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New safety regulations pushing Miami condo owners out

The Colorado Kid

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Surfside building collapse continues to reverberate in Florida...

The referenced article is behind the WSJ paywall but compelling numbers in the tease...

Owners who cannot afford steep special assessments to make repairs are now trying to sell their homes for pennies on the dollar

The big picture: There are more than 18,000 units for sale in South Florida — more than double the number in the first quarter of last year, per the Journal

Zoom in: Ivan Rodriguez, an owner at North Miami's Cricket Club, paid $119,000 for his unit in 2019, but was forced to sell it after his building passed a $30 million special assessment for repairs, the Journal reports.

  • It sold last month for $110,000 after originally listing for $350,000.

 
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I read the article in today's WSJ and just wow. It is wild. It actually seems some of the condos are now worth close to $0.

I'm still not super clear on how this impacts timeshares in FL. I know people are saying that reserve costs are going up a lot, but has that been true for pretty much everyone here that owns in FL.
 

The Colorado Kid

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I read the article in today's WSJ and just wow. It is wild. It actually seems some of the condos are now worth close to $0.

I'm still not super clear on how this impacts timeshares in FL. I know people are saying that reserve costs are going up a lot, but has that been true for pretty much everyone here that owns in FL.
I feel it impacts timeshares dramatically because special assessments are going to lead to increased timeshare owners walking away from their ownerships just like the condo owners in the article which impacts the financial viability of the underlying property to continue to function properly. Likely a different kind of gentrification will be coming now as these older properties could be sold for pennies on the dollar to large resort companies who will bulldoze them and build shiny new sprawling beachfront resorts.
 

vacationtime1

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Surfside building collapse continues to reverberate in Florida...

The referenced article is behind the WSJ paywall but compelling numbers in the tease...

Owners who cannot afford steep special assessments to make repairs are now trying to sell their homes for pennies on the dollar

The big picture: There are more than 18,000 units for sale in South Florida — more than double the number in the first quarter of last year, per the Journal

Zoom in: Ivan Rodriguez, an owner at North Miami's Cricket Club, paid $119,000 for his unit in 2019, but was forced to sell it after his building passed a $30 million special assessment for repairs, the Journal reports.

  • It sold last month for $110,000 after originally listing for $350,000.

Am I supposed to feel sorry that the owner didn't more than triple his money in five years?

I understand the problem, but that often happens when a building has latent defects. It is no different than someone buying a house with a bad foundation or dry rot. An owner cannot just pass the problem along to the next buyer.
 

AJCts411

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Certainly exposes the folly of the condo associations/owners ignoring the conditions of their buildings and vetoing special assessment /condo fee increases. Now here is a pleasant thought, if the condo associations purchased liability insurance for the members could owners litigate to recover some of the costs?
 

Panina

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Whereas the financial implications to homeowners are huge the law as written now should have been implemented years ago,

Mf’s should include costs associated with future repairs as where they have to be done there is enough money in reserve and no assessment needs to be charged.

Unfortunately some Hoa’s did collect what was considered enough for future repairs 5 years ago but due to inflation and rising costs of material there still is a huge shortfall requiring high assessments. Hoa analysis of projected expenses should be done yearly to make sure projections are still on target.
 

billymach4

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I feel it impacts timeshares dramatically because special assessments are going to lead to increased timeshare owners walking away from their ownerships just like the condo owners in the article which impacts the financial viability of the underlying property to continue to function properly. Likely a different kind of gentrification will be coming now as these older properties could be sold for pennies on the dollar to large resort companies who will bulldoze them and build shiny new sprawling beachfront resorts.
Beach Front Timeshare will just increase MF and SA. This is the case at Ocean Pointe. Did not feel or see any lower demand this past spring. People will pay up.

Not happy about it at all.
 

The Colorado Kid

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Beach Front Timeshare will just increase MF and SA. This is the case at Ocean Pointe. Did not feel or see any lower demand this past spring. People will pay up.

Not happy about it at all.
I agree on the nicer properties people will pay up...but likely the B and C rated properties will not pay up and go through a transformation.
 

Cornell

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I read the article in today's WSJ and just wow. It is wild. It actually seems some of the condos are now worth close to $0.

I'm still not super clear on how this impacts timeshares in FL. I know people are saying that reserve costs are going up a lot, but has that been true for pretty much everyone here that owns in FL.
I read it too and was in shock.

My own daughter goes to college in Daytona Beach which was hit by 2 hurricanes in one season , two seasons ago. It was the rain and flooding which impacted them the most. Nonetheless , I see parents buying condos for their kids as "college housing" for the 2-3 years they need it and I think "is this really going to pay off when you sell in such a short period of time?". And the insurance costs just seem insane.

I'm no real estate expert though!
 

bnoble

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I read this article the other day and have been thinking about it.

The problem is that these costs have to be paid eventually, and the places where they are the worst are either (a) buildings with significant defects, (b) associations which have chronically under-funded reserves, or (c) both. I have a little more sympathy for (a) than (b), but (a) is also a consequence of ownership. If one isn’t prepared to take on those risks, rent and don’t buy.
 
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Am I supposed to feel sorry that the owner didn't more than triple his money in five years?

I understand the problem, but that often happens when a building has latent defects. It is no different than someone buying a house with a bad foundation or dry rot. An owner cannot just pass the problem along to the next buyer.

No, definitely not. Just to clarify though because the MSN summary in OP didn't give the full details. The owner did still sell 42% below what he bought for it. Throw in the costs to sell and the owner probably still lost about 50%.
 
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TheTimeTraveler

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Surfside building collapse continues to reverberate in Florida...

The referenced article is behind the WSJ paywall but compelling numbers in the tease...

Owners who cannot afford steep special assessments to make repairs are now trying to sell their homes for pennies on the dollar

The big picture: There are more than 18,000 units for sale in South Florida — more than double the number in the first quarter of last year, per the Journal

Zoom in: Ivan Rodriguez, an owner at North Miami's Cricket Club, paid $119,000 for his unit in 2019, but was forced to sell it after his building passed a $30 million special assessment for repairs, the Journal reports.

  • It sold last month for $110,000 after originally listing for $350,000.




This is a sad situation that in most cases "could" have been easily avoided.

"Most" (but not all) condominiums and cooperatives built in Florida during the 50's, 60's, 70's and 80's NEVER set up a reserve fund to do long term maintenance on their buildings. Sadly these now long neglected buildings are now in need for long overdue repairs and there is no reserve funds set aside to do so.

With that said, if reserves had been set aside since day one then a lot of folks wouldn't be incurring this painful situation -- basically now incurring large special assessments or just sell out. The good news is that the values are substantially higher than 50 years ago. Many builders want these older properties because a lot of things are already in place for an easy tear down (and rebuild) or an extensive renovation of existing units.

This situation does work out for some, and doesn't work out for others. The key to this problem is "RESERVES". Those associations that have healthy reserves in place are worth far more to potential buyers in the 2024 sales environment because of the looming 2025 Florida law.












.
 

billymach4

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I agree on the nicer properties people will pay up...but likely the B and C rated properties will not pay up and go through a transformation.
Yes there will be opportunity for redevelopment. Perhaps Marriott will eyeball another sweet location and build another resort along the way. That pink now white building between Pompano and Kingfish has a big target on Marriott dartboard.
 
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bizaro86

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Yes there will be opportunity for redevelopment. Perhaps Marriott will eyeball another sweet location and build another resort along the way. That pink now white building between Pompano and Kingfish has a big target on Marriott dartboard.

I doubt it. They wouldn't be able to build another sales center, which is their primary motivation to build new buildings instead of recycling existing weeks into the trust.
 

Panina

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This is a sad situation that in most cases "could" have been easily avoided.

"Most" (but not all) condominiums and cooperatives built in Florida during the 50's, 60's, 70's and 80's NEVER set up a reserve fund to do long term maintenance on their buildings. Sadly these now long neglected buildings are now in need for long overdue repairs and there is no reserve funds set aside to do so.

With that said, if reserves had been set aside since day one then a lot of folks wouldn't be incurring this painful situation -- basically now incurring large special assessments or just sell out. The good news is that the values are substantially higher than 50 years ago. Many builders want these older properties because a lot of things are already in place for an easy tear down (and rebuild) or an extensive renovation of existing units.

This situation does work out for some, and doesn't work out for others. The key to this problem is "RESERVES". Those associations that have healthy reserves in place are worth far more to potential buyers in the 2024 sales environment because of the looming 2025 Florida law.












.
Even HOA's that have ample reserves find themselves having to do assessments. When I purchased my mother's condo, I looked at all the financials. They had millions in reserves and were fully funded at least they thought so and the financials looked good to me.

They missed one major component. The roof is now due for the 5 buildings based on HOA documents and the price for them have gone up 4 to 5 times what they were pre-pandemic. Contractors have increased material costs, labor costs as well as insurance costs driving the price up.

The assessment will be $5000. The mf went up for my moms unit $170 month but for larger units in the complex over $300. This was to increase the reserves to today's cost as well as for increased insurance costs.

Some of my friends in other complexes went up more than $500 a month. When you mf is $500-$600 a month, percentage wise it is a very big increase. Take a senior with limited income and these increases are hugh increases for them.

My moms hoa was otherwise financially sound and smart enough to take a loan for the roof so owners will have a choice to pay a one time assessment of $5000 or $50 month for 10 years.

The reality is Florida timeshares will feel the same financial pain.
 

chriskre

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Unfortunately it's not just the underfunding of the reserves that is a problem in Florida but we have a huge fraud issue with HOAs as well.
In our building our President is stealing right from under our nose and was exposed by our building manager and was fired instead of doing something about it.
So our nice reserve fund is being stolen every month by the petty cash he pockets to the tune of thousands.
He uses the building's legal team as his own lawyers and is getting away with it all because he has a crooked board.
Good luck trying to oust a crooked board.
Owners have to hire their own lawyers and it's very difficult trying to coordinate anything with apathetic owners but there are a few suits going against him.

I used to be the condo president so I know what he is doing but I'm so done fighting because I have my own health issues to deal with right now.
A developer has been knocking on our doors and I know they want our huge block to redevelop so I'm hoping that is our saving grace.
We are on a prime piece of downtown land right across the bay.
Our building isn't in such bad shape though so owners have their heads in the sand.
Insurance costs are skyrocketing but luckily we were able to get our roofs done so we were insurable again.
But the lawsuits against the building may cost us that insurance in the end.
I'm holding out hoping that developer makes us a fair offer. Fingers crossed.
 

Sugarcubesea

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I read the article in today's WSJ and just wow. It is wild. It actually seems some of the condos are now worth close to $0.

I'm still not super clear on how this impacts timeshares in FL. I know people are saying that reserve costs are going up a lot, but has that been true for pretty much everyone here that owns in FL.
One of my timeshares went way up in MF's and it was due to special assessments after the building was inspected and found that some things had to be fixed immediately.
 

Sugarcubesea

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Unfortunately it's not just the underfunding of the reserves that is a problem in Florida but we have a huge fraud issue with HOAs as well.
In our building our President is stealing right from under our nose and was exposed by our building manager and was fired instead of doing something about it.
So our nice reserve fund is being stolen every month by the petty cash he pockets to the tune of thousands.
He uses the building's legal team as his own lawyers and is getting away with it all because he has a crooked board.
Good luck trying to oust a crooked board.
Owners have to hire their own lawyers and it's very difficult trying to coordinate anything with apathetic owners but there are a few suits going against him.

I used to be the condo president so I know what he is doing but I'm so done fighting because I have my own health issues to deal with right now.
A developer has been knocking on our doors and I know they want our huge block to redevelop so I'm hoping that is our saving grace.
We are on a prime piece of downtown land right across the bay.
Our building isn't in such bad shape though so owners have their heads in the sand.
Insurance costs are skyrocketing but luckily we were able to get our roofs done so we were insurable again.
But the lawsuits against the building may cost us that insurance in the end.
I'm holding out hoping that developer makes us a fair offer. Fingers crossed.
Our HOA in Michigan also experienced fraud via a property management company stealing the reserves...Thankfully the insurance company made us whole but fraud is everywhere these days...
 

chriskre

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Our HOA in Michigan also experienced fraud via a property management company stealing the reserves...Thankfully the insurance company made us whole but fraud is everywhere these days...

I am sure the property management company is in cahootz with him.
They are releasing the petty cash every month to him so yeah he's definitely getting a kick back.
It's all so crooked and so sad because we have the funds.
I was president for 6 years and turned over a solvent association and now they are draining us to court receivership.
I think maybe that's their plan so we are forced to sell to the developers.
Hopefully in the end it works out because I don't see other owners wanting to sell unless forced to do so because
we have a unique building with townhouse lofts in the middle of Downtown Miami among the high rises.
Definitely not the highest and best use of the land but an oasis in the city.
I'll be sad to see it go but it's time has come.
I don't want to see a Lahaina incident happen to us.
 

Fido Chuckwagon

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as these older properties could be sold for pennies on the dollar to large resort companies who will bulldoze them and build shiny new sprawling beachfront resorts.
Is that a bad thing? Those older properties were once shiny new beach resorts. If they’ve outlived their useful lives and the costs of maintaining them exceeeds the cost of a new build…
 

The Colorado Kid

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Is that a bad thing? Those older properties were once shiny new beach resorts. If they’ve outlived their useful lives and the costs of maintaining them exceeeds the cost of a new build…
@Fido Chuckwagon in my opinion its a GREAT thing and just part of normal property change - I'm just pointing out the tsunami that will be happening
 
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The BIGGEST reason for this is Former Florida Governor Charlie Crist deregulating condo HOAs. That allowed condo HOAs/owners to not keep enough reserves or not conduct regular inspections. After the Surfside collapse, state inspectors found out the building had not been inspected in years, which meant the collapse probably could have been avoided, or at least the building could have been emptied and condemned before it fell. Current governor DeSantis signed a law that said all condos must have regular inspections and must have significant reserves for things like major repairs.

This is also happening in Orlando, where lots of multi-story condos are telling residents they must pay $10000-$30000 Special Assessment by the end of the year to the HOA.

TS
 
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