Florida condo repair law starts Jan 1 2025

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{{ Under the new law, condo associations must have enough money in their reserves to fund all repairs necessary to maintain the structural integrity of all buildings three stories or higher. Existing associations must meet this requirement before 2025. }}

New Florida law means big changes for condo associations (mynews13.com)

Since real estate is typically sold based on the monthly payment, if your monthly condo fee is going from $500/month to $2,000/month to fund 20 years of deferred maintenance, that’s got to impact the sales price.

Here’s a spectacular penthouse on the 42nd floor of a nearly 40-year old oceanfront highrise for less than $1 MM with a monthly HOA fee of just $1,042. What are the odds that monthly fee will be $3,000 or $4,000/month by year end?

1717 N Bayshore Dr Unit A-4236, Miami, FL 33132 | MLS# A11414852 | Redfin

intercst

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And my neighbor bought a condo in Florida, thinking he is ducking a big charge for replacing the parking lot pavement here.

Steve

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We will see. Like all real estate, location, location, location.

We have a condo in the panhandle. About to undergo some maintenance, some structural (roof) and some cosmetic (paint/stucco). Our HOA has gone up from $3k quarterly to $5 but primarily due to insurance rates. Comp sales in the area unaffected so far. Could sell the condo today for a 100% gain over 8 years.

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Sometimes, when I see those absurd numbers for condo fees, I think “hey, you get to pay a million bucks to buy yourself the privilege of paying “rent” for your apartment forever”.

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It definitely varies from place to place.

For us, the majority of the fee is insurance. So whether it is an association fee or straight to me, not going to change. The other big chunk is the “town association fee” which goes to maintenance of parks, green space, boardwalks, dune crossovers, drainage, roadways, fiber internet, pools, etc.

Our condo is in a designed community where you arrive, park your car, and you can walk to anything and everything you’d want/need in 5 minutes. Our real time is about 2 minutes since we are in the middle of town. If we really wanted to expand our options, can ride a bike to several other places.

So while our HOA might sound high, it is in line with location and what is provided. This is not your typical generic downtown high rise condo.

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Wherever you live, you pay for things like maintenance and real estate taxes. If you rent, they’re included in your monthly rent. If you live in a condo, they’re included in condo fees. If you’re in a home, you pay the costs directly.

Our home was “paid off” over 25 years ago, but we still have to pay for maintenance (or own an asset that decreases in value) and real estate taxes.

If you own a condo and don’t pay adequate condo fees, you’re just kicking the can down the road.

Where you live is a huge financial decision, and you need to understand ALL the costs in order to make the best decision for your particular needs and desires.

Sounds like some of these condo folks may have, chosen poorly.

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Or they chose before all the information was known, or before they had all the information.

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Yep. That million dollar penthouse I linked to rents for $5,237/month based on comps in the area. Monthly cost in the listing for a 20% down payment is $7,121/month, plus it looks like they’ve underestimated the property taxes. Miami averages 2% of market value or $20,000/year on a million dollar property. They’re saying the taxes are only $4,000/yr.

I’d definitely be a renter.

intercst

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That’s what people keep telling me, but rents are based on what the local market will bear, not the landlord’s costs. Lot’s of people seem to be accepting the joys and prestige of being a landlord, for a lot lower investment return than I’d accept. Here’s a recent study.

intercst

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Taxes would be about $17,000 or so on that $1M apartment. Roughly ($1M - $50k homestead exemption) x 1.8% or thereabouts. Could be less if the assessed value isn’t $1M, but it’ll be pretty close to that if it sells for $1M.

That’s not really what they are saying. They are saying that taxes are currently $4k, and that’s because the person who owns it now purchased it for ~$250k a long time ago and their property taxes can only go up by a few percent a year max, regardless of how much the property appreciates.

Once the property sells, the taxes will reset back to normal, or about $17k after homestead exemption.

Now that brings up one aspect that makes buying better for long-term holders of a property (in Miami). The person that buys now at $1M will pay $17k in taxes each year, plus maybe 2% increase a year. In 10 years, if the property is worth $2.5M, they’re still paying only about $21k in taxes. Meanwhile, the unit next door also worth $2.5M, but a rental is paying $44k in property taxes, and will likely be charging a higher rent at that point.

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If the landlord is making a positive return, even a small one, you’re paying for maintenance, taxes, and the small return. If the local market won’t bear the landlord’s expenses, they’ll be out of business soon.

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Lots of small landlords won’t accept the loss on a property sale, and hold on hoping for a recovery. Renter’s love these “investors”.

intercst

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This is nonsense, with occasional exceptions. Landlords are, on the whole, in the business of not losing money. That it occasionally happens doesn’t mean it’s how that industry works, or ever will.

If there is a landlord losing money, they will sooner or later, be out of that business - or at least that property, and a new landlord will take it over and start cutting costs or raising rents to recover or both. If market conditions don’t allow the raising of rents, you can be sure services will deteriorate and maintenance will suffer.

People buy houses and find themselves underwater, and face the monetary consequences, and the same is true of landlords. If you are lucky and find one who is both losing money and willing to continue doing so, well bully, but that is not how any business in the US works, at least not for long.

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Lots of businesses in the US are founded on the expectation of people making poor financial decisions. That includes vacation time shares, and a lot of “vanity” real estate investing, etc.

Nobody ever lost money betting on the ignorance and innumeracy of the American people – and that includes American investors. You just need to apply the metric to find them.

intercst

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Add in state lotteries, and on line casino and sports gambling. How much of the US economy is now dependent on inducing people to throw their money away for nothing?

Steve

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Sure, if you believe a property in a flood zone is going to see that kind of appreciation. (If you look at the flood map, the flood zone extends from the Atlantic Ocean to about 3 blocks West of the building. Perhaps you can market it as “Venice, Italy style living”?)

intercst

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Ironically, the sellers of tie shares make money, and the folks that sell you advice to help you get out of time shares make money. The buyers of anything to do with time shares are the ones that don’t make money.

So too, on the whole, across the country, owners of rental property tend to make money. If it weren’t so, the industry couldn’t, and wouldn’t exist for very long. Heck, there are laws being passed in various places that will indeed slowly work towards reducing the rental property business, or at least make it prohibitively expensive. As time passes, those places will have less rental housing … because investors won’t find it lucrative enough.

Here is a random sampling of new laws affecting rental housing -

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It all depends on whether or not “the Florida peninsula being underwater in 10-20-30 years” really happens or not. And just like properties in an earthquake zone can go way up in price, maybe properties in flood zones can also go up? Somehow, despite all the issues (high condo fees, high insurance, flood zones, etc), demand has been relatively high for coastal real estate nearly everywhere. I won’t be living there, but seems like plenty of others want to. And they seem to be willing to pay top dollar!

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Absolutely! I enjoyed living in a beach view condo during the years I worked in San Diego. But as a renter, not a buyer.

intercst

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OK kids, let’s play pretend.

,Let’s say Intercst had bought the beachfront condo in San Diego 30 or 40 years ago or whenever it was, lived in it while he was there, and then rented it out, having renters pay the mortgage for all those years.

What do you suppose the condo would sell for today?

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