I’m looking to buy a condominium. The condominium association will provide me financial information, but I am not an accountant, it appears they have plenty of money on the books, but how will I know for certain? Is there someone that I can pay to review this information?
We own several beach properties and I can provide some guidance as you will need more than just the financials:
- Get all of the meeting minutes for the last year. Look for discussion on assessments.
- Find out if the COA is currently being sued (can affect financing)
- Find out if there is a single entity owning a majority of the units (can also affect financing)
- Look in the past for lawsuits against the COA
- Ensure that a reserves study has been performed recently
- Find out how many people are behind on dues
- If in Florida, find out if they are in compliance with SIRS
Find out how many of the properties are being rented . . . short-term and long-term.
In most real estate markets I’ve checked into, condominium values are the first to fall and the last to recover.
FWIW, my home is technically a condo…a .65 acre condo…
In my experience land condominium developments didn’t suffer the market fluctuations that building condos did. Pricewise they track much closer to typical subdivisions with CC&Rs.
A land condo is often done because of complexities, costs or rules for a land subdivision in the chosen location. Normally for the developers, they are easier to shepherd through the legal obstacle course.
Like most all real estate, it depends on location. Properties on the beach aren’t going to follow your pattern.
I’ve owned properties on the ocean, on lakes and on rivers. Waterfront properties fall into a category all by themselves, and ocean beach properties are usually among the most desired. But they also require a lot of research and knowledge of the local market influencers.
It’s great to have the ever-changing scenes a waterfront property offers. There’s always something going on.
Our development was created as a condominium by mistake, but when the developers realized that and tried to correct it, they could not because lots had already been sold, and thus real property rights were involved. In Arizona, the difference between a condominium and a planned community is based upon who owns the common areas. In a planned development, the association owns the common areas; in a condominium, the homeowners own the common areas.
Musta been their first project, new in the business.
That is a colossal screw-up…