driving. Theoretically we will buy a car and leave it in Florida.

Do realtor handle cheap deals like the one in the ny times?

ekscrunchy, Thanks for the links. They are most helpful. Thanks for taking the time to input while you are on vacation.

I don't think I need an ocean view. The thought of having to deal with the aftermath of a hurricane is scary. Don't mind being a baby boomer among the very old. I have not been to an over 55 community but I don't think I have a problem with it.

I appreciate a good gym with a swimming pool and exercise classes. A well-equipped ceramic studio and the opportunity to garden will be the deal breaker.

Do you like where you are now? I know I always love your trip report. No pressure, if you have the time.

Yesterday was a beautiful day in NYC, today it's looking lovely also. Spring is here!