Need advice on buying condo in Florida

[pb4uski]

Well, it looks like DW and I may be buying a condo in Florida for snowbirding. The annual carrying costs are about 3/4 (or less) of what it costs to rent for January to March so if the appreciation is decent then the appreciation and the difference in renting should cover the lost investment income in the long run.

What I'm looking to find out from forum members who have bought a condo in Florida is what the process is like. We have bought houses before never a condo.

I assume that we will still want a home inspection of the HVAC, water heater, plumbing and electrical etc even though the association is responsible for the outside walls and grounds. I also want to see the HOA's financials and perhaps read their minutes for the last year to get a sense of their issues and how well they are funded.

I assume that one would want a title search and title insurance for a condo just like one would for a house.

Since it is a cash deal I plan to hire a real estate attorney to do the closing.... make sense?

 

[MasterBlaster]

Pros and Cons of Buying a Home in Florida – Moving to Florida

The first one is that many people who move to Florida will end up deciding it was a mistake and move out. Because Harry and Pauline never considered that possibility, they made decisions that turned out to be very costly during the move.
The other thing they didn’t know was that Florida’s real estate prices are very unstable compared to the town in Ohio where they had moved from. Florida’s home prices often rise or fall farther and faster than most other states. Unlike most US states, Florida’s real estate market is affected by a constant, large number of people moving into and out of the state. When far more people are moving in, prices soar. When that flood of buyers slows, prices usually crash. The good real estate market that allows people to sell to move to Florida usually means that they will be buying their home at or near a peak in Florida real estate prices.

 

[MichaelB]

Does that cost estimate include insurance? We didn't use an attorney when we bought, the realtor looked at us as if we were from outer space when we brought it up.

Have you looked at the finances of the association? You want to be sure you are aware of any issues or liabilities, and would hope to see a nice reserve, big enough to cover at least one large repair (pool, clubhouse roof, etc).

 

[Dash man]

We're closing on a Florida condo next week in Hillsboro Beach. A big thing to ask for is the history of assessments for at least the last ten years. I asked and they printed out the list for the forty years since the condo first opened. Find out if they keep reserves or not. Mine doesn't because the owners vote it down every year, but pay average assessments of $2,000/year on top of the quarterly fees. Check for parking availability for you and for guests. Read all the rules and bylaws thoroughly so you know what your getting into. Know what the condo requires for delivery or construction workers. My condo association seems very well run. We had a Skype interview mainly to go over rules and what is expected to keep the building in good condition. The process from this association left no questions unanswered by the time we were done.
Using a realtor was pretty important to get in to see most of the places we looked. Many places gave security and the realtors have access to the lock boxes. So I'm not sure how you'll get around that.
You may want to negotiate who pays the title insurance. It was a $2100 hit I missed which checkbox was marked in the contract.
Check fees for the closing agent....shop around because there are big differences.
I had an inspection from a home inspector, then ended up having a plumber, electrician and HVAC guy come out anyway. Seemed like a waste to do both.
Make sure you have hurricane impact Windows or shutters.
You can look up tax information for the property on the county web site. Look at a similar property that sold recently to see what the new assessment will be like.
There are lots of fixer uppers and some updated. Some stubborn sellers try to sell for a price like theirs is newly redone, but is desperate for a remodel. Don't waste your time when they're too overpriced.
The market is a little soft because of the strong dollar keeping the Canadians away, so don't be afraid to go in with a low offer. We went in 10 percent below an asking price that had already been dropped 20 percent .
Good luck!


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[pb4uski]

I am cognizant of the risk.... in fact we just yesterday visited with some friends who moved to Florida for retirement a few years ago and are in the process of moving back north. Our intent is different... not to live here but to winter here so owning is an alternative to renting 3-5 months a year... worst case use it January to March or best case from November to April and fly home for the holidays.

The price we expect to pay is about 60% up from the recent bottom of the market, but the bottom was 40% of the top... so we are expect to buy for about 65% of the value from the top and roughly the value in late 2004 before the crisis.

In my expenses I have provided an estimate for insurance but I'll call my agent tomorrow to get a better read on the cost. My understanding is that the basic coverage will be covered by the HOA policy but that I need to insure for fixtures, contents and liability.... sort of in between homeowners and renters insurance. The owner has a separate policy since he also owns a home in Florida and his insurer doesn't allow more than one Florida property and has told me what his cost is. If ours was the same it would be more than what we have budgeted but it would not be a deal-killer.

One of the contingencies will be to look at the financial statements of the association and the minutes of their meetings for the last 24 months to get a sense of their financial strength and the issues they are facing.

 

[Dash man]

I am cognizant of the risk.... in fact we just yesterday visited with some friends who moved to Florida for retirement a few years ago and are in the process of moving back north. Our intent is different... not to live here but to winter here so owning is an alternative to renting 3-5 months a year... worst case use it January to March or best case from November to April and fly home for the holidays.

The price we expect to pay is about 60% up from the recent bottom of the market, but the bottom was 40% of the top... so we are expect to buy for about 65% of the value from the top and roughly the value in late 2004 before the crisis.

In my expenses I have provided an estimate for insurance but I'll call my agent tomorrow to get a better read on the cost. My understanding is that the basic coverage will be covered by the HOA policy but that I need to insure for fixtures, contents and liability.... sort of in between homeowners and renters insurance.

You'll need two policies, one like you mentioned and one for wind mitigation. My insurance for a 1200 sf property on a higher floor is $$1585 and $864 for the wind mitigation policy.


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[pb4uski]

Thanks Dashman... great info... it sounds like you are all over it. One advantage that we have is that we have friends who rent in the same neighborhood/association for a number of years and who are cozy with neighbors, some of whom are there full-time so we have a pretty good idea of what we are getting into. We've heard good things about the association but I still want to see the financials to see what they have for reserves and I will ask about historical assessments.

This particular unit is not homesteaded so I assume the taxes will not change as a result of the change in ownership... right?

This unit has been well maintained but not updated and that is part of the attraction... it is very livable as is and we can update over time to suit our tastes. Also, I'm pretty handy so we can do some of the more cosmetic things (flooring, paint, minor remodeling, etc) ourselves. We are dealing directly with the owner so will be splitting the absence of a commission.

 

[pb4uski]

You'll need two policies, one like you mentioned and one for wind mitigation. My insurance for a 1200 sf property on a higher floor is $$1585 and $864 for the wind mitigation policy.


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Wow! Together that is over 3X what I pay for our house up north. I assume you are on or close to the beach and that may be part of what is driving the cost?

 

[MichaelB]

Wow! Together that is over 3X what I pay for our house up north. I assume you are on or close to the beach and that may be part of what is driving the cost?

I think it's cheap..

 

[pb4uski]

You've both convinced me that I need to dial down on the insurance... something for tomorrow.

 

[Dash man]

This particular unit is not homesteaded so I assume the taxes will not change as a result of the change in ownership... right?

.

Taxes will be adjusted in the new tax year based on the new assessment after the sale.

I also just remembered your insurance will require a wind mitigation inspection and probably a roof inspection.


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[MichaelB]

I also just remembered your insurance will require a wind mitigation inspection and probably a roof inspection.

Yes, and that can be part of the same pre-purchase inspection, which will save you some $$.

 

[pb4uski]

Taxes will be adjusted in the new tax year based on the new assessment after the sale. ....

So what is the new assessment based on? The price we pay?

At home assessments are in theory at fair value, but in reality lower than fair value but at fair value relative to one another... so a change in ownership doesn't change the assessment at all.

Edited to add:.... ah... found info on the county website... knocking off the non-homestead cap savings the current owner has and using the full value only adds $80/year to the total tax bill so no problem.

 

[Lakedog]

Wow! Together that is over 3X what I pay for our house up north. I assume you are on or close to the beach and that may be part of what is driving the cost?

I am on my second oceanfront FL condo, and in both cases the association covered the insurance costs for the building down to the drywall with the unit owner being responsible for the interior (furnishings/appliances/etc). My current policy costs under $500 and includes $1 million liability as well as wind/hurricane damage. I think some people insure for way more than they need -- 2/2 condos in my building are selling for close to $400k currently but the policy does not need to cover anywhere near that amount due to the association insurance covering the structure. So, it is important to know what the association covers before determining insurance needs.

 

[Dash man]

Wow! Together that is over 3X what I pay for our house up north. I assume you are on or close to the beach and that may be part of what is driving the cost?

Right on the beach. But I have another house in Tampa that is inland and the insurance is expensive there too. Not many companies write policies in Florida.


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[48Fire]

I am on my second oceanfront FL condo, and in both cases the association covered the insurance costs for the building down to the drywall with the unit owner being responsible for the interior (furnishings/appliances/etc). My current policy costs under $500 and includes $1 million liability as well as wind/hurricane damage. I think some people insure for way more than they need -- 2/2 condos in my building are selling for close to $400k currently but the policy does not need to cover anywhere near that amount due to the association insurance covering the structure. So, it is important to know what the association covers before determining insurance needs.

That's consistent with MIL policy.

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[48Fire]

Well, it looks like DW and I may be buying a condo in Florida for snowbirding. The annual carrying costs are about 3/4 (or less) of what it costs to rent for January to March so if the appreciation is decent then the appreciation and the difference in renting should cover the lost investment income in the long run.

What I'm looking to find out from forum members who have bought a condo in Florida is what the process is like. We have bought houses before never a condo.

I assume that we will still want a home inspection of the HVAC, water heater, plumbing and electrical etc even though the association is responsible for the outside walls and grounds. I also want to see the HOA's financials and perhaps read their minutes for the last year to get a sense of their issues and how well they are funded.

I assume that one would want a title search and title insurance for a condo just like one would for a house.

Since it is a cash deal I plan to hire a real estate attorney to do the closing.... make sense?

Congratulations! I have found 2 months rent is break even for us.

Inspections are a good idea, because even if you don't own everything, you still own the HOA fees.

Title search still a good idea.

Definitely look at HOA financials. I see wide variety between our place, MIL, and BIL.

Not a big fan of Real Estate attorney, but better safe than sorry.

No worries about the up and down Florida market since you are all cash. That's only a worry for someone with 90% loan to value in my opinion.

My wife and I will never spend winter up North again. It's a good feeling to own and have a place to go to, and no need to worry about where to stay or any rent increase.



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[Dash man]

I am on my second oceanfront FL condo, and in both cases the association covered the insurance costs for the building down to the drywall with the unit owner being responsible for the interior (furnishings/appliances/etc). My current policy costs under $500 and includes $1 million liability as well as wind/hurricane damage. I think some people insure for way more than they need -- 2/2 condos in my building are selling for close to $400k currently but the policy does not need to cover anywhere near that amount due to the association insurance covering the structure. So, it is important to know what the association covers before determining insurance needs.

I curious which insurance company you use if you don't mind sharing. What coverage levels do you have? I have to have a minimum $300k liability because of my umbrella coverage. I have $100k dwelling and $25k personal property.



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[aaronc879]

Although you didn't specify, i'll assume you'll be in a building with people living above you. When is the last time you lived in a place with neighbors above you? You may find the noise to be very bothersome like I have. I am planning to move soon and if I move to another multi-floor building, I will make sure i'm on the top floor. Try to visit the place when there are as many people home as possible to see what the noise level is like.

 

[Bamaman]

My daughter was living in a house outside of St. Augustine, and it originally cost $250K. The house was on the retail market for $185K, and there have been no offers since it was put on the market 3 years ago. The whole development has had excessive foreclosures destroying property values.

Another big problem is that the property taxes and HOA fees are $5,500 per year--excessive. I have no idea how much the homeowners insurance would be, but you can bet it's a very high amount.

The HOA fees, taxes and homeowners' insurance should be very carefully considered when shopping for any property in Florida. The only good news is that the state has no state income taxes, but they make up for it in other ways including high sales taxes.

 

[Senator]

See if they have rental restrictions. If they do not, you may be near a bunch of snowbirds, or worse yet, year round renters.

 

[pb4uski]

Although you didn't specify, i'll assume you'll be in a building with people living above you. When is the last time you lived in a place with neighbors above you? You may find the noise to be very bothersome like I have. I am planning to move soon and if I move to another multi-floor building, I will make sure i'm on the top floor. Try to visit the place when there are as many people home as possible to see what the noise level is like.

Top floor (of two-story), end unit... so only one common wall. We have had someone above us for the last 2 1/2 months.... no issues. Sorry you have been having trouble.

 

[pb4uski]

My daughter was living in a house outside of St. Augustine, and it originally cost $250K. The house was on the retail market for $185K, and there have been no offers since it was put on the market 3 years ago. The whole development has had excessive foreclosures destroying property values.

Another big problem is that the property taxes and HOA fees are $5,500 per year--excessive. I have no idea how much the homeowners insurance would be, but you can bet it's a very high amount.

The HOA fees, taxes and homeowners' insurance should be very carefully considered when shopping for any property in Florida. The only good news is that the state has no state income taxes, but they make up for it in other ways including high sales taxes.

HOA fees (including basic cable), property taxes, electricity, insurance, and monitoring while we are away will be about $7k a year.... but during the season rents are $3-4k a month (plus 10% tax) so 3 months rent would cost me $10-13k

Actually tax rates here are quite reasonable compared to home.

 

[48Fire]

Top floor (of two-story), end unit... so only one common wall. We have had someone above us for the last 2 1/2 months.... no issues. Sorry you have been having trouble.

That's good. We share two walls in our townhouse, and we occasionally hear noise, but we are retired, so no worries.

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[tmm99]

My previous landlord has a condo in Naples, FL. He has a renter from Germany who rents his place for three months every summer and that pays his maintenance fees, etc and he basically gets to use the condo for free the rest of the year.

According to him, there are a lot of renters from Europe in the summer months and will rent if the apartment is furnished with more modern furniture.

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