I recently had a bid accepted on a condo in south Florida and ran into something I hadn’t seen before that I want to share. I grew up in Florida and have been keeping my eyes open for opportunities there because I want to be more actively involved in that area. So I was pretty excited to get the bid accepted on what looked to be a very profitable deal. It also reminded me of the old Seinfeld episodes where his parents lived at the Del Boca Vista.
The borrower was deceased and the property was vacant, so the seller was able to provide an inside inspection report. The inside was in very good condition although it was a little dated which was to be expected. But the comps in the building and surrounding area for condos were all over the map which made no sense to me. The comp prices ranged from $30,000 all the way up to $200,000.
It turns out that to buy a property in this community you are required to purchase a country club membership for $70,000 which is non-refundable. The minimum membership level is social-only is $13,000 per year. I didn’t bother to ask them how much extra it was for golf….. Not to mention that the HOA dues were $2000 per quarter. So basically all of those extra expenses crush the value of the condos. Plus the condos were built in the very early 80’s. There are a ton of country clubs in south Florida in this price range (and higher), but the people who buy into them probably don’t want to live in a dated 40 year old condo.
So this is something to watch out for when bidding on properties in Florida. Make sure you understand what the HOA and other community requirements are. You could be in for a big surprise.