How foolish is this? [Buying waterfront apartment in Florida]

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protagonist
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How foolish is this? [Buying waterfront apartment in Florida]

Post by protagonist »

We are thinking of bidding on a great 2 br apartment on the 10th floor of an building on the waterfront (vacation home that could become a permanent residence in the future) in a community we really like on the west coast of Florida with spectacular water views for around $400K;;;we expect a bidding war and are thinking of making a cash offer with no contingencies. We have wintered in this community for the past 4 years and love it there.

For years I have told others how stupid it is to buy waterfront real estate in Florida now....housing bubble, hurricane risk, volatile home values, etc. Especially in 55+ complexes like this one. Nor would I normally forego a home inspection...seems insane....but it is a concrete/stucco building with hurricane shutters and my own visual inspection turned up nothing major. As far as I can tell the only big expense would be if the HVAC needed replacement, and that would still be within reason (it seems to work fine but it is 15 years old). The apartment is in move-in condition. I don't think much could go wrong, and I expect many bids at above asking price.

We can afford the apartment without any hardship.

I expect to lose a lot of respect for my critical thinking from Bogleheads with this post.

It just went on the market and the open house at 9AM today was a feeding frenzy. The owners are going to sort through offers tomorrow and choose the best one.

Is what we are considering absolutely insane?

And if we make an offer, can savvy homebuyers, especially realtors, give me any tips in doing so?

Thanks.
supalong52
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Re: How foolish is this?

Post by supalong52 »

When buying a home, I always try to turn off the emotional thinking that gives rise to panic and fear of missing out.
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retiredjg
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Re: How foolish is this?

Post by retiredjg »

I have no tips.

I don't think it is insane because you know you will love it and you can afford it. Even if it turns out not to be the best financial decision you ever made, it will be one you enjoy.

Might be a little foolish, but what the heck.
jebmke
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Re: How foolish is this?

Post by jebmke »

Have you reviewed the condo association balance sheet? The biggest risk could be lack of reserves for common expenses.
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greg24
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Re: How foolish is this?

Post by greg24 »

I think the best time to spend a half million dollars is when the process is described as a "feeding frenzy".
T4REngineer
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Re: How foolish is this?

Post by T4REngineer »

retiredjg wrote: Wed Apr 14, 2021 11:30 am I have no tips.

I don't think it is insane because you know you will love it and you can afford it. Even if it turns out not to be the best financial decision you ever made, it will be one you enjoy.

Might be a little foolish, but what the heck.
While I have lots of reservations I assume you have done your home work and agree with the above. No point in trying to die with the biggest bank account (unless you plan to leave it to me - PM for my details and we can discuss how terrible of an idea this is) :sharebeer
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Watty
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Re: How foolish is this?

Post by Watty »

One thing to keep in mind is that if you are planning on renting it out then that might not be allowed.

Even normal condos often have a restriction on the percent of units that can be rented out since if the percentage of rentals goes above a certain level future owners cannot get normal mortgages. Many places also do not allow short term vacation rentals.
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C4NT
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Re: How foolish is this?

Post by C4NT »

I live in South Florida, and the fact that it is concrete block and has hurricane shutters is about as good as it gets. You could install impact windows to add some extra protection if you like.

While it is pure speculation on my part, I do not think that Florida is in a housing bubble. Or, if it is, it will not pop for a long time. The number of people moving to Florida, especially from NY, will keep home prices up for a while.

I wouldn't worry too much about those two items.
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protagonist
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Re: How foolish is this?

Post by protagonist »

retiredjg wrote: Wed Apr 14, 2021 11:30 am I have no tips.

I don't think it is insane because you know you will love it and you can afford it. Even if it turns out not to be the best financial decision you ever made, it will be one you enjoy.

Might be a little foolish, but what the heck.
THat was my thought as well.
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protagonist
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Re: How foolish is this?

Post by protagonist »

jebmke wrote: Wed Apr 14, 2021 11:33 am Have you reviewed the condo association balance sheet? The biggest risk could be lack of reserves for common expenses.
I considered that. I have a copy but am having a hard time interpreting it....lack of experience. I want to run it by someone with more experience. One possible red flag (?) is that the HOA fees took a big bump in 2021 over last year- $395 to $456/mo. I want to know why.
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protagonist
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Re: How foolish is this?

Post by protagonist »

T4REngineer wrote: Wed Apr 14, 2021 11:36 am
retiredjg wrote: Wed Apr 14, 2021 11:30 am I have no tips.

I don't think it is insane because you know you will love it and you can afford it. Even if it turns out not to be the best financial decision you ever made, it will be one you enjoy.

Might be a little foolish, but what the heck.
While I have lots of reservations I assume you have done your home work and agree with the above. No point in trying to die with the biggest bank account (unless you plan to leave it to me - PM for my details and we can discuss how terrible of an idea this is) :sharebeer
right! *laughing*
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protagonist
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Re: How foolish is this?

Post by protagonist »

I must say that the encouraging responses I am receiving are the exact opposite of what I expected, which was to lose all my street cred in this group.
My impression of the typical Boglehead is a multimillionaire who will travel miles to save two cents a gallon on gas *giggle*
Last edited by protagonist on Thu Apr 15, 2021 11:46 am, edited 1 time in total.
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lthenderson
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Re: How foolish is this?

Post by lthenderson »

Insane... no.

Emotional... perhaps a little too much. But that is hard to shut off when it comes to such a large purchase.

I usually find the worst part about buying a house is the night after my offer is accepted and I ponder if I just threw a huge chunk of money down the drain. But that usually fades away pretty quickly.
MarkerFM
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by MarkerFM »

Count on replacing the AC if it's that old. You really need to take the HOA review suggestion seriously. This could be a source of problems. Your Realtor should be able to help you analyze the financials and documents.
Sunrise
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Sunrise »

protagonist,
Are there docks at the apartment building, where you could keep a boat in a slip? IMO, $400K is not out of line these days to live on the waterfront in Florida, especially if you can keep a boat there!
Last edited by Sunrise on Thu Apr 15, 2021 2:25 am, edited 2 times in total.
rascott
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by rascott »

If you can easily afford it, and you really like it.... then buy the darn thing. Life is short.

I could come up w/ a thousand more foolish ways to spend money than buying a home. Sounds like you'll own it a very long time.
sk2101
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by sk2101 »

ETA: I would just caution you that the market is pretty hot at the moment, so don't be surprised if you are significantly outbid and watch your emotions :sharebeer :sharebeer
Last edited by sk2101 on Fri Jul 02, 2021 12:56 pm, edited 3 times in total.
oldfatguy
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by oldfatguy »

protagonist wrote: Wed Apr 14, 2021 11:18 am We are thinking of bidding on a great 2 br apartment on the 10th floor of an building on the waterfront ...
How far above current sea level is the property around the building?
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CommitmentDevice
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by CommitmentDevice »

It sounds like a fine purchase for you. You can afford it and you'd enjoy it.

Personally, I wouldn't buy waterfront anything in FL due to worsening hurricane season and sea level rise.
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protagonist
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by protagonist »

Sunrise wrote: Wed Apr 14, 2021 1:14 pm protagonist,
Are there docks at the apartment building, where you could keep a boat in a slip? IMO, $400K is not out of line these days to live on the waterfront in Florida, especially if you can keep a boat there!

Just as a point of reference, I bought my 3bed/2bath 1966 SFH on water with dock in 2009 for $450K, property appraiser says it's currently worth about $725K. West-Central Florida, 10 minutes by boat (idle speed) to Gulf of Mexico. :sharebeer
Yes, there are boat docks as well as a kayak launch. Dock fee is extra. Currently I don't have any plans to keep more than a kayak there.
It doesn't seem out of line at all to me. For what it is and in this location I am surprised property is as inexpensive as it is. But prices have skyrocketed in the past couple of years.

The asking price is actually around $360K but I am pretty sure it will sell for above asking price. How much above, I have no idea.
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protagonist
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by protagonist »

sk2101 wrote: Wed Apr 14, 2021 1:41 pm I own a handful of condos in S.Florida and I would be comfortable waiving inspection as well. There are not many things that can go wrong in a high rise condo that's not covered by the association. Main item is really the AC, and frankly it's not that expensive to replace those (you only need replace the air handler as the evaporator is part of the building infrastructure and their responsibility).

If the water heater is 15 years old too I would replace it immediately; a leak is one of the worse things that can happen in a condo as you have people living underneath you that would also be affected.

Like others said, make sure the HOA is in a decent financial position and understand all the restrictions they impose, such as limits on rentals, parking and storage arrangements, insurance requirements and the history of special assessments. When condos get to be over 25 years from construction things start to deteriorate and you should expect higher maintenance and the HOA really needs to be on top of it with preventive maintenance.

ETA: I would just caution you that the market is pretty hot at the moment, so don't be surprised if you are significantly outbid and watch your emotions :sharebeer :sharebeer
Yes, I agree about the water heater, and I will ask about whether it is my responsibility (HOA includes gas and water but not electricity)....thanks for reminding me.) I have read the rules and I am comfortable with them. I need to also ask about insurance requirements if my offer is accepted, though my realtor suggested that, for a condo, the insurance should be cheap.
Also thanks for the suggestion about history of special assessments. I thought about that- good idea. The building was built in 1981. It looks well cared for, and like I mentioned, the construction is concrete/stucco.
I expect the bidding to possibly go quite high and I have no real yardstick to determine what would be expected. I was outbid on the last one I tried to buy there (a 1 br, not nearly as nice, that sold for $230K recently...5K above asking, cash, no contingencies. I bid $227K on that one). This one is a choice unit.

Thanks for the useful tips.
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protagonist
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by protagonist »

oldfatguy wrote: Wed Apr 14, 2021 1:45 pm
protagonist wrote: Wed Apr 14, 2021 11:18 am We are thinking of bidding on a great 2 br apartment on the 10th floor of an building on the waterfront ...
How far above current sea level is the property around the building?
Not sure, but I don't think more than a few feet. There is parking under the building. I will ask. Thanks.
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retiredjg
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by retiredjg »

protagonist wrote: Wed Apr 14, 2021 2:21 pm I was outbid on the last one I tried to buy there (a 1 br, not nearly as nice, that sold for $230K recently...5K above asking, cash, no contingencies. I bid $227K on that one). This one is a choice unit.
Ah ha! This is not an impulse interest. You were already hoping/planning to buy.

Go for it!

And if you get it, post a picture of the balcony view. :happy
Big Dog
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Big Dog »

Sounds like a good fit. That said, I'd wait for 6-9 months as I expect that the feeding frenzy will decline as more and more folks are vaccinated adn real estate gets back towards normal. Since it's a high rise, other places will come on the market over the next months, so waiting shouldn't cost you anything.
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plannerman
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by plannerman »

I did somthing similar in February 2020 and didn't move in until this last February post Covid vaccinations. A year after the purchase and our only regret is we wished we had done it sooner. If you are buying from a foreign national (we bought from a Canadian citizen) make sure you understand the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) implications.

plannerman
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Wricha
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Wricha »

The price seems very reasonable, water view? (Gulf, lake, canal, river). Is this a hotel - condo deal? (If so, these are the first to take hit in the downturn and the last to recover.)
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Dregob »

protagonist wrote: Wed Apr 14, 2021 11:18 am We are thinking of bidding on a great 2 br apartment on the 10th floor of an building on the waterfront (vacation home that could become a permanent residence in the future) in a community we really like on the west coast of Florida with spectacular water views for around $400K;;;we expect a bidding war and are thinking of making a cash offer with no contingencies. We have wintered in this community for the past 4 years and love it there.

For years I have told others how stupid it is to buy waterfront real estate in Florida now....housing bubble, hurricane risk, volatile home values, etc. Especially in 55+ complexes like this one. Nor would I normally forego a home inspection...seems insane....but it is a concrete/stucco building with hurricane shutters and my own visual inspection turned up nothing major. As far as I can tell the only big expense would be if the HVAC needed replacement, and that would still be within reason (it seems to work fine but it is 15 years old). The apartment is in move-in condition. I don't think much could go wrong, and I expect many bids at above asking price.

We can afford the apartment without any hardship.

I expect to lose a lot of respect for my critical thinking from Bogleheads with this post.

It just went on the market and the open house at 9AM today was a feeding frenzy. The owners are going to sort through offers tomorrow and choose the best one.

Is what we are considering absolutely insane?

And if we make an offer, can savvy homebuyers, especially realtors, give me any tips in doing so?

Thanks.
10th floor should be fine even with climate change.
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protagonist
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by protagonist »

Wricha wrote: Wed Apr 14, 2021 4:10 pm The price seems very reasonable, water view? (Gulf, lake, canal, river). Is this a hotel - condo deal? (If so, these are the first to take hit in the downturn and the last to recover.)
Not a hotel. It is in a well-established over 55 community on the gulf, or more specifically, a bay, but with spectacular views. I think it seems very reasonable for what it is. I'm surprised that properties like this are selling in that range, but then again, I am used to Northeast prices. I think 55+ communities appreciate much slower than others, and maybe that is a factor.
Jayhawker
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Jayhawker »

I'll give you the response it sounds like you expected to get from Bogleheads. It does sound a bit foolish to me. Is renting in the area an option for you lifestyle-wise? If so I think that would be a wiser choice from a risk management and long-term return perspective. It sounds like from your OP that you already understand many of the risks so I'll just share two links that I think are helpful.

I would recommend you check out NOAA's map of sea level rise just to get an idea of what you are getting yourself into given your specific location. Be sure to also look at the high tide flooding map on the same page.
https://coast.noaa.gov/slr/#/layer/fld/ ... dAccretion

This article is about Miami but I would imagine the general theme applies to where you are looking as well. Like the author, I live in a particularly fire-prone part of California. The way the real estate agents talked about how "they" are "fixing" it reminded me of the casual chatter I pick up around here as well.
https://popula.com/2019/04/02/heaven-or-high-water/

I would be interested to hear your thoughts.
Dave55
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Dave55 »

Not foolish. You thought of all the downsides and do not mind paying up for a property you would very much like to have. Let us know if your offer is accepted and good luck.

Dave
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protagonist
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by protagonist »

Jayhawker wrote: Wed Apr 14, 2021 6:29 pm I'll give you the response it sounds like you expected to get from Bogleheads. It does sound a bit foolish to me. Is renting in the area an option for you lifestyle-wise? If so I think that would be a wiser choice from a risk management and long-term return perspective. It sounds like from your OP that you already understand many of the risks so I'll just share two links that I think are helpful.

I would recommend you check out NOAA's map of sea level rise just to get an idea of what you are getting yourself into given your specific location. Be sure to also look at the high tide flooding map on the same page.
https://coast.noaa.gov/slr/#/layer/fld/ ... dAccretion

This article is about Miami but I would imagine the general theme applies to where you are looking as well. Like the author, I live in a particularly fire-prone part of California. The way the real estate agents talked about how "they" are "fixing" it reminded me of the casual chatter I pick up around here as well.
https://popula.com/2019/04/02/heaven-or-high-water/

I would be interested to hear your thoughts.
You deserve to hear them after such a thoughtful response:

We intend to be "snowbirds" (FL-speak for those who winter in FL and then go home) for the foreseeable future, though we also envision a time when we might consider moving permanently (simple life, warm winters by the sea, easier to deal with with advancing age than our 130 year old Victorian, etc.)

We were committed to doing airbnb for the last few years, but as we became increasingly connected to the area, made friends, etc., and given the hassle of finding a new place every year, moving our stuff, and finding that things were not always as advertised...plus given the inflated prices of seasonal rentals...having a place of our own became more attractive.

If we were committed to living in FL year round I think the rental option would be a very good one. And in fact we were (and still are, if the deal falls through) considering that option. We like the simplicity of it. But the property that we are considering buying is much more appealing to us than anything we could rent without paying a lot more...in fact, it doesn't really exist in that location.

And yes, I understand the risks and they do make me nervous. Anybody who buys FL waterfront property in a bidding war during what may well be a real estate bubble should be nervous. I also am confident that we could withstand any resultant financial loss without significant lifestyle impact....in fact, anybody with a significant part of their portfolio in stocks should have similar concerns (and unlike hurricane damage, a market crash is not covered by insurance). So it boils down to where we would rather risk that ~$400K chunk of our portfolio and the potential enjoyment we can get out of it.

If the stock market tanks and I lose $400K on paper it is just a matter of luck whether I ever recover it before I die, and what pleasure did I get from it when I had it? Whereas if my condo gets wiped out by a hurricane at least I have enjoyed the ride, and I might even get reimbursed in full for my loss.
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Re: How foolish is this?

Post by Hebell »

protagonist wrote: Wed Apr 14, 2021 12:00 pm
jebmke wrote: Wed Apr 14, 2021 11:33 am Have you reviewed the condo association balance sheet? The biggest risk could be lack of reserves for common expenses.
I considered that. I have a copy but am having a hard time interpreting it....lack of experience. I want to run it by someone with more experience. One possible red flag (?) is that the HOA fees took a big bump in 2021 over last year- $395 to $456/mo. I want to know why.
As president of a large condominium Association I can tell you why that happened. Commercial insurance for general liability and property coverage went up 32% last year, and will probably go up another 20% in the coming year. It was ruthless this year. The reinsurers are passing on their damages from years past. Plus in over 55 plus communities general liability coverage is going through the roof because of increased litigation from falls.

From 2020 to 2021, Florida saw horific increases at many associations that were otherwise generally well run.

Another reason it may have gone up is because of a reserve study. You say your building was built in 1981. Buildings of that age in high velocity high wind zones, which you are talking about, begin to have problems with their stucco at 40+ years. Your condo association has probably experienced some cracking and escalation of stucco repairs, so they've had to increase that reserve line item. That's also happening across South Florida. It's something a lot of condos did not budget for properly. People think of stucco is lasting for life, but at 40 to 50 years, you start to get problems
Hebell
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Hebell »

By the way, if that building is built in 1981 it is not built to current code. If it's like other buildings built in 1981, like mine!, You'll find it has concrete walls dividing the units and at the ends of the building, but then it has finished stucco on the fronts and back. That type of construction was very popular.

So you may have partial protection but don't go assuming that what you think is stucco has concrete block behind it. It probably doesn't. It has steel studs, some type of framing material over it, either plywood or something like Hardie board, steel wire lathe and then a multi-layer stucco finish.

There are large number of big condos built in the early 80s and that's a very typical construction. Also check the date of the hurricane shutters and see if permits were actually filed so you know that they are anchored into the studs and actually meet Miami-Dade ( S FL HVHZ) code. A lot of the hurricane shutters that come with this 1980s construction can't handle more than a class one hurricane.

Sorry for all this bad news, but I would have bought an apartment built no earlier than the mid-90s if resisting hurricanes was my top priority.
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Taylor Larimore
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Taylor Larimore »

"The building was built in 1981."

protagonist:

Dade County (Miami) requires a 40 year inspection of condos in Miami. The result can be a large assessment (we had two). I would try to determine if the building has an adequate capital reserve even without the government inspection.

Hope this information is useful.

Best wishes
Taylor
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Wricha
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Wricha »

Taylor Larimore wrote: Wed Apr 14, 2021 9:31 pm "The building was built in 1981."

protagonist:

Dade County (Miami) requires a 40 year inspection of condos in Miami. The result can be a large assessment (we had two). I would try to determine if the building has an adequate capital reserve even without the government inspection.

Hope this information is useful.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: “Successful investing doesn’t require sophistication and complexity; all that’s necessary is a healthy dose of common sense.”
This is a very good point. Last year I was looking at a condo in Naples there was a building in the development with major problems and they were looking at 6 figure assessment,
Hebell
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Hebell »

My building is in Palm Beach county. And they don't require regular reserve studies. That's why I was put in as president. To uncover a lot of this cr*p. I mean, to pay greater scrutiny to our operating cash, as well as get the appropriate expert counsel to plan our way forward with our reserves.
Jayhawker
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Jayhawker »

It sound to me like you are in an ideal position to make this move. It makes a lot of sense to try Airbnb for the first few years and it makes just as much sense want something more permanent now that you are more connected to the area.

It sounds like you are well set to manage it financially if the risks we both talked about show up in a big way. It seems like the biggest risk there is not so much a single event (that could be reimbursed) but a permanent change to the risk rating or the federal subsidy structure for flood insurance programs making premiums unaffordable. I think in a condo you would see this passed through mostly in your HOA dues increasing over time.

Perhaps more important than the financial side (given you have said you can afford the potential downside without hardship) is what you said makes it seem as though you are set to manage the potential risks emotionally as well and have the right perspective going in.
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protagonist
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Re: How foolish is this?

Post by protagonist »

Hebell wrote: Wed Apr 14, 2021 9:05 pm
protagonist wrote: Wed Apr 14, 2021 12:00 pm
jebmke wrote: Wed Apr 14, 2021 11:33 am Have you reviewed the condo association balance sheet? The biggest risk could be lack of reserves for common expenses.
I considered that. I have a copy but am having a hard time interpreting it....lack of experience. I want to run it by someone with more experience. One possible red flag (?) is that the HOA fees took a big bump in 2021 over last year- $395 to $456/mo. I want to know why.
As president of a large condominium Association I can tell you why that happened. Commercial insurance for general liability and property coverage went up 32% last year, and will probably go up another 20% in the coming year. It was ruthless this year. The reinsurers are passing on their damages from years past. Plus in over 55 plus communities general liability coverage is going through the roof because of increased litigation from falls.

From 2020 to 2021, Florida saw horific increases at many associations that were otherwise generally well run.

Another reason it may have gone up is because of a reserve study. You say your building was built in 1981. Buildings of that age in high velocity high wind zones, which you are talking about, begin to have problems with their stucco at 40+ years. Your condo association has probably experienced some cracking and escalation of stucco repairs, so they've had to increase that reserve line item. That's also happening across South Florida. It's something a lot of condos did not budget for properly. People think of stucco is lasting for life, but at 40 to 50 years, you start to get problems

This is very useful information, thanks!
Also thanks for the info on the stucco....I will look into that!
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protagonist
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by protagonist »

Taylor Larimore wrote: Wed Apr 14, 2021 9:31 pm "The building was built in 1981."

protagonist:

Dade County (Miami) requires a 40 year inspection of condos in Miami. The result can be a large assessment (we had two). I would try to determine if the building has an adequate capital reserve even without the government inspection.

Hope this information is useful.

Best wishes
Taylor

Taylor, thanks for that!! I will check and see if there are any anticipated assessments. I plan to review the reserve, but I have no experience reviewing the financials of condos or knowledge of what would be considered a reasonable reserve. I suppose I should get an expert...like a real estate attorney...to review it?
Hebell
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Hebell »

The best way to determine if your building is having moisture penetration problems, which jacks up the costs to run the building, is to go examine the building.

Look at the stucco areas. If you see caulk patches in numerous areas where those cracklines follow a roughly horizontal line, then you know you have problems. If you have heavy conduits or downspouts attached to the walls with fasteners, and you see patched caulk running out from the fastener holes, you have problems.

Caulk is a temporary fixed used by associations that have not properly budgeted for aging stucco. Broad running lines indicate that the stucco is slowly pulling away from the lathe as it's weight slowly moves down the wall, some what like tectonic shift. Proper stucco remediation requires grooving out or even completely removing stucco, identifying places where moisture is being held behind the stucco, and fixing the whole area.

An inspection in South Florida on a stucco wall can tell you an awful lot, even by visual inspection. Along with the caulk you will see oftentimes patchy paint colors.

Look up at the roofline, and you'll often see small holes, in South Florida, bats and small pests will deposit organic matter in those holes and you will see streaky patterns of green and brown at the top edge of your building.

Another sign of insufficient funding is if the gutters leak and also streak the side of the building, often leading to mold growth on the outside of the building in shady areas.

A good visual inspection is worth its weight in gold
tibbitts
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Re: How foolish is this?

Post by tibbitts »

protagonist wrote: Wed Apr 14, 2021 12:09 pm I must say that the encouraging responses I am receiving are the exact opposite of what I espected, which was to lose all my street cred in this group.
My impression of the typical Boglehead is a multimillionaire who will travel miles to save two cents a gallon on gas *giggle*
I can't believe it either. Somebody must have cracked a bunch of Boglehead passwords and we have imposters posing as Bogleheads.

Hvac replacement is a complete non-issue in the context of what you're considering so you shouldn't even think about that.
mgensler
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by mgensler »

We have a unit in a 2004 building on the ocean in FL. We've owned it for about seven years. Things we had to remove/replace/repair since purchasing include:

All appliances except induction cooktop and wall ovens, Hvac units, wood flooring (replaced with tile), water heater, plumbing shut off valves (we have cpvc water lines), roof 2x due to hurricane, beach crossover, exterior and interior paint, repair 2-3 hurricane shutters per year, bathroom exhaust fans.

Since your building is older some of these items most likely have already been replaced or are due for replacement again.

Our association fees and property taxes have risen 50%+. The other owners complained so now for last three years, we've had no increases in the monthly hoa fee but we annually have had a large lump sum assessment.
Topic Author
protagonist
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Re: How foolish is this?

Post by protagonist »

tibbitts wrote: Thu Apr 15, 2021 10:35 am
protagonist wrote: Wed Apr 14, 2021 12:09 pm I must say that the encouraging responses I am receiving are the exact opposite of what I espected, which was to lose all my street cred in this group.
My impression of the typical Boglehead is a multimillionaire who will travel miles to save two cents a gallon on gas *giggle*
I can't believe it either. Somebody must have cracked a bunch of Boglehead passwords and we have imposters posing as Bogleheads.

Hvac replacement is a complete non-issue in the context of what you're considering so you shouldn't even think about that.
+1. And as far as I can tell that would prob. be the most expensive repair I would encounter if I just do my own visual inspection . It's just an apartment..... I would rather forego the inspection which will make my offer more competitive.
My realtor told me that when they opened the unit for viewing at 9 AM there were already about 20-30 realtors lined up with clients to see it. She arrived at 9 but had to wait until 10:30 for her turn to enter. Recent sales in the building have typically been at or above asking price, selling within a day or two of listing. I need to make my offer competitive.
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protagonist
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by protagonist »

mgensler wrote: Thu Apr 15, 2021 10:41 am We have a unit in a 2004 building on the ocean in FL. We've owned it for about seven years. Things we had to remove/replace/repair since purchasing include:

All appliances except induction cooktop and wall ovens, Hvac units, wood flooring (replaced with tile), water heater, plumbing shut off valves (we have cpvc water lines), roof 2x due to hurricane, beach crossover, exterior and interior paint, repair 2-3 hurricane shutters per year, bathroom exhaust fans.

Since your building is older some of these items most likely have already been replaced or are due for replacement again.

Our association fees and property taxes have risen 50%+. The other owners complained so now for last three years, we've had no increases in the monthly hoa fee but we annually have had a large lump sum assessment.
I'm curious why hurricane shutters need to be repaired so often (2-3 shutters per year!)
If that is the case, I wonder if it would be more cost-effective to replace the windows with "hurricane-proof" impact windows .
Hebell
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Hebell »

protagonist wrote: Thu Apr 15, 2021 10:52 am ... Question about repairing shutters
Permitted highend hurricane shutters do not need to be repaired every year. However, high end hurricane shutters are typically treated under a maintenance contract

I have some big roll up shutters on the back balcony, one over the front door and a number of window sliding accordion style shutters.

I have the manufacturer of this shutters come in once a year and lubricate everything. Don't forget, these items are subjected to outside air, meaning moisture and sea salt. Maintenance makes the shutters much easier to operate when you do that every year. These shutters aren't the lightweight things you use up north. These are heavy duty. Meant to withstand up to 175 mph winds

This is maintenance work, not repair work.
Surfcaster
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by Surfcaster »

I have a neighbor that complains every few years her unit gets hit with a 5 figure special assessment. (FL waterfront)

I looked at one condo a couple years ago here in FL that was for sale cheap (99k). Unit was just assessed a $150,000 special assessment and owner couldn't pay.

Definitely look through the books.
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protagonist
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Re: How foolish is this? [Buying waterfront apartment in Florida]

Post by protagonist »

Surfcaster wrote: Thu Apr 15, 2021 4:58 pm I have a neighbor that complains every few years her unit gets hit with a 5 figure special assessment. (FL waterfront)

I looked at one condo a couple years ago here in FL that was for sale cheap (99k). Unit was just assessed a $150,000 special assessment and owner couldn't pay.

Definitely look through the books.
That really is scary. Thanks.
Saving$
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Re: How foolish is this?

Post by Saving$ »

protagonist wrote: Wed Apr 14, 2021 12:00 pm
jebmke wrote: Wed Apr 14, 2021 11:33 am Have you reviewed the condo association balance sheet? The biggest risk could be lack of reserves for common expenses.
I considered that. I have a copy but am having a hard time interpreting it....lack of experience. I want to run it by someone with more experience. One possible red flag (?) is that the HOA fees took a big bump in 2021 over last year- $395 to $456/mo. I want to know why.
If you have time, get copies of the HOA minutes from the last 7 years, or as far back as you can. Read them carefully. If you don't have time, put a contingency in your offer that you get to review them. Ask if there have been any assessment, or if there has been any communication, formal or informal about pending or contemplated assessments.

It may not be a deal breaker, but friends with a Florida condo were assessed about $20k 8 or so years ago when the condo replaced all the exterior glass with hurricane/impact resistant glass.
tibbitts
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Re: How foolish is this?

Post by tibbitts »

protagonist wrote: Wed Apr 14, 2021 12:00 pm
jebmke wrote: Wed Apr 14, 2021 11:33 am Have you reviewed the condo association balance sheet? The biggest risk could be lack of reserves for common expenses.
I considered that. I have a copy but am having a hard time interpreting it....lack of experience. I want to run it by someone with more experience. One possible red flag (?) is that the HOA fees took a big bump in 2021 over last year- $395 to $456/mo. I want to know why.
Just based on my south florida condo that's a very, very low condo fee. My condo is 3mi from the beach and in the $100k range - no elevators, gated/covered parking, etc. Fees are lower, but not that much. The only person I know with a beachfront high-rise condo pay much higher fees than those.
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protagonist
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Re: How foolish is this?

Post by protagonist »

tibbitts wrote: Thu Apr 15, 2021 11:20 pm
protagonist wrote: Wed Apr 14, 2021 12:00 pm
jebmke wrote: Wed Apr 14, 2021 11:33 am Have you reviewed the condo association balance sheet? The biggest risk could be lack of reserves for common expenses.
I considered that. I have a copy but am having a hard time interpreting it....lack of experience. I want to run it by someone with more experience. One possible red flag (?) is that the HOA fees took a big bump in 2021 over last year- $395 to $456/mo. I want to know why.
Just based on my south florida condo that's a very, very low condo fee. My condo is 3mi from the beach and in the $100k range - no elevators, gated/covered parking, etc. Fees are lower, but not that much. The only person I know with a beachfront high-rise condo pay much higher fees than those.
Could that be related to the number of owners sharing the cost?
I inherited a freestanding villa in a gated community from my mom in Boynton Beach that I sold last year...fees were lower.
I am rather surprised when I see how much the fees vary from property to property, even between properties that superficially seem very similar in close proximity to each other.
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